Applying Standardised, Interoperable and Innovative Automated Solutions: Corporate Treasuries and the Development of Globally Connected Financial Services
journal contributionposted on 13.03.2015, 15:37 by Tom Buschman, Nikiforos S. Panourgias
Large multinational corporations operate in a wide variety of countries with a range of risks associated with their size, infrastructures and operational practices. Increasingly ubiquitous and powerful ICTs have enabled the centralisation of many support functions from local operations to the corporate headquarters. This, in turn, has led to a concentration of contracting for financial services with global and strong regional banks, primarily in Western countries by corporate treasuries. In this context, the development and adoption of standardisation in informational linkages can become a crucial component in remote and centralised decision-making by providing a mechanism for re-engaging financial service providers in emerging markets in the execution of financial services with limited intermediation from global or regional banks. Prime broker services, for example, combined with an efficient processing of transactions, can facilitate enhanced international market access for local financial institutions by providing the necessary credit intermediation between multinational corporations and local financial institutions. This paper seeks to show how the corporate treasury of a large multinational corporation, through the use of ICT-enabled transactional process innovations, is developing effective and efficient mechanisms for the management of the credit, concentration, and operational risks involved in contracting with local financial services firms. It also demonstrates how interoperability based on ICT standards is an essential component of such an arrangement if the risks of operating in a volatile and heterogeneous global financial environment are to be mitigated rather than just displaced or obscured. The paper also illustrates how over the past five years, significant progress has been made in constructing the infrastructures and establishing the services that will be needed to enable financial services institutions in emerging markets to benefit from enhanced access to global markets. It further shows how the pro-active engagement of these local financial services firms and their regulators with such arrangements is an indispensable part to any strategy to reversed, or at least mitigate, the current trend of financial services provisions migrating from local institutions to regional and global banks. Such a pro-active engagement should involve a focused seeking-out of new ways to deliver financing, liquidity management, FX and related services to international multinational firms. This, as will be show, entails a high degree of standardisation, automated supporting of transaction services, active contracting with prime broker services and engagement with regulators in order to ensure automation of reporting requirements and rapid authorisation processes for cross-border transactions.