Navigating a Treasury 4.0 World Corporates Guidebook 2 Navigating Treasury 4.0 World - Corporates Guidebook 3

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Navigating a Treasury 4.0 World Corporates Guidebook 2 Navigating Treasury 4.0 World - Corporates Guidebook 3 Navigating a Treasury 4.0 World Corporates Guidebook 2 Navigating Treasury 4.0 World - Corporates Guidebook 3 Contents Foreword 1. Foreword 3 Lance Kawaguchi, Managing Director and Global Head – 2. Industry 4.0: A Treasury Revolution 4 Corporates, Global Liquidity and Cash Management, HSBC 3. The Evolving World of Treasury and Corporate Supply Chain 14 In a time where corporates are becoming increasingly In the Americas and Europe, treasuries are exploring the use more global and the treasury efficiency agenda continues, of Robotic Process Automation (RPA) and AI as a way to gain 4. Blazing a transformation trail: Saudi Arabia’s new digital frontier 20 it is vital to keep track of and understand how business efficiency. RPA is seen as a tool to raise the productivity and landscapes are evolving across the world. It is becoming an profile of the treasury team and contrary to popular belief, imperative for corporate treasurers to keep up to date with treasurers agree that the implementation of RPA is quick when 5. Infographic 26 emerging and accelerating trends across different regions, compared to a full scale Treasury Management System (TMS). countries and territories – whether its economic, political or In addition, connectivity in both regions’ banking ecosystems, technological. The Fourth Industrial Revolution, or Industry coupled with Open Banking led API innovations, allows mobile 6. Next Generation Treasury Management: From Industry 4.0 to Treasury 4.0 28 4.0, is transforming the way business is done on a global cash management apps to become richer in terms scale. Through the use of existing and emerging technologies, of functionality. Industry 4.0 is combining the digital and physical spheres, converging the power of humans and machines. It’s important Similar tones are echoed in Asia, with treasurers across 7. The Robots are Coming: Treasury Evolution in China 44 to understand that Industry 4.0 will have impacts far beyond financial hubs, such as Shanghai and Singapore agreeing the production line – changing the entire business landscape that technologies such as RPA and AI are enabling them to and redesigning humans’ role within it. This applies to treasury be more efficient. Corporates with treasury operations in Asia 8. Supercharging Treasury with Industry 4.0 Technology 54 are leveraging cloud technology to build TMS fit for the future, too – Treasury 4.0 is coming. whilst digitisation is also revolutionising the ways customers In this series of our Great Expectations: From Industry 4.0 to engage with corporates – both online through e-Commerce 9. Turning up the Heat: Treasury Transformation in Mexico 60 Treasury 4.0 corporates guidebook, we explore the treasurer’s platforms and in person in physical stores. new world from a geographical perspective – covering the Americas, Europe and Asia, providing insights into the changes As the rapid digitisation of businesses continues, treasurers 10. Robotic Treasury: Seizing Digital Transformation in ASEAN 66 that we believe will have the biggest impact on the treasury must evolve and adapt to new ways of working or risk holding landscape. The content draws on the knowledge and expertise back other areas of the business. There is a growing belief that of some of HSBC’s most experienced transaction banking hiring the right talent as well as up skilling existing treasury 11. 5 reasons why Singapore is a Treasury 4.0 Hotspot 74 professionals, industry experts and practioners, as well as teams is a make or break factor in the deployment of Treasury insights gained through working with our broad range 4.0 technologies. However it is not all about growth - increased of corporate clients to address these very challenges. digitisation and automation requires additional focus on 12. Houston, We Have A Solution: Cheniere Flips the Treasury Script 80 A common theme across all regions is the evolution of cybersecurity too, which is an area to which corporations are paying close attention. Brook Ballard, Treasury Manager, Cheniere Energy Inc. ‘buzzwords’, such as artificial intelligence (AI), Internet of Things (IoT), and Machine Learning to reality, with treasurers Collectively, these materials bring together our insights at a 13. Portrait of a Modern Treasury: Digitisation meets Sustainability at Pernod Ricard India 86 looking for continuously more innovative ways to incorporate these technologies to make their operations similar, faster, lean time when treasurers are searching for more in depth and Rajesh Mishra, Chief Financial Officer, Pernod Ricard India / Sunil Duggal, Head of Corporate Affairs, Pernod Ricard India and intelligent. practical information about the possibilities open to them. We hope that this guidebook will open up new ideas and help 14. Streamlining tube fare repayments in London 92 you to make more informed decisions around your treasury Najam Israr, Head of Delivery Enhancement, Transport for London operations, supporting your organisation’s strategic agenda. 15. Zuellig Pharma: Transforming Receivables with Virtual Accounts and Robotic Process Automation 96 Mirko Dierks, Chief Financial Officer, Zuellig Pharma Malaysia For more information on how HSBC 16. Getting Real about Diversity & Inclusion in Treasury 102 can help meet your needs please contact your local HSBC representative or visit gbm.hsbc.com 4 Navigating Treasury 4.0 World - Corporates Guidebook 5 Industry 4.0: A Treasury Revolution Contributors Jeroen Bakhuizen, Global Co-Head of International Subsidiary Banking, HSBC Sandeep Uppal, Global Co-Head of International Subsidiary Banking, HSBC Richard Adams, CFO of global creative agency Imagination The current trend of increasing automation and data exchange in the commercial world, often referred to as Industry 4.0, promises numerous productivity gains1. However, while Industry 4.0 may be taking off in the commercial side of the business, many corporations have yet to emulate it in their treasury operations. This is important if the corporation is to achieve end to end gains across the entire enterprise. However, as Jeroen Bakhuizen and Sandeep Uppal, Global Co- Heads of International Subsidiary Banking and Lance Kawaguchi, Managing Director, Global Head – Corporates, Global Liquidity and Cash Management at HSBC explain, Treasury 4.0 is readily achievable if treasury centralises in a manner that will provide the interconnected visibility and free flow of data already emerging in Industry 4.0. 1 https://www.sage.com/en-us/blog/how-industry-4-0-will-boost-your-manufacturing-productivity/ 6 Navigating Treasury 4.0 World - Corporates Guidebook 7 The pressure to transition to Treasury 4.0 comprises multiple Apart from reducing administrative costs, centralisation also Apart from potentially improving investment returns and Treasury centralisation: why? discrete drivers. One of these is the level of global interest serves to reduce financial costs. The key element here is reducing the need for externally funded working capital, rates driving cost control. According to PwC’s 2018 “Treasury visibility of corporate cash. In a decentralised environment, centralisation offers a range of other benefits. Hedging and function of the future” report, “a prolonged low interest rate global treasury has imperfect visibility of cash and may even management of FX exposure can be significantly improved environment means cost containment is one of the keys be unaware of the existence of multiple local corporate bank with centralised visibility, thereby reducing both risks and costs. to survival”2. accounts. As a result, sub-standard investment returns and/ Similar benefits apply to the administration of bank accounts or unnecessary borrowing costs arise - a problem that can because centralisation also allows the number of bank This has not gone unnoticed in many boardrooms, where apply across all sizes of enterprise from large multinationals accounts to be reduced, thus saving on maintenance charges CFOs (and by implication also treasurers) are now expected to downwards. However, once cash management is properly but also reducing the number of personnel sending/authorising deliver increasing efficiencies. There are numerous routes to centralised, treasury has both visibility and control of corporate payments and thereby also reducing the risk of fraud and this goal, but centralisation underpins many of them. A case in cash globally, which facilitates far better decision making cyber-crime. Not only can more rigorous controls be applied point is the move to consolidate financial processes in shared and the efficient application of cash to where it can serve the to the payment process in a centralised environment, but it service centres (SSCs), rather than having replication of those optimal purpose. also becomes easier to test and report on the effectiveness of processes across multiple local offices. Furthermore, these those controls. centralised processes also need to be automated wherever In doing so, treasuries are also adding a degree of future possible, to reduce manual activity and thereby also costs proofing; as new technologies/products arise they need only Centralisation enables the adoption of standardised payment and the potential for operational errors. Personnel freed from be implemented once at a central level. Furthermore, if all data messages, leading to more efficient reconciliation and repetitive, low value, high volume tasks can then be redeployed (such as cash information) is already centralised, the maximum increased straight-through-processing
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