• The future of cash

January 2020

From the continued rollout of the second European payment services directive, emergence of various instant payment schemes, new payment instruments and devices, to the fast approaching November 2021 migration of payments of ISO 20022 messaging standard, there are plenty of innovations in the cash management space imminent. Flow speaks with Ole Matthiessen, Deutsche Bank’s Head of Cash Management on the future of cash management at the start of a new decade

Welcome to what promises to be not only an exciting year, but also the opening chapter of a demanding decade in the cash management, liquidity and foreign exchange space, where ‘tomorrow’s treasury’ transitions from theory into practice and becomes today’s opportunity.

The past 12 months has been a transformational time at Deutsche Bank, with Cash Management at the heart of the newly-structured Corporate Bank. We were very pleased to again be voted by our clients as the Best Bank for Cash and Liquidity Management in Europe in the annual Euromoney survey, and have recently won a very similar award from TMI – confirming our status as a leader in Europe and with many regional wins in countries around the world.

Several fundamentals from the last decade will be carried over; the importance of speed of execution, visibility of payments and positions and, importantly, the ability to manage risks associated with each.

Ole Matthiessen

Head Cash Management

When it comes to speed of execution, the next decade promises to make major strides in the realm of real-time banking and specifically the amplification of real-time payments, delivering continued go-live of schemes, infrastructure and solutions that advocate and support the immediate availability of funds and finality of settlement. Of course, real-time treasury overall is driven by an accelerated uptake when it comes to the overall undisputed shift towards non-cash based transactions worldwide; a shift propelled by the emergence of new digital payment and account alternatives, as well as the opening up of the banking landscape and the new entrants that this fosters.

This surge in global digital payments volumes points not only to a new openness of adoption but in addition, despite rising protectionism, an ever more connected global treasury eco-system. With further increasing global flows, the importance of cross currency payments will not only have to continue to lead to more focus, also some challenges will have to solved:

  • visibility of currency restrictions, formatting, documentation and cut-off times;
  • independence from traditional account structure to realise the most cost-effective cross-currency payment into and from local jurisdictions as well as clearing systems; and
  • the ability to control consistent execution across the globe.

This new decade will also finally see a move into the next stage of automated FX risk management beyond the integrated cross-currency payments. We can expect heavily increased connectivity to internal and market data, and unforeseen deployment of new age technology, such as machine learning ensuring smart risk management processes on contractual as well as planning-related FX risks.

At the same time, remaining close to macroeconomic trends, understanding complex drivers and market participants in FX and interpreting ever increasing central bank, regulatory and political impacts in the right way will remain a key component of differentiation among banks as well as for corporates.

Whether triggered by the need to centralise cross-currency payments, bring transparency and control to a decentralised treasury set-up or save costs by rationalising accounts, over the past decade, we’ve helped corporates from multinationals to SMEs in managing their cross-currency needs. As Deutsche Bank celebrates its 150th anniversary this year, it’s against this backdrop that our expertise in transactional FX will again prove its worth as the Twenties unfold.

I look forward to speaking with you and encourage you to join us on this exciting journey as cash management continues to evolve at pace.