The following interview with George Zinn, Corporate Vice President and Treasurer at Microsoft, is an edited excerpt from Journeys to Treasury, a unique collaboration between BNP Paribas, PricewaterhouseCoopers (PwC), SAP, and the European Association of Corporate Treasurers (EACT).*
Digital transformation presents a number of opportunities for the treasury to become more efficient, optimized, and innovative. It enables treasurers to explore ways to deliver greater value to the business, including more effective management of risk.
Microsoft, at the vanguard of the digital transformation journey and as early adopters of Microsoft Azure, started the process around five years ago, with a move from on-premises technology to the cloud.
How did your digital transformation begin, and how has it developed?
Our motivation was simple: Like every treasury, our IT budget was stretched, and we needed to find ways to save money. The results of our transition to the cloud were remarkable, with cost savings of 20 percent. One of the reasons for this level of savings was capacity planning. By using the cloud, our peak system usage could be scaled to our needs at different times of the year. This was significantly more cost-effective than maintaining permanent excess capacity.
The shift revealed some interesting and unanticipated opportunities. By bringing all our data into the Microsoft Azure data lake, we now have far easier access to it. We’ve eliminated problems of trust and consistency, and that’s enabled us to perform sophisticated data analytics. No longer does the team have to spend most of their time collecting and validating data; they can now spend time on analysis and making better decisions.
How has this changed the skills you need in treasury?
Data analytics and the ability to parse data quickly and effectively has become integral. To prepare for this shift, we spent time training our team and exploring new data opportunities. This was a catalyst for many to develop their skills and shift their career trajectory to include data science.
Using services such as Azure ML12 Studio allows us to use historical data for predictive analytics, building data algorithms for cash flow forecasting. We have produced more-accurate forecasts, therefore managing our liquidity and risk more effectively, which reduces the pressure on business units and the treasury team.
How do you offer value in practice?
Now that we have moved to the cloud, we have rewritten some of our applications to create a suite of SaaS services for treasury. Treasury solutions are now accessible through a modern browser without the need for any dedicated infrastructure or interface.
One of the first solutions we focused on was bank account management, which is often a challenge for treasurers of multinational businesses. Using this application, we have fully digitized our bank account management process internally using services like Azure Active Directory and supported with a full audit trail.
How do you see the use of APIs developing in treasury?
Banks are at different levels of maturity in their use of APIs, but we expect the use of APIs to become the norm, not only for bank account management but also for a wide range of other purposes. For Microsoft, the value proposition for APIs is currently limited to specific business tasks, but for many other treasuries, their use could become transformational.
What are the next steps in your digitization journey?
We are experimenting with the Azure bot framework in our credit and collections team. With around 45,000 sellers that invoice customers, we see a large number of queries. Previously, this created significant resource constraints for our credit and collections team, but with “Edward” the chatbot, queries can be resolved immediately. We are also starting to use predictive analytics using Azure ML to identify which invoices are likely to be paid late.
What challenges have proved most difficult to resolve through digitization?
KYC and AML compliance are major issues for multinational companies. Banks cannot share information with each other, leading to very high resourcing overheads to provide KYC data. There have been some efforts to automate and streamline the process, but the success of these initiatives has been limited.
The success of KYC solutions will be driven not necessarily by technology but by the degree of industry collaboration and consensus that can be achieved. This has been a critical element in our digitization journey so far: Technology is an enabler, but the driver of success is the enhancement of human interaction and the quality of experience.
One of the things that has surprised us most is the degree to which our digitization journey has improved the quality of the day-to-day experience of our staff. This has led to greater enthusiasm for future change, a positive team culture, and a focus on value-added activities, therefore creating benefits for the business as a whole.
* Original article can be found here.
Bank of the West is part of the BNP Paribas group of companies. Facts and opinions expressed herein are based on a variety of sources which the author believes to be reliable, however we make no representation as to the accuracy and completeness of such information, and Bank of the West does not accept any liability in this respect. The discussions and information contained in this document are the opinions of the author as of publication date and should not be construed or used as a specific recommendation. This material and its content are for information and discussion purposes only.