Data-driven treasury

Data-driven treasury – Part 1
Podcast featuring:
- Daniela (‘Dany’) Eder, Head of Payments and Cash Management for Barclays Europe
- Martin Runow, Global Head of Payments and Digital, Barclays Corporate Banking

Dany: Hello, and welcome to our first podcast in our series exploring what is possible for treasurers in the new Europe. My name is Dany Eder, Head of Payments and Cash Management for Europe. And today I'm joined by Martin Runow, Global Head of Payments and Digital at Barclays Corporate bank. We’ll be focusing on the topic of data-driven treasury.

Hello and welcome, Martin. I hope you're well.

Martin: Hi Dany, I am. I hope you are too.

Dany: Absolutely! These are some challenging times we've been going through. And you know, data is all around us, even more evident today than ever before. What have you experienced? Have you seen changes in the behaviour of treasurers, and how they're using data and the tools that they are using?

Martin: Not drastic change in behaviour; more like a strong need to get stuff at your fingertips and obviously have accuracy. And that's not new; that’s always been there, but it's probably a bit propelled by Covid.

I mean, on the topic of data, it's there in abundance – that obviously does lead to a bit of a problem as well, to make sense of the data that's really relevant and try to cut out the noise – and forecasting and predictions, especially in times like these where we don't actually have a proper historic data set to work with in terms of economic forecast.

Actually it's quite interesting; I was speaking at a conference the other day together with one of our economists, and when your day job is making sense of data and then creating predictions out of it, what we see now is that there is data but there's no history, so it's really hard to predict the future.

So if you then turn that into Treasury – so some of the models and the forecasts and the things that our clients and customers or corporate treasurers have been dealing with – it's really hard, and in day-to-day that means that you have to deal with very, very high volatility in currencies. You have an interesting interest rate environment everywhere in the world. And trying to make sense of that, trying to make that jive with your Treasury policies, is actually really, really hard.

Dany: So, data is at the heart of everything we do. Have you seen any rise in the usage of our online tools as a result of the crisis? I mean, there must be more activity now than ever before?

Martin: Yes definitely.

And you can see that with the number of stats – obviously we're tracking people logging in and things, but we’re also tracking self-serve. So, you need to go in and amend a Direct Debit or maybe cancel a standing order or do other things online, and those have gone massively up, with spikes in March and April. We're seeing it kind of stabilised now at a much higher level.

So I would say – and it's probably true for most of us – those of us who haven't been totally embracing digital in the sense of communicating with your bank, getting information from your bank, you know, doing payments through digital means, have been pulled kicking and screaming into the digital age, I would say. That’s definitely happened.

Dany: Yeah, the online tools, it’s becoming a wide variety as well to choose from as payment service providers also offer services to help collect data. Like, I'm thinking about the account information aggregators that are out there that are collecting information from various balances for the use of APIs and bringing that all together on a dashboard so I can have a look.

Or my pension planning, my insurances and so forth, and how all that data is kind of being streamlined into a bit of a picture.

And similar to the treasurer as well; he has so many things that he needs to plug in, and so many various forms of data, I can imagine the online tools are for him an absolute necessity. But also going beyond that making really intelligent decisions from the data that he's viewing.

Do you think, taking us a little bit off track – I'm thinking about the big ecosystem around data – do you think Cloud is an absolute necessity nowadays? That you have to build your new data lakes, and data technology and digitalisation transformation can't live without the Cloud?

Martin: I think that you can live without the Cloud, it just wouldn't be smart and/or practical anymore today – and certainly not in the future. So Cloud technology has become quite mature, and we are seeing, both for us internally – our online banking platform iPortal has recently moved to an internal Cloud environment – but we do see the same with our clients as well.

So moving things into a Cloud – whether that's on premise, which is sort of an in-between technology I would almost say, or it's really going into one of those bigger Cloud providers out there – it's almost a necessity, for a number of reasons.

One is it gives you flexibility, and it has massive cost benefits. It also has resilience built in. So when we talk about our own technology, our ambition, especially in online banking or front-end services as a bank, resilience is a key factor for us. So how do we make sure that our systems don't go down, or if something happens that you can bring them up quickly in that you have what we call an active-active environment where you have several databases running at the same time, mirrored all the time?

All of those things you can do without a Cloud environment; it would just be so prohibitively expensive and complicated that it just wouldn't make sense. So it's kind of just happening. That's the world that we live in now. So for me, Cloud is one of those massive enablers of digital overall.

Dany: For us at Barclays it's a big part of our strategy as well. But what would be some examples of how I've been able to utilise products and services for a better client experience if I'm utilising Cloud technology in the background.

Martin: I would say as a client of ours, you shouldn't have to know whether we use Cloud or not. The difference in client experience is naturally a driver. Our client experience is the outcome, and that should drive what technology you deploy. It's not tech looking for a problem to solve. You have the problem; you solve it with tech.

So in the digital front-end space our mantra is actually that we want to make it easier for our clients to do their business, and that means not spending too much time trying to learn our systems. So, what you get with the Cloud environment and a bit more agile technology application and development process that we've built over time, is a much quicker release cycle. What we get with Cloud is, for example, a rapid release – or actually, a simultaneous release.

So, instead of having to shut down online banking systems over the weekend so I can do a massive release, I can actually release parts of the infrastructure without taking the system down. Should we find an issue we can actually roll back on all of that without our clients ever noticing. So that's the kind of stuff that the Cloud brings. Good tech and good services, especially in our world, are just the ones that run, that work. Always-on, right?

Dany: And you know, that's exactly why I mention it, because a lot of these buzzwords have been kind of floating around for quite some time, but sometimes just for a normal treasurer it's hard to kind of connect the dots. So, what are these buzzwords and how do they fit into what I need?

From my experience it's really the foundation of everything that you want to do going forward that's a little bit more digitalised and automated. So prediction and forecasting and the numbers getting back to our data and how to use that.

I just wanted to go into a little bit of some of the things that we're doing around automating processes, and reporting and predictions. Tell us a little something about our roadmaps. What are we looking at in terms of client experience, but also automisation so there's a cost benefit for both sides?

Martin: When we look at these data topics, data-driven treasury, I think it's time for us to throw some of these acronyms and buzzwords around ourselves.

Obviously we did cover the Cloud, there is API , there is robotics RPA, and there is the AI topic, but when I look at it from our end and how we connect with our clients, then we have a pretty wide variety of companies that we bank, basically, and the ecosystem starts really with the slightly smaller, maybe not so complex, companies out there and they're quite happy to actually log on to some sort of online banking tool, maybe have some mobile app, and look at account information and send us payments etc.

And then you move into the slightly more complex space and all the way up to the multinational corporations, as well as financial institutions and non-bank financial institutions that we deal with. And then this is where APIs and other means of full systems integration come into play.

So this is where we want to basically live within our clients’ ecosystem, or whether we want to or not our clients want that, so they are running their big ERP systems, so we need to be there. So, in the past we've done that through SWIFT connectivity or SWIFT for corporates host-to-host protocols, or direct integration into those systems where data then moves back and forth from machine to machine.

And the API – so more real time ‘I need this done now’, ‘Give me this piece of information’, or ‘Here's a payment I need you to execute’ – is coming in now. So it's very interesting how that then integrates into your client systems.

And through those things we are pushing data. We are trying obviously to make sense of the data as well, and we call that providing insights. And I think there's still a long way to go before you hit AI and predictive analytics where your computer or the AI actually tells you what you should be doing, where you should be investing or whatever else there is.

There’s sort of the first and the second level of data, and we want to make sure that we have data in a timely fashion and it's fully accurate and rich – so it has a lot of information that I can work with. And it's sort of, how do I glean basic things out of it before I have a basic cycle, I know when my payment runs are and those things.

So for us the trick is, it's a bit of a toolset that we want to build and give things to our clients, and then there's also the need for many of our larger clients to do something like that or they want to do that themselves within their ecosystems because they’re aggregating data from different financial institutions.Maybe they're even using other service providers to get all this data together and do something with it.

So that's a very interesting space, but the enablers for those are definitely, I would say, the technology of making sure that the data that gets transmitted, is in rich format; we haven’t talked about ISO, you know the big industry-wide ISO migration that's happening – that's helping, of course. And then things like API that are really emerging, or have emerged, where payments become more granular and quicker and part of a transaction that our clients are doing on their end, really.

Dany: You touched on the big ISO migration that's happening within Europe, and that will obviously foster more of the interoperability you were referencing, globally, as well as more will be able to connect with one another on a central banking basis as well, in a common format.

I think that's really important and you know, as you mentioned the APIs and how massive amounts of data our host-to-host sent to me and then uploaded in my reconciliation and my risk programming, it allows me to really quantify the data and then also selectively use it for my various forms of business and what I'm looking to do with my business.

And risk plays a big role in that as well. So I couldn't agree with you more on the APIs – ironically not a technology that’s so brand new if I read correctly – but it's just now getting major attention. And the uses of it – also the security of it – I believe, plays a big role in this as well. Would you agree?

Martin: Oh, absolutely. So APIs are not new. They’re definitely one of those lovely buzzwords that are quite frequently used these days, but people who have been into programming have been around APIs for quite some time. But the notion of open APIs, which ties into the Open Banking journey that we've been on – in Europe, at least – it ties nicely together.

But I think API is definitely an additional channel for us and we clearly see that. It's also not the Holy Grail; it's not the one thing that does everything for you. So if you're a corporate out there then it really depends on what you're trying to achieve. So the API, despite common belief, doesn't actually solve every problem in the world. It doesn't make coffee either, but what it does do is give you more options for things where speed, for example, is of the essence. So I see obviously huge benefits.

But then, if you look at the profile of payments that a company does, then there are things that are not super urgent. They need to be accurate; you need to know what happens etc. – I'm talking about normal supplier payments or maybe payroll etc.

So, if you are a very traditional company that does payroll once or twice a month, you do know days, if not weeks, ahead of time what you're going to pay and whom, so those things lend themselves to classical batch process, going through classical ACH systems like they do today. There's nothing wrong with that.

But we do see real-time payments emerging, and in combination with an API it does allow us to do things in a better way, for maybe new business areas or where, I don't know, you're in a new economy and you're ridesharing, or you're selling something, or you want to give someone a refund, or there’s insurance – it doesn't matter.

There are things where, as a client pushes that button or taps that button on their smartphone, you want to either pull in some information or maybe push out a payment, and that's where an API comes in. So it's a really interesting toolset that wasn't quite there before, maybe, outside of card payments. So I think it's a really cool piece of technology that's enabling certain journeys, or even new business models, and for that I think it's quite cool.

Dany: Thank you for listening to Part 1 of our podcast. Join us again for Part 2 where we will be looking at ways that corporates can battle cybercrime and what Barclays are doing behind the scenes. We’ll also touch on the new digital products and services that Barclays will be introducing for corporate clients over the coming 12 months.

Data-driven treasury - Part 2
Podcast featuring:
- Daniela (‘Dany’) Eder, Head of Payments and Cash Management for Barclays Europe
- Martin Runow, Global Head of Payments and Digital, Barclays Corporate Banking

Dany: Hello again. My name Dany Eder, Head of Payments and Cash Management for Europe. On Part 1 of our previous podcast, we spoke to Martin Runow, Global Head of Payments and Digital at Barclays Corporate Bank, about the importance of data for treasurers, the impact of Covid-19 and developments in new technologies. In Part 2,

Martin and I will be discussing the rise in cybercrime and what treasury teams and banking partners can do to counter that. We’ll also look at the new digital products and services that Barclays will be introducing for corporate clients over the coming 12 months.

Dany: There's more and more activity now in the Net, and there's more and more demand. And there’ll be more and more cybercrime as a result. A lot of banks, including ourselves, are investing heavily in our infrastructure and monitoring this. What would be some of your tips to give to our corporates when they're dealing with the cybercrime topic? Good question, right?

Martin: I think it's an interesting time, Dany. I mean, as more and more payments move into real time, there's obviously even higher risk of not getting your money back. If there's something gone wrong with an old-fashioned payment, a wire etc., there's still a recall option. That doesn't exist with a real-time payment. Once it's booked, it's booked. And on top of that, because of Covid and all these things, you see more and more volume going into electronic and away from cash and cheques.

But on electronic payments in general, my number one tip for everyone is: do also trust your gut. When we look at fraud vectors in corporate banking, there's always the notion that people are hacking systems etc. That's actually not usually how things work.

So the classic problems are people writing their PINs or their passwords on a dongle and they get stolen, basically. The classic problem is internal fraud. The classic problem we see a lot externally is the CEO impersonation, which still works; we still have clients, regularly being defrauded because someone sent you an email, and it was the CEO, and managed to get someone within the company to send out a payment, duly signed, hard for us to find as a company – as a bank – and/or vendor scams.

So someone manages to come in and manages to get the vendor management team within the corporate to change the IBAN to that of a fraudster.

So, from those two angles, as I said, there's trust your gut. How likely is it that your CEO is going to give you an email and ask you to send away a couple of million pounds and no one else in the company needs to know? So it's probably okay to hang up and call back on the office phone line of your actual CEO and see if that's actually true.

That's just one idea.

The other one is invoices: have good processes in place that prevent these things from happening. Just, you know, training, knowledge. We, for example, do a scam test: every now and then we get scam emails and we get to click on it and see that we’ve managed to find them, or get reminded that it was very stupid that we tried to open this important invoice ‘please open here’, right? So that's one thing.

The other thing is obviously on our end we're deploying more and more technology that uses clever algos and maybe some form of AI to look for patterns and where patterns break. So to give you the invoice fraud example, if one of our clients has been paying the same vendor regularly and all of a sudden there's a payment coming in that fits that pattern but has a different IBAN, these things get flagged up now; our system will find them, so we can go and alert the client and ask them. But it is obviously a race.

So as systems’ security prevention and detection systems get cleverer, so get the fraudsters. So be vigilant and make sure that you have a bit of an angle on these attack vectors yourself, and using common sense is also quite important.

Dany: I think one of the things that's important is, again, analysing my data in all of this and making sure that I have a full overview of my ecosystem. It's not only the forecasting and predicting and all the tools that are necessary to carry out my business, but also making sure that my environment is secure.

And I think one of the things to point out here that you just mentioned at the end, Martin, is the investment that we're making into this, into making sure that our customers have a safe and secure partner they’re banking with, that's not only innovative in some of the things that we're doing around API and improving the client’s experience – you mentioned self-service types of services; I think that's exactly what customers are looking for nowadays.

You want to spend the time with your relationship manager on the phone about really important business matters, and not around your infrastructure and the administrative part of your job. And I think having such a strong partner as Barclays on your side, you can be confident of doing so.

And again, managing your data lake, your access points, your connectivity that you have to your various banking partners, making sure they’re standardised and highly secure according to certain standards that obviously you have to set for your own industry. I think they’re some of the key messages that I'm hearing from you – as well as the training and awareness.

You mentioned some of the old-fashioned stuff, traditional fraud activity that, because we're thinking so ‘digital’ we're constantly thinking it's just about hacking, but it's still some of these traditional tools that are being used, so training and awareness are obviously still also key in all of this.

Martin: Exactly. A lot of the fraud these days is very clever social engineering and, I mean, these guys are professionals – this is an industry. This is very elaborate. And with social engineering people do get passwords and are able to capture accounts and build on it. So this is not the clichéd teenage hacker sitting in his parents’ home and hacking into machines or trying to do stuff. This is an industry, these are pros, and we have to protect ourselves from them with technology, but also training and awareness.

Dany: And making sure that we continue to – obviously – there’s regulations like GDPR and other regulations about data security that are localised and across the EU as well, throughout Europe that play into this as well. So it's a larger governance topic, I agree with you. It's also one that needs investment and, going back to data, how do I collect the data that is appropriate for my business case, for the innovative investment that I'm doing, while making sure that I keep my systems secure in the background?

Just to close off or maybe to get some insight to our listeners, what's the one innovative project that you're really excited about at the moment at Barclays, on our digital journey?

Martin: I don't think I can break it down to one – there's so many! But I'll give you a few. I have to, I'm sorry about that! But I'm quite excited about virtual accounts.

So what we're doing there, which is building a very cool virtual account solution - that’s still in a relatively early stage, but with a lot of progress.

We have been doing a lot of work around basically moving things bit by bit and business by business onto iPortal, our online tool for corporate clients – which does include things like much better UI/UX but also practical things like payment tracking, like the SWIFT gpi. And then of course there is API in general, which I find just super exciting as a topic, creating, for example, ‘make a faster payment’ as an API and rolling that out into our clients.

But in general at Barclays we are basically building a digital stack - it's a multi-year exercise - and at the same time we obviously have been opening branches and building capability across Europe. So it's actually super exciting to be able to support both with the proper digital toolkit.

Dany: I had a feeling you might say APIs as there’s so much going on in this space. And the virtual accounting is the next level of Treasury cash management, I think, what we're building here.

And having that kind of virtual overview of my cash management position, that's just so advantageous for corporates to utilise, especially with a large stack of currencies as well. And then I think also really important is obviously that cross-border, the multi-entity type of service – that part of the product is quite important as well. So I'm looking very much forward to your team giving us such a fine tool to use and to share with our clients going forward.

Do you think data is the key ‘golden’ tool going forward in every area of business?

Before, we always used it to collect and make a decision, and now we're adding speed, efficiency, transparency – I'm thinking of SWIFT gpi in this sense as well; there's so many developments going on in this space. You have to get a handle on your data lakes today, going forward, I think, as a treasurer if you're not doing it already.

Or you partner with us as a bank to help you with these self-service tools. What do you think going forward? Data is the golden key – not the way we process or the way we connect, but the way we use it to make our decisions?

Martin: So data is obviously interesting, and if you listen across the industry then there's this notion that data is the new oil – data is like gold – we just need to mine and it's there, and that's how the business models of the future will work.

But data is also sensitive, in the sense that a multi-banked corporate doesn't want one of their many banks to have all the data about them. So in that sense we're trying to do more around insights, and make sure that our clients will find it easier to make sense of the stuff that we give them. Or can we glean certain things from their data, the payments that run through us, etc.?

So we give them good quality dashboards etc., but also give them, maybe, an insight about their suppliers who are paying you later, or other things that you can build up.

I think to a large extent data is gold, but it's much more sensitive in the corporate and also for our clients in the financial institution space, and the notion that we as consumers always push that button ‘I accept. Yes, here is my soul, I accept all terms and conditions and as long as I can get this shiny new app you can basically own all of my life, that's fine.’ that I don't think applies as much to corporates.

They do want to know the terms and conditions – they want to keep ownership of their own data – and so these business models where I could use all of my clients’ data and then create something cool out of it and sell it back to all of them, I don't think that works that easily within the corporate segment. And I hope that's going to stay the case for a bit.

Dany: Interesting your discussion with the corporates and their response to this. I think it's a journey that we continue. And you're right, we have to be wise about what we select and what really adds value, because investment doesn't come for free and business cases are very difficult anywhere, in any industry.

So Martin, it's been such a pleasure spending time with you this afternoon talking about data and the importance of data, and sharing your insights. And I can only say I'm truly excited about the journey that Barclays is on in digital, but also in the global payment space as we do cover a broad array of clients and there are synergies to be gained from the various developments.

I can only encourage everyone to take up the dialogue with us and see how we can help, because I'm certain we can. Thanks for sharing your insights this afternoon. It's been a joy, thanks so much.

Martin: Thank you Dany, and I’m looking forward to maybe our next one. I enjoyed this. Bye

Dany: Bye bye.

Dany: Thank you for listening. That concludes our podcast for today. You can learn more about how we can support corporates across Europe online at Barclayscorporate.com/Europe