Real-Time Treasury Helps CFOs Gird for Black Swans | #microsoft | #hacking | #cybersecurity

Two decades at a trillion-dollar tech juggernaut provides a ringside seat to just how important liquidity and risk management really is when grappling with seismic, global events.

Tahreem Kampton, who held the position of Microsoft treasurer until this month after 10 years in that department, told PYMNTS’ Karen Webster that the role of the corporate treasurer has been tested and transformed through the years, with one undercurrent running through it all:

“The Black Swan events keep popping up,” he told Webster.

His own tenure at Microsoft stretches back to just before Y2K — which caused a panic in various C-suites that may seem quaint when viewed through the rear-view mirror. Then came the dot-com crash, and just a few years later, the housing bubble, the financial crisis and ensuing Great Recession. (We wouldn’t say Kampton’s time at Microsoft was … boring.)

Fast forward a bit, and there are a myriad of pressures confronting treasurers today: A pandemic that’s stretched out across three years, inflation that’s proved to be anything but transitory, and geopolitics snarling supply chains.

See also: Voices of the CFOs: 4 Tools and Tactics for Fighting off Inflation

Planning and trying to stay three steps ahead of what lies ahead — whatever it may be — is, well, everything for the chief financial officer (CFO) and the treasury team. Real-time treasury functions and insight are critical in an age where the cost of capital is increasing.

The pressures are mounting on finance teams to prove adroit with their balance sheets, though Kampton noted that many firms are in relatively good shape. They tapped capital markets when interest rates were low, and were prudent about debt.

But volatility has become a hallmark of quantitative tightening by the Federal Reserve, and there’s been a readjustment in the fixed income markets that few people expected.

The Microsoft Example 

Part of staying on top of, and ahead of, looming risk has involved a bit of cultural shift. In the wake of the pandemic, pivoting toward cross-departmental communications has been a life-saver for many companies, Microsoft included — especially during the months when the pandemic hit hardest.

“We had originally thought that ‘this will be short term, and we’ll get back to the office,’” said Kampton, “and obviously that didn’t happen.”

There was at least some advantage in the fact that cloud-based technologies, including Microsoft Azure and Microsoft Teams, could harness data across the globe and give insight into liquidity and balance sheet positioning.

For Microsoft, one key way to grapple with the impact of the pandemic was to hold daily meetings across the whole organization to keep everyone informed and collaborating in real time — with a focus on addressing pockets of vulnerability.

That collaborative mindset has taken root in many firms and is here to stay, he said. As the pandemic fades a bit, there’s an opportunity to tweak business models, broaden global reach and tap new customer bases.

The treasury department is increasingly being pulled into those discussions about new strategic directions, Kampton noted, and needs to be involved in those discussions. After all, a change in tax laws or regulations can have an impact on onshore/offshore cash positions, which in turn impacts the capital available to deploy in pursuit of those new go-to-market strategies.

The Technology

Kampton said technology, and the data collected and analyzed by that tech, is critical in juggling it all day to day — integrating multiple cash accounts, vendor insight and FX risk, in real time.

He offered up the example of the ongoing Russia-Ukraine war, which brought financial services to a standstill for a period of time. Having real-time data on hand and a game plan (along with some tech-driven automation) allowed Microsoft to ensure that employees in the region could be paid without interruption.

Related: Smart Tech Helps Treasurers Manage Risk, Drive Strategic Growth

Banks and FinTechs Step Up  

Banks, he said, are stepping up to the plate in an effort to deliver real-time treasury functionality to corporate clients. The financial institutions (FIs) are making investments in tech upgrades to deliver those services.

That is no easy task, given the fact that many of those banks have been cobbled together by acquisitions, much of their tech infrastructure is outdated and regulatory requirements can be onerous. The cloud and partnerships with digitally-native FinTechs, and the availability of application programming interfaces (APIs), can help speed that tech-upgrade journey, he said.

“It’s a journey,” he said of the data flow, but with APIs in the mix, “it’s a simple and accurate journey that means you don’t have to reconcile data between systems.”

Looking ahead, he said that real-time treasury will become top of mind for banks as a focus of technological priority, and especially as enterprise clients demand those services from their providers. The banks that will be ready for that demand need to start developing APIs that help improve back-end functions (including their own).

From his current vantage point as an advisor to FinLync, Kampton said real-time treasury will be a useful tool as CFOs gird for the next Black Swan.

As Kampton told Webster, “You plan for the worst and hope for the best. Trying to have a game plan for everything is hard, of course. But it’s important.”



About: PYMNTS’ survey of 2,094 consumers for The Tailored Shopping Experience report, a collaboration with Elastic Path, shows where merchants are getting it right and where they need to up their game to deliver a customized shopping experience.

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