Embracing innovation has been at the heart of James Leather’s career in corporate treasury – and it is now central to the mission of his growing treasury consultancy, Corium. In a recent podcast, he talked to TMI about his passion for the treasury profession and highlighted some recent advances that have particularly impressed him.
Eleanor Hill, Editor, TMI (EH): Tell us a little bit about yourself and the ways in which treasury innovation has shaped your career path to date?
JL: I have worked in corporate treasury since the early 2000s, when I joined BAT in its Amsterdam office – the former head office of Rothmans and a key treasury hub for the group. From the moment I joined, innovation was a core theme, as I quickly found myself part of a project whose purpose was to replace the four systems that ran treasury there with one, namely SAP, underpinned by host-to-host connections with the banks.
This had dramatic effects on everything – from the timing of when we worked, to controls, and productivity. I was asked at the time whether I wanted to stick with general finance, or to focus on treasury. For me, the choice was easy. I was inspired by the people around me and their passion for this subject area that was forward looking and converged around the financial markets, technology and the business.
I stayed with BAT until 2011 and for most of that time, I was part of one kind of transformation project or another, such as the implementation of FXall and the rollout of a cloud-based forecasting system to 60 countries around the world.
Then, in 2011, I moved to Australia, where I predominantly worked with UGL, helping to integrate an acquisition and then to divest it. From an innovation perspective, this centred on Swift-related projects to gain visibility of all bank accounts, a TMS implementation [Visual Risk] and the re-setting of the capital structure – a different kind of innovation altogether.
I was inspired by the people around me and their passion for this subject area that was forward looking and converged around the financial markets, technology and the business.
After UGL, I worked for just under a year with Deloitte, which exposed me to consulting and advisory work, including Bank Bill Swap Rates (BBSW) reform. In addition, I was a founding member of Australia’s fintech start-up incubator, Stone and Chalk. Both of these experiences were significant and inspiring for me, as they were all about innovation.
In 2018, we returned to the UK. But, to the extent that innovation is a part of that history, then it has had a profound influence on my career to date – it’s something I’m passionate about and I am rarely happy with the status quo.
EH: Why did you decide to set up your own interim treasury and treasury advisory firm? And how important is innovation in the services you deliver to your clients?
JL: Corium was originally set up by me simply as a vehicle through which to undertake some consulting contracts, but from those humble beginnings it has grown in terms of the services it provides and the ambitions I have for it. Key services include: risk review and mitigation – with a focus on liquidity, investment and FX risk, and associated system, process and policy mitigations; accelerated RFPs; carve out support and regulatory transition [e.g. IBOR and most recently, debt capital market reform as the UK regulated bond market prepares for ‘retail-enablement’].
Corium leverages not only my skills, but also those within my network around the world, which, when combined with the skills of the client, boosts performance and strengthens resilience. Clients are from across the spectrum – traditional non-financial corporates to regulated financial institutions.
To the extent that innovation adds value, then it is critical to the services Corium provides, not least, because they provide a point of differentiation – but it has to add value – you can’t have innovation for innovation’s sake. A good example of Corium’s unique approach to innovation is that we incorporate it into an RFP. By partnering with the independent digital platform Treasury Delta, an RFP can be delivered more swiftly and cost effectively than by traditional means such as emails and spreadsheets. And that translates into a more competitive price for the client and a better ROI for them too.
EH: Could you elaborate on the Treasury Delta* offering and why treasurers should perhaps consider it for RFPs?
JL: In a nutshell, Treasury Delta has managed to ‘digitise’ the whole RFP process. Having run RFPs for cash management bank selection, SCF [supply chain finance] platform selection, and for FX trading platform selection, I know full well the problems it solves, which it does very effectively and rapidly. Compared with the traditional spreadsheet and email route for RFPs, Treasury Delta is far less time consuming and cuts out much of the administrative effort.
To my mind, this digital solution is a game-changer for treasurers. Treasury functions are typically lean and treasurers are constantly under pressure to do more with less. Treasury Delta is a powerful solution that can help alleviate that pressure.
Also, treasury functions like to run a selection process for new technology and Treasury Delta can help make this task a lot easier. Indeed, I can see it easily providing treasurers with the confidence and encouragement to implement other technologies more quickly, creating a virtuous circle of improving productivity.
EH: So presumably a treasury team could use it for a complex cash management RFP, for example?
JL: Absolutely. Many large organisations like to keep providers on their toes and have a policy of running a cash management/bank account provision RFP every five years – which comes around pretty quickly. Treasury Delta will enable this whole process to run more efficiently and make it a far more achievable policy.
The platform can cater for many types of RFPs, with the focus being on cash management, bank deposits, and TMS selection.
In terms of efficiencies, on RFPs run to date, I understand the platform has more than halved the time taken compared with the traditional process. However, greater efficiency is not the only major benefit of the Treasury Delta platform. It also delivers transparency and enables organisations to fulfil the ‘G’ element in ESG with answers recorded on the platform and easily printable should a copy be required for an audit or by a treasury committee.
Another aspect of the platform that I also really like is its ability to support broader communications. For example, with a bank deposit rate RFP, an organisation can share potential ancillary business and allow shortlisted banks to express their interest in this by offering an attractive deposit rate.
To sum up, Treasury Delta, in my view, offers an attractive ROI for those that engage with it, including banks and TMS vendors – not just the corporates.
EH: Coming back to the wider theme of innovation, how do you see it changing the role of the treasurer over the short and medium term? Are there any particular innovations or other fintechs you’d highlight?
JL: The first fact to point out is that innovation helps the treasurer to do more with less, which they are generally consistently being asked to do. Given that there is only so far that ‘less’ can go, I think innovation can most certainly help treasurers do more with the same.
Fintechs that come to mind include PrimaTrade, a dynamic discounting and SCF platform; Treasury Delta, of course; and TreasurySpring, a cash investment platform. On the technological innovation front, digital wallets, cryptocurrency, APIs and AI have caught my eye, but there are so many in train it is difficult to keep track of everything that is out there. It’s an exciting time.
EH: For those who aren’t familiar with TreasurySpring, what makes it interesting from an innovation perspective?
JL: The key aspect about TreasurySpring is that it enables access to the repo market for organisations that previously could not get access, or that found access prohibitively costly and complicated. It solves a long-standing problem that I have increasingly been uncomfortable with, namely the use of unsecured deposits by corporates. UK authorities offer protection up to £85k, but beyond that no guarantees. In the US the figure is $250k and in Europe €100k.
A recent survey by TMI, I believe, identified that 18% of corporates still use deposits for 80-100% of their liquidity portfolio investments. I find that staggering – I don’t actually understand how it gets past audits year after year. The issue is particularly relevant right now, when we see many bank credit ratings drifting downwards and the sector under stress due to an expansion in sovereign debt issuance and the rapid rise in interest rates. We only have to see what happened with Silicon Valley Bank – you wouldn’t want to have placed a deposit with that bank and be uncertain about the outcome. No treasurer wants to contemplate, never mind actually find themselves, relying on authorities to arrange a quick purchase by another bank to enable those funds to be safely returned to them if things go pear-shaped.
The other key element for me is that the TreasurySpring platform covers investment time horizons from one week to one year, offering a range of investment products. In doing so it helps corporates address another issue: whether to invest everything in an immediately accessible MMF [or overnight deposit] or allocate a percentage of surplus cash into longer- term investments, beyond one week, which might realise a better return and, thanks to TreasurySpring, at a more optimum level of risk. Many corporate treasury policies do not distinguish between short-term liquidity and investment portfolios that are not short term. But they should.
EH: And how is TreasurySpring different from other offerings in this space, in your view?
JL: As far as I know, Treasury Spring is the only institutional cash investment platform to provide the connectivity that enables businesses of all sizes and sophistication to access banks on a secured basis via the repo market. Furthermore, it supports investing in Supranational, Sovereign and Agency bonds via one single onboarding and KYC process. It is simple and makes it easy for organisations to diversify across a range of cash products, minimising risk while maximising return.
Innovation helps the treasurer to do more with less, which they are generally consistently being asked to do.
But TreasurySpring offers more than just access to the repo market. As well as tenor flexibility, other benefits of TreasurySpring include its ability to act as a one-stop KYC for multiple counterparties. It also supports the raising of finance if a company is investment grade and especially if it is issuing ESG-aligned instruments for up to one year thanks to its partnership with the London Stock Exchange.
I believe TreasurySpring is building a credit risk analysis capability too. Many treasury functions simply rely on a credit rating to assess the credit strength of a counterparty. Unfortunately, this credit rating is an assessment of probability of default and it may not change in a timely enough manner to give early warnings to a treasurer that a counterparty is under stress and to make necessary changes. TreasurySpring’s proposal is to build platform functionality that enables, for example, credit default swaps and share prices to be analysed in real-time to complement the reliance on credit ratings. I think that would be a very welcome platform capability.
EH: Finally, what is your advice for treasurers with respect to making the most of the treasury innovation that’s on offer today and advances yet to come?
JL: A challenge facing all treasurers is that while they operate in a specialism, they are actually looking after multiple specialist activities. It’s one of the most challenging and diverse roles within an organisation. Yet treasury teams don’t often have the resources to manage everything required to a good standard. That stretching and testing of capabilities has become increasingly evident in recent years and is being significantly exacerbated by the quite dramatic and rapid changes taking place now in the business landscape. Leveraging innovative technology is becoming increasingly critical for competitiveness and success.
As such, the rationale for exploiting innovation and new technologies by treasurers seems clear to me. It is an impossible task, however, to make the most of everything coming on the market – that palette is very big indeed now and getting bigger by the year. Rather than being blinded by all the innovative offerings and things they promise to deliver, I would suggest to treasurers that it’s better to work from the bottom up. And that means a thorough assessment of the strengths and weaknesses of their functions to help identify where their greatest needs lie. It’s a strategy that will equip them well as they explore solutions to clearly defined problems through research and when they attend conferences, drawing them to those innovations that can best help them fulfil their most important needs.
Leveraging innovative technology is becoming increasingly critical for competitiveness and success.
*For complete editorial transparency, TMI has a strategic partnership with Treasury Delta.
