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Key Factors Driving
Treasury Decisions in 2017

Survey Results

Earlier this year, Euromoney and J.P. Morgan conducted a survey of global corporate treasurers to find out what they see as the biggest challenges they currently face, and assess their expectations for 2017. The survey enjoyed an overwhelming response, with more than 230 respondents sharing their thoughts, from over 30 countries.


KEY TAKEAWAYS

  • Political risk and currency market volatility among the biggest concerns for treasurers.

  • Only one in five treasurers are well prepared for cyber attacks.

  • More than two thirds of treasurers plan to invest in new digital technology within the next three years, despite only a quarter believing digital technology will have a big impact on their business.

  • US rate rises expected to be gradual, but will still have a big impact on corporate treasury.

  • Nearly half of corporate treasurers have recently reviewed cash and liquidity management processes. The majority of the remainder plan to do so this year.

Political risk

There is a clear disconnect between the sentiment among investors, which has been relatively upbeat about the implications of Trump's deregulation and tax reform agenda, and among treasurers, who are feeling the effects of the political uncertainty.

  • Political risk and currency market volatility the biggest concerns for treasurers.
  • More than 45% of respondents feel pessimistic about the impact recent political developments will have on their businesses.
  • Around 20% of respondents expect new political forces to be advantageous. A similar number believe the positive and negative impacts are likely to cancel each other out.

The world has entered a period of political transition that is likely to have a significant implications for regulation, taxation, trade and immigration. What impact do you expect these changes to have on your business?


15% - Not Sure
20% Net positive
19% Net neutral
46% Net negative

Interest Rates

The survey shows rates remain a big concern among treasurers despite the widespread expectation that the Fed will continue to follow a very gradual path of hikes. Given the Fed funds rate has been set to less than 1% since 2008, it is little surprise that corporates are anxious about how comfortable life will be above that level.

  • More than 40% of respondents say rising rate will have a big impact on their business.
  • Half of respondents expect US rates to be 1%-1.25% by the end of this year.
  • More than 40% expect a steeper path of rates rises but less than 12% expect them to be higher than 1.5% by the end of this year.
  • Around 8% expect rates to stay the same or fall by the end of the year.

What do you expect the U.S interest rate to be at the end of 2017?


30% - 1.25% to 1.5%
50% - 1% to 1.25%
12% - Higher than 1.5%
9% - At or lower than 0.75%

Cash and liquidity management

With many expecting heightened currency market volatility to continue and perhaps even increase in 2017, there is a real focus on ensuring corporate treasurers have optimised their cash and liquidity management systems to ensure there is no disruption to operations.

  • More than 45% of respondents said they had already reviewed their cash and liquidity management processes.
  • A quarter of respondents expect to review cash and liquidity management processes in 1H, with another 5% planning to do it in 2H.
  • One in five see no reason to review their cash or liquidity management processes at all.

Has your treasury taken steps to review cash and liquidity management practices to account for continued currency market volatility?


 

Digital, cyber security and big data

The global economy is going through a digital revolution that has profound implications for all businesses, both positive and negative. New systems will improve how companies interact with their customers and manage internal operations but the increasing reliance on digital channels is also leaving them vulnerable to new kinds of risks.

  • Only one in five respondents feel their business is well prepared to deal with cyber attacks.
  • Nearly one in four admit they have a considerable amount of work to do to prepare their cybersecurity strategy.
  • More than two thirds plan to invest in new digital technology within the next three years despite only a quarter believing digital technology will have a big impact on their business. This may suggest corporates see digital technology as something they need to invest in to support their customers; what they should consider is the working capital benefits/efficiencies it can also bring to their organisations.
  • Banks and third-party technology vendors are the biggest beneficiaries of corporate digital investment. Less than 10% of respondents are looking to develop digital platforms in-house.
  • Under one in five respondents admit they have no plans to invest in digital technology despite having made no such investment in the last two years.
  • Treasurers believe big data can help them better understand their customers and improve cash forecasting.
  • More than 30% of respondents feel a better understanding of their customers will be the biggest benefit to be gained from advances in big data. A fraction fewer predict cash forecasting will be the biggest benefit.


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To what extent is your treasury prepared to respond to cyber attacks?


24%- VERY LITTLE – WE HAVE
CONSIDERABLE WORK TO DO IN THIS AREA

47%- SOMEWHAT – WE WOULD
BENEFIT FROM BEING MORE PREPARED

21%- FULLY – WE UNDERSTAND
THE RISK AND HAVE APPROPRIATE MEASURES IN PLACE

9%- NOT AT ALL – WE ARE NOT
AT RISK/OTHER AREAS OF OUR ORGANIZATION ARE HANDLING CYBER SECURITY





 



Gaining a competitive edge with big data


The survey revealed that 45% of respondents expect big data to have the greatest impact in the area of cash management (forecasting and visibility) with another 30% expecting that big data will have the most impact by providing greater insights into customer behaviour. Treasurers should act by forging a greater partnership with the business in order to drive sales. Here are some top tips to consider:

number 1 ice blue ts

Look outside the department
treasurers should partner first with business stakeholders to determine which data sets may prove most useful in driving sales or creating efficiencies. For example, treasurers may be able to improve cash flow forecasting by profiling data of web impressions gleaned from the sales/marketing team. Then, they should partner with their bank, who may be able to help extract suitable data from cash management, digital payment processes and transaction histories.

number 2 moss green ts

Practical applications
better cash flow forecasting in real time is now being made possible by “track and trace” solutions and improvements in the timeliness of payments. Elsewhere, mining card data obtained from the business can be married with payment data to surface insights that may drive new customer propositions and, ultimately, revenue.

number 3 purple ts

Don’t end up data rich, insight poor
there is a danger of over relying on data for data’s sake. Data processing should help achieve specific treasury objectives: maximising shareholder value, optimising working capital efficiency, facilitating liquidity, and managing currency and economic risks.

In which areas of treasury do you expect big data to have the greatest impact?


 



Bank relationships

Corporate treasurers want banks to show a greater level of commitment to their clients despite concerns that regulations like Basel III may make it harder for banks to serve their clients.

  • Half of treasurers are calling for improvements to their banks' digital channels and internet banking offerings.
  • Respondents are almost evenly split on where they want to see better service from banks: between a quarter and a third want to see improvements to all of the following: KYC and onboarding, account opening, product deployment, client service, and transaction accuracy and speed.
  • More than 56% of respondents intend to conduct a formal review of their treasury services banking suppliers this year.
  • Another 12% plan to review their treasury services banking suppliers in 2018.
  • Nearly a third say they have no plans to review their banking supplier relationships.

Do you intend to conduct a formal review of your treasury services banking supplier relationships in the next 12 months?


 

Learn More

To learn more, please contact your J.P. Morgan representative.

 

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