Recap and Insights from AFP 2022

Announcer  00:04

Welcome to the Treasury Update Podcast presented by Strategic Treasurer, your source for interesting treasury news, analysis, and insights in your car, at the gym, or wherever you decide to tune in.

Paul Galloway  00:18

Welcome to the Treasury Update Podcast. This is Paul Galloway. I’m joined here by Craig Jeffery, managing partner and founder of Strategic Treasurer. Live at the AFP 2022. Craig, I’d like to talk today about a few things that we’ve noticed or seen here at AFP. I’d like to start out with trends. What is the biggest theme that you’re seeing at this year’s AFP?

Craig Jeffery  00:44

We’re in this room that we’ve rented from AFP, we’ve been hosting a number of events, we’re looking out over the exhibit hall and area where they serve lunch. And it’s it’s really good to be back. I think the the biggest thing, I think, is one of energy. People are excited to see one another, to learn and to be back together. That is, that’s encouraging a lot of ways. You know, I think last year’s conference was it met the needs, but it was much smaller than we’ve normally seen. And so this is at least three quarters of the way back from there to probably the peak of the AFP, the pre registrations surpassed final registrations, you know, this year is pre registrations surpassed final registration. I know we’re north of 5000. I don’t know if we’ve hit 5500 or not, but that that provides a significant amount of energy. You know, some of the things that we’ve heard a lot in our discussions have to do with a broader process, you end to end, in addition to discussions about risk, discussions about payments and technology, the end to end view, whether it’s about payments or risk or structure or services, how do we make sure that processes methodologies are are structured properly. So that end to end view is one the other has to do with making sure we’re setting up our technology to handle changes in infrastructure at companies to handle changes in what’s coming down the road? What’s available now what’s coming down the road to make sure we’re not creating situations where our technology becomes obsolete. That’s what we’re hearing from treasures, Assistant treasures, directors, people are finding things out, they want to make sure that they’re positioned well. So excitement, end to end view and technology architecture. And there’s, there’s there’s a lot of learning going on, which is, which is always ideal for educational conference like this one.

Paul Galloway  02:34

And no doubt, Craig, I can definitely tell you, I’ve seen some of the same things, especially around the excitement here. People are engaging people in ways that they haven’t in some time. And so that’s really encouraging. The numbers are definitely up. So in terms of AFP itself, are they doing a good job and delivering relevant content to its members?

Craig Jeffery  02:59

Yeah, I think I’ll address that, from the conference perspective, you know, the discussions around content. This is what we hear, it’s like, there was two or three sessions I really wanted to go to, but I can only go to one. And it’s that type of situation is there’s an abundance of really good content, there’s just a time limitation. That’s much better than I didn’t see anything. The last two sessions I’m or I’m only going there for recertification credits. That idea of you know, people recertifying if they’re CTPs, they’re gaining new knowledge and experience this is that’s that’s quite good. I think they’re doing a really good job. I think they’ve they’ve dug in and COVID is really difficult for the travel industry and events. You know, a firm, an organization like AFP to make, make it through those type of items. Everyone’s been challenged. I think he’s done a really good job being particularly this year, making it through that. And it seems like they’re back. They’re strong. I think they’re doing a good job. And I think that has to change over time. So that’s, that’s everyone’s challenge to see how that works. We love this event forum, we schedule a lot of events before and after, to provide even different methods of sharing content and leveraging the community here. So it’s, it’s great. So hats off to Jim Cates and the rest of the crew for doing this.

Paul Galloway  04:16

And no doubt, Craig, I think what I’ve seen in the FP over the past couple of years is people historically have been, hey, I’m going to recertify I’m going to get my CPS cover all my bases, whether it’s CTP, CPA FP and a, whatever it is the certification that you’re looking for, they’re not talking about them, or they’re going, man, I’ve got 1234 different things. I’m gonna go see they’re all at the same time. I can’t see them all at once. I gotta pick one. And I also get a win for the accreditation as well. So it’s like a win win. Delivering that kind of content, I think is really important.

Craig Jeffery  04:54

Yeah, and it’s and so that’s the formally delivered content that that exists through all of the educational Session. But think of all the conversations we’ve had with with our clients prospects, FinTech providers, banks, just really good conversations. There’s a massive amount of learning that occurs in the through those types of situations that you don’t get, I mean, you can get, you get your credits and things from going to webinars are local life events, and you should do those things. But there’s something for this large gathering of people where you can connect with so many people and have these side conversations that add something to your your thinking change how you might approach something, trigger a trigger response, or an initiative at your firm. Those are all things that had, how do you put those into play, when you say, Come to come to an event where people are talking about this stuff? It’s the values that when you come there, you’re like, Yeah, this is what we’ve been missing for a couple of years. So just not having a large gathering, like when we had virtual, virtual is you can only go so far with virtual, the physical is it’s demonstrably superior in a number of ways. Yes, you have to travel, that’s a that’s the challenge, you have to physically move to get somewhere. And certainly, you’ll learn how to put a lot more steps on here than clicking from one room to another.

Paul Galloway  06:10

So I’d like to move to practitioners, it’s good to see a fair number of practitioners here last year in DC, it seemed like there was definitely more providers and practitioners. And I see the flip side this year more practitioners are around are coming out that talking to folks. It’s a real good sign. So what are clients or prospective clients telling you in terms of what their needs are?

Craig Jeffery  06:34

Yes, I would just expand one of the comments I said earlier about, you know, this concept of of an end to end view is something we’re hearing regularly. How do I make it you know, because every time there’s not an end to end view, there’s a broken disruptive process, every will we call defects, every defect has massive costs, costs and time. And that tends to be one of the most expensive, most valuable assets of an organization that also prohibits and inhibits growth and scaling. But it also has a financial impact in terms of cash flow. So that’s a that’s a key key item. But a lot of technology conversations are, we’re in transition, and we’re in a heavy transition of technology. What do I need to do? How do I need to think about all of my actions that move me towards what the future state will be? What the most modern technology is, so that I’m not having to rebuild in three, five and 10 years, there’s always going to be some of that. But if they’re thinking about that, in terms of payments, in terms of managing and leveraging this explosion of data, it’s interesting to see, you know, you’re talking to people and they’re like, now I get I gotta connect to all my banks, I need to pull in data from 12 different sources. So I need to leverage, you know, big data, databases, the providers, technology, they’re thinking farther ahead, I think everything is every group seems to be bringing the technology team with the Treasury team. They’re not necessarily that they’re all embedded, some are embedded, some have reporting relationships, they’re bringing the full team together. And they’re all learning that you know about the business and about the technology together, which is, which is really, really exceptional has always been needful, but has has been much rarer in the past than it is this time.

Paul Galloway  08:25

That’s a great comment, because I’ve seen that as well. And that’s definitely something that is a new trend. So when we think about past, what has differed this time, or where we’re at today versus what you’ve seen in the past, he has gave a great example. It is embedded or part of the team when it comes here to AFP, that’s relatively new. It’s great to see because this is a technology conference when you’re looking at it then the day. That’s what a lot of the providers and vendors are selling or providing to the members here at the AFP. What are some of those differences in the nuances that you’re seeing this year, compared to past?

Craig Jeffery  09:07

There’s a number of new technology providers, we expect that every year there’s going to be new technology providers that are either they’ve gotten to the point where they’re past the quiet period, they’re now they now have a booth that they can show and explain what they’re doing. And we see that, again, you walk on the floor. The one challenge I see, there’s not a lot of those, there’s there’s some and they’re significant. But when I go back pre COVID, it seemed to me that there was 80 or 100 of these booths, these 10 by 10 booths, largely of you know, relatively new technology providers who are making a foray getting in front of people in COVID. There was like almost none, it’s come back a bit there. That’s an area I want to see expand as well that there, you know, another 50 or so of these type of tech firms come in and make their case on the floor and share what’s going on. I think to your point about out, how is that different from the past? That’s one area that I think COVID has, has harmed just like a harmless we’re not getting together. Now we’re getting together. I’m really hoping that that bounces back far more fully, that’s less than half the way back from, like the population, like you said, they were more at parity with practitioners, and everybody was trying to sell to practitioners versus, you know, three people chasing one or two chasing one. Now, it’s, it’s much, it’s much, much easier that that’s part of part of the answer to your question, but what else do they tell them about our needs, they’re valuing their bank relationships heavily. I still hear them talking other banks to get massive amounts of advice. And some are doing really good good at that. And some bankers are repeating what they said five years and 10 years ago, and not updating. So most of them are, most of them are keeping up on on data and trends. Some are not. And it seems like the corporate treasurers ATS are quickly discerning who’s who’s adding significant value and who’s not really every, every banker, every treasury, sales executive, needs to be adding value, they talked to so many people, they need to do that. And that’s not being consistent. That’s a key relationship differentiator.

Paul Galloway  11:14

For those banks that aren’t paying attention, they’re gonna need to pay attention soon, or they’re gonna get left behind. Thinking about some of these key areas that practitioners are thinking of, what are you advising to your existing clients or prospective clients in terms of what they should focus on?

Craig Jeffery  11:33

That’s a deep question, right? What? What are the key areas that that we should be telling people to focus on? Well, it will sound like a little bit of a repeat on the technology front, it’s, you have to stay current with what’s going on, you don’t have to be a master of all the new technology, of all the new regulations, you know, of everything else that’s coming down the pike from a structural perspective, but you need to be aware of those things. So if you think of concentric circles, there’s, there’s items and activities that are common and standard that exists today, that everyone has to know there’s the items that are going to impact you. They’re starting to impact impact organizations, they’re going to impact you, as a regulation is coming in shortly about foreign bank account reporting. Those things are going to impact organizations in the very near term. Most companies, most Treasury professionals are really focused on those because it’s it’s immediate, it’s extensive, but the the broader identification zone of what’s coming down the pike, what’s happening with technology, what are banks doing with structures, they offer services that they provide technology providers, you know, are doing many, many different things, staying alert to what’s going on the circle, evaluation identification zone has to extend out quite a bit more. And so in smaller organizations, that’s difficult if you have one or two people, how do you stay current on that? Well, you’ve got to go to the exhibit hall, you have to talk with people who are smart. So bankers, consultants are smart, because they see a lot and talk to a lot of people, you want to take advantage of those people who have a network of ideas in their heads. Because they’re continual learners, or they’re continual talkers and engagers. In the in that space, that’s a key activity for practitioners make sure you’re doing that. And some of the some of the phrases divide and conquer, divide and conquer, to companies that we’re doing work with abroad. They’re examples of they bring their IT team, multiple Treasury people, they’re looking at what they want to learn as an organization. And they’re dividing themselves up because we’re like, there’s three sessions, we need to know about this. They go out there, and they don’t just keep it in their heads. They debrief and focus together. So that’s the kind of behavior that is team oriented behavior that’s institutional, knowledge oriented, that anybody who has that, that luxury of being able to bring staff can and should do.

Paul Galloway  13:59

It’s really encouraging to see organizations doing that, especially ones that we have relationships with, really says that they’re looking to do the right things they’re looking to learn as they go along. Because there’s a certain section of things that they just don’t know, because they’ve been doing something for the same way for two decades. It’s a common theme for some organizations out there. When you see your clients coming to an event like this, and they’re bringing the team and they’re dividing and conquering. That’s just encouragement for us, helps us or positions us, to help them to be more successful in what they’re trying to accomplish. Because they get more by they get more knowledge. They understand the process better. They adopt a quicker, I just think that’s a huge win for practitioners. So as we come off practitioners, I’d like to talk about the flip side, the provider centers, we have a number of providers here. He just talked down on the floor back here. There’s quite a few vendors this year. That’s great to see. Last year it was was pretty thin this year better attended on the provider side as well. So it’s great to see that you see any changes, and what providers need in order to succeed in the treasury arena?

Craig Jeffery  15:25

Yeah, I’m not I’m not sure there’s a lot of changes in there, it’s probably more of the same on the continuing path, you see a number of vendors who are here who are well committed, they bring a large team they’ve prepared, they’re not just entertaining. They’re educating, you know, their current clientele, the current customers, as well, as they’re reaching out to to prospects. They’re educating, they’re building awareness, they’re helping make those connections. That’s, that’s one general thing that is, is vital. So they’re committed to the industry. And they’re committed to being here where most of these conversations are taking place. That’s what that’s one aspect. I think the other is, if they’re service providers, technology providers, they need to not just have here’s our our roadmap of feature functionality, that has to be done. That should be it’s not quite table stakes. But it should be table stakes, where that’s really clear what they’re doing Functionality wise. But there also has to be more explanation of where they’re going with their roadmap, technologically, what technology is changing how that impact what they’re doing? How are they addressing scalability, the power of compute, natural language search, all of those items that are impacting every other area of tech, that has to be part of the discussion. So we see that the risk providers, the FX, entities, the treasury management systems, the payment hubs, that treasure aggregators, and we certainly see that with the move in ERP providers, to the Cloud, Oracle, cloud SAP as for HANA, the movement to more or less cloud native type of technology is shifting, and so that those discussions need to need to happen. How do we continue to as a vendor, as a provider? How do we continue to make our offering to grow in value each month, each quarter each year, as opposed to is plateauing and is declining? It has to be an asset that increases in value. There needs to be more discussion and explanation of how that how that works. The other thing that I’d say is, there’s this, there’s this balance between explaining what needs to be done today, next to the real practical matters of making things work. And this vision of the future, you know, you can’t explain 30 years out in the future, but there needs to be some link to the five to seven year horizon. What are you doing thinking and planning. And then then there has to be the practical side, because people can’t say, I’m gonna go with you, because of what you’ve promised to do in five or 10 years. There’s this, the practical nature of what’s immediately out there. But also this eye to the future, just like I was talking about the concentric circles of what’s happening now. And what’s what’s on the forefront. vendors need to do that same type of thing. And they need to explain why and have those discussions with with their clients and prospects.

Paul Galloway  18:17

Yeah, that’s really spot on, Craig. So when we think about loop providers, do you see consolidation at tech firms or a faster pace and new entrants over the next five years?

Craig Jeffery  18:30

I certainly think on the private equity side, there’s a huge amount of liquidity sloshing around it needs to be put to use and they will put it to use, but they’re careful. I mean, they review organizations that look at growth trends, where where people spend their they’re looking to find where they can put together companies that have particular synergies or will have outsized growth, or they can they can leverage their expertise to their ability to expand the market, upscale their their sales process, because there’s that liquidity, because these are, there’s a number of areas and Treasury and finance that are growing far faster than the economy has been growing, and probably certainly faster than the economy is expected to grow in 2023. I think there’s going to be more consolidation I think that will outstrip the number of companies that come be new entrants, because there’s so much cash right now. I think it’d be fairly even. There’s always this onslaught of new entrants, but I think I’m gonna give it a little edge to the, to the acquisition spree for the for the very short term.

Paul Galloway  19:39

Yeah. Okay. Seems that way, at least in the near term. So these are great comments. The next thing I wanted to move on, which seems to be a theme here at AFP, is payments. We talked about trends earlier. This year’s AFP as a number of presentations on payments seems to be a focus Some payments. So this is clearly taking the spotlight, what do you think is driving this?

Craig Jeffery  20:05

There’s so much changed in payments. Now, I think it’s easy to say everything, it’s there’s never been more change in x area than in the past. And that’s that may be true for most areas, payments has payments hasn’t changed tremendously, you know, compared to some other areas for a long time, even the US there’s new payment rails hadn’t come out and you know, 30, 40 years, now there’s new payment rails, multiple new payment rails coming in the US in different areas of Europe, really across the globe, that’s changing a lot because it’s, it’s brand new, it’s not just a different window or a little bit more information. It’s new information, new methods of communicating, and payments are changing from we pass information and we pass data, it’s non transparent. And eventually it shows up in the other area, too, we’re looking at the whole lifecycle away in places like swift and other companies, like ECS fin, whatever, think about a payment platform, as opposed to a, you know, a series of messages that move. And so when we think about how that changes, the activity is not like 50, handoffs, something gets stuck partway through, it goes back to the beginning has to start over. It’s everyone’s looking at the same, I’ll call the same version, the truth is the same instance. And whether you interact over that via an historical method of connection, like SFTP, or an API or some other method you are, you’re all interacting over the same information. And so that what gets lost in the telephone game of all this conversations, the telephone game with multiple languages now becomes a, you know, a dialogue that everyone’s communicating in the way and the time and the language of their choosing. And they’re all seeing the same, the same information. So that’s one one big part I think what’s happening the other is we’ve been at some sessions, we’ve had a lot of conversations, Paul on on API’s and embedded Treasury embedded payments, that is a massive, a massive trend. It’s not just a talking trend. It’s happening. And we also we see it happening in Europe faster than we see it in the US much to the to those who have pride in US technologic technology growth, and it’s behind it and it’s following and playing catch up in some of these areas. So there’s a lot on payment front, from API’s to embedded embedded payments to the rapid rise of, of payments, rapid growth of payments. There’s a lot here on payments.

Paul Galloway  22:36

Really appreciate the comments today. We’re at the end of our time, look forward to seeing what what’s gonna happen over the next few years in treasury. There’s a lot of exciting things out there and we’ll provide an update next year.

Announcer  22:55

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