The financial crisis has brought home to corporates the importance of ensuring that their assets are held by a stable bank, and the necessity of being able to transfer their assets quickly to another institution if circumstances demand it. Microsoft was present at Sibos in a dual role. As a client, it is the first corporate to use Swift to link its banks with its treasury. As a provider, Microsoft was present at Sibos to advertise its payment and cash-management platforms. Microsoft’s insights at Sibos gave the benefit of its dual client/provider perspective.
In its capacity as a corporate client, Microsoft was keen to stress that it is capable of safeguarding its assets if risk levels at the institution holding them become unacceptable. Colin Kerr, industry solution director for worldwide financial services at the company, told Euromoney that if risks become too high Microsoft is capable of almost instantaneously withdrawing its cash and transferring it to another institution.
"From an industry perspective, we are prepared to move all our cash if we need to, such as when we believe that there is too high a level of risk across regions or the banks," says Kerr. "We can move the cash to another bank almost immediately. It doesn’t mean we are not confident in the banks, but if for whatever reason we believe that our cash isn’t safe, we have the flexibility to pull it out immediately."
While Kerr stresses that he has confidence in the banks, his comment came just days after media reports that Siemens had withdrawn more than €500 million in cash deposits from a large French bank and transferred the funds to the European Central Bank.
Although this secures a slightly better interest rate for the German conglomerate, it has also given backing to the impression that corporates are eager to safeguard themselves should another financial crisis emerge.
Kerr emphasized the increasing importance of technological improvements to risk management, and stressed that risk management could be greatly improved by a focus on monitoring where assets begin the day.
"Since the credit crisis, there has been a drive for independent technology providers to implement more solutions that enhance risk management," says Kerr. "One of the key priorities for enhancing risk management for treasuries is to know where the cash is at the start of the day. By streamlining transaction flows, a point of risk is almost eliminated. While some may remark on the costs, the long-term payback is worth it: less risk, quicker processing and a more streamlined business cycle."
Euromoney Sibos Insider: Microsoft can move its cash from banks instantly if risks are high