Alain Schmid on treasury services | Fides Treasury Services

Transcript

Fides Treasury Services is a wholly-owned subsidiary of the Credit Suisse Group, which acts as an intermediary between corporate treasurers and their banks. Alain Schmid, CEO of Fides Treasury Services, discusses the company’s ethos, the services it offers, and the impact initiatives like the Single Euro Payments Area are having on the market.

World Finance: Fides Treasury Services is a wholly-owned subsidiary of Credit Suisse Group, which acts as an intermediary between corporate treasurers and their banks. Here to discuss their company ethos and the services they offer is Alain Schmid. Alain, welcome.

Alain Schmid: Thank you.

World Finance: What kind of challenges do your clients face?

Alain Schmid: It’s important to understand what kind of clients Fides serves. We are targeting the mid- to large-sized corporates, and there are several studies that say 40-50 percent of corporate treasurers work the following way.

When they go into the office, the first task they do is get visibility on their bank accounts. So when they work with 30 banks, they have to log in to 30 internet banking tools. And then they usually use an Excel spreadsheet – they copy and paste the balances into it – and then they have to decide which cashflows have to transfer into which accounts. Then obviously they have to log in to the accounts and tools again.

At the end of the day it’s all about controlling. And you say that these processes are inefficient. It’s also prone to mistakes. And last but not least, from an audit perspective, there’s just too much manual interaction in it.

World Finance: And how can Fides help with these challenges?

Alain Schmid: Our goal at Fides is not just to improve the processes. It’s to render them obsolete. You know, connectivity is what we can do, what we’re best in.

I like to compare it a little bit to Facebook. Facebook is so important, because you have that many friends on Facebook. At Fides, our friends are the banks. We work together with almost 1,500 banks all over the world – and that’s where the leverage for the client comes in too.

World Finance: Tell us the impact that the economic downturn has had on your business.

Alain Schmid: The financial crisis hit almost every institution, all over the world. So in our business there are mostly two strategies. It’s a little bit black-and-white, but: mostly two strategies.

The first one is the one-bank strategy. You work with everything in your core bank, your absolute core bank. So the services are generally very cheap, but they are subsidised by other banking services.

Multi-banking, on the other side, is about risk-aversion, risk-diversification. And the answer provided to your first question shows there is some inefficiency to this multi-banking strategy. But Fides helps to overcome this inefficiency, and make it as efficient as the first strategy – but you can manage your risk.

World Finance: Speaking of efficiency, how do standardisation initiatives like SEPA affect your business model?

Alain Schmid: In theory, SEPA should be a very bad thing for Fides. We should be very unhappy.

Three to five years ago, everybody thought with SEPA there would be just one global – or at least one European – standard. One format in place. And it makes life so much easier for corporate treasurers.

But what we see today is that there are counter-specific flavours in place; as well as the banks, they have their own specifications. And this situation, connected with a regulatory thing, for example – in Europe you have to use SEPA by February 2014 – this combination means a huge business potential for Fides.

World Finance: Why have you decided not to offer a treasury software management tool?

Alain Schmid: As I mentioned before, we are doing what we really do best – and that’s all about connectivity. We work very closely with treasury software management providers, because it’s important to serve our clients on a full scale. And we also have some little software in place – for example, for clients to get first process efficiency gains, on a really first hand. So it’s not at all comparable to a full-fledged treasury software management system.

World Finance: And finally, what principles guide your client relationships?

Alain Schmid: It’s important to understand that a client usually implements the whole operation over several phases. And if you look into one of these phases, which could consist of first of all implementing in European banks, it’s starting with a project. And then it’s going into that project. It’s very important that Fides brings its experience into the project. Because what you usually see – just for one example – is that the project is placed within corporate treasury. And important stakeholders within the company are not involved. For example HR, regarding payments on payrolls, compensation, and also financial accounting. So we bring these topics onto the table.

After the project, you implement the solution. And obviously our relationship managers are very close to the client, to ensure that the services help to meet the goals. But obviously we want to start the second phase, because this means additional business for Fides.

World Finance: Alain, thank you.

Alain Schmid: You’re welcome, thank you as well.