1PRESENTED BY RABOBANK AND ENIGMA CONSULTING November 2019

Treasury Barometer2019

Table of contents

• About p. 3• General Results p. 5• Sustainability p. 8• Compliance, Fraud & KYC p. 10• Treasury Organisation, Business & Development p. 16• Financial markets, IBOR phase out p. 22• Cash Management, Connectivity & Treasury road map p. 26• Epilogue p. 32• Contact p. 34

You are invited to read the 6th Treasury Barometerdeveloped by all participating treasurers, Rabobankand Enigma Consulting in the online TreasuryBarometer 2019.

Enjoy reading!

3

About

The Treasury Barometer is anindependent survey for and bytreasurers, developed jointly byRabobank and Enigma Consulting.

This report presents the key results ofthe 2019 survey and presents the latesttrends and development.

This survey is created to give insight inthe most important items on theagenda of treasurers.

The report provides a representativeunderstanding of this agenda for Dutchcorporate treasurers.

We especially would like to thank allrespondents for participating in thisyear’s survey.

The Treasury Barometer 2019 focuseson the following topics and themes:

1. Sustainability

2. Compliance, Fraud & KYC

3. Organisation & Development

4. IBOR phase out

5. Cash Management, connectivity, Treasury roadmap

A number of interviews are held togain a deeper insight into the topics ofthe Barometer 2019. Our special thanksgoes to the participants of theseinterviews:

• Edwin Slutter, Added Value onCompliancy, Fraud and KYC

• Marnix Verhoef, Rabobank on IBORPhase out

• Lisanne Rijnders, Heerema, onTreasury organisation (and theresults in general)

• Nico Strauss, Rabobank on CashManagement and Innovation

The Editor Panel, consisting ofmembers of the treasury community,has been established to set thedirection of the Barometer and tomonitor the quality and relevance ofthe content.

We thank all members of the EditorPanel for their participation and advice.

In 2019 the Editor Panel consists ofthe following members:

About

Dennis Baljeu Vanderlande

Frans Boumans HU Utrecht

Jeroen Custers Q-Park

Wim Lambrecht Ammega

John van Roon FedEx

Lisanne Rijnders Heerema

The results of the Treasury Barometer 2019 will be available as an online report as from 14 November 20194

Licht blauw:

General Results

General Results

83% of the respondents are

(assistant) treasurers. The remainder of

the respondents are cash managers (10%)

or back- / front office employees (7%).

€ $

How many persons are involved in treasury in your entire company?

In which branch or industry is your organisation active?

84% of the respondents expect

that the size of their treasury

team will remain stable in the

future…

1-5

70%

6-9

10% 20%

>10

…as treasurers expect their

processes to become more

efficient and the size of treasury

teams will remain stable, there is

more time for the available

treasury staff to add true value.

“The treasury department at Heerema is a two women show.” Lisanne Rijnders, Treasurer at Heerema.This is remarkable since last year’s results showed that over 85% of the treasurers is male.

6

In which regions does your organisation have operational / business units?

Customer base breakdown:

55%

North-America

97%

Europe

48%

South-America

30%

Africa

36%

Pacific

61%

Asia

B2B 58%

B2C 12%

Combination 30%

General Results

Operational / business units in this region

No operational / business units in this region

7

It seems a long road, from the Paris Agreement and thesustainable development goals to the treasury desk. However inthe last 15 years sustainability has developed into a cornerstonetopic in most of the boardrooms. Today, treasury departmentsare more and more involved as well. This is also reflected in theoutcome of the 2019 Treasury Barometer.

Sustainability

What was the effect of Sustainability & CSR requirements on your treasury activities in the last 3 years?

Decreasing the ecological footprint

In case of an effect on your treasury activities, to which topics did it apply?

24% Cash & liquidity management12%

Treasury technology

21% Other

24% Evaluate banks

on Sustainability and CSR criteria

35% Corporate finance

Note: the percentages add up to more than 100% as it was possible to select multiple answers

0% 10% 20% 30% 40% 50% 60%

I don't know

Not at all

To a certain extent

A lot

6%

32%

53%

9%

3%

36%

48%

12%

2019 2018

0%

5%

10%

15%

20%

25%

30%

Completelyclear

To a certainextent

It is not clearto me

To a certainextent

It is not clearto me

I have neverthoughtabout it

18%

27%

3%

15%

6%

27%

Yes No

Sustainability

If you have ever considered the issue of a green financing instrument, is it clear to you what the process will look like and what parties you need to involve?

......In 2019, a total amount of

was issued as green

bonds in The Netherlands. In 2019,

the total volume of green bonds

globally was Source: Rabobank

48% 48%

Have you ever issued or considered the issue of a green bond, green loan, green RCF or other green financing instrument?

of the respondents experience a

Sustainability & CSR effect on their

treasury activities. This is

comparable to last years results,

despite increased media attention

and the growing number of green

financing issues .......

9

Payments fraud and cybercrime appears to be the“new norm” for corporates. They need to be awareof increasing threats and in many cases are activelyimplementing measures to control payments fraudand cybercrime. What role is treasury playing inthese topics and what measures/controls are taken?

Compliance, Fraud & KYC

Could you elaborate on what this rating is based?

• segregation of duties and 4-eyes-principle applied• all the staff have done a training on cyber crime

and fraud prevention• it is impossible to be 100% protected

What measures have been taken to prevent, detect and combat payment fraud & cybercrime?

has been a victim of attempted or

actual payment fraud/cybercrime.

has not sought advice from

external parties to prevent, detect

& combat cyber risk and

(payment) fraud.

Stricter adherence to internal policies

Training users to create awareness

Automate processes to diminish human intervention

Has the increased payments fraud / cybercrime activity had impact on the processes in your organisation?

0% 10% 20% 30% 40% 50% 60% 70% 80%

Not at all

To a certain extent

A lot

6%

73%

21%

7,2

5,8

Respondents rate their treasury

department with a 7,2 for

protection against payment fraud / cybercrime

Respondents rate their treasury

department with a 5,8 for the

incident response and backup plan to recover from

payment fraud / cybercrime

Could you elaborate on what this rating is based?

• there is no written back-up plan• focus on prevention instead of back-up plan• responsibility lies within IT

In a recent interview with The Financieele Dagblad, Minister Grapperhaus from the Dutch Ministry of Justice and Security announcedthat the government will take more aggressive action against companies that are not in control of their cybersecurity.

Compliance & Fraud

11

Have you considered changing banks due to bank-specific KYC processes?

Has the average lead time changed to open a new bank account for a new entity operational

compared to 5 years ago?

Because of the legislative and

regulatory focus on anti-money

laundering (“AML”) and combating

the financing of terrorism (“CFT”),

there is a lot of pressure on

financial institutions to meet the

compliance expectations.

Of all respondents has considered

changing banks due to bank-

specific KYC processes

Reasons why 24% of respondents has considered changing banks due to bank-specific KYC processes:

• The average lead time to open new bank account for new entity is considered too long

• The growth and the management of its business from the increased KYC requirements are hindering operational efficiency

Do you have an example of best practices to lighten the burden / shorten the lead time of the KYC process, internal or external?

• Standardised set of KYC documentation that works for all banks• Complete overview of KYC requirements at start of process to avoid additional requests along the way • Use KYC technology that connects multiple banks to one KYC platform like the SWIFT KYC Registry for

Corporates (Go-live in Q4 2019) where KYC information can be shared with banks

of all respondents experience an increased average lead time compared to 5 years ago

27%

67%

6%

> 3 months

1 - 2 months

< 1 month

Average Lead Time New Bank Account New Entity

KYC

It is remarkable that for of the correspondents the KYC

process is not an important indicator in cash management bank selection

of all respondents see that the increased KYC requirements are hindering operational efficiency, the growth and the management of its business.

12

Can you briefly explain how the "CEO fraud" took

place at Pathé?

It all started when the managing director of Pathé

Netherlands was requested by the CEO of Pathé to

transfer money for a foreign acquisition. Because of a

double authorisation policy, I was (as Financial

Director) also involved in this transaction.

Both the managing director and I were convinced we

were dealing with the real directors in Paris because

the transaction was confirmed with supporting

documents with signatures from the majority

shareholder and the CEO.

Additionally, the treasury department of the head

office also transferred the necessary funds to the

Dutch subsidiary. In the end, more than € 19 million

was stolen, the majority of which came from our cash

pool.

The Treasury Barometer survey shows that 82% of

the companies are - or have been - victims of actual

payment fraud and/or cybercrime. What do you

think of this result and to what extent have you

noticed that payment fraud has increased in recent

years?

This does not surprise me, and I can therefore

endorse this result from the Barometer. Many CEO’s

and directors have had to deal with this, but I find it

shocking that only 5% of the fraud (attempts) are

being reported to the police. People are afraid to be

open about the fact that this happened to them so

that it will be difficult for the police to solve fraud

cases committed by large scale operating gangs.

The interesting thing in this context is that

cybercrime was number 10 on the list of concerns of

CEO’s in the Netherlands last year and is now number

4. This also indicates that it is now more prominently

on the boardroom agenda.

The fraud attempts are also becoming more

sophisticated: with the use of voice computers, voice

distortion, artificial intelligence and with the

deployment of actors. Sometimes the communication

is set up via Facetime or Skype, which can be very

sophisticated and can make it difficult to distinguish

fake from real messages.

In my opinion IT systems are also still all too easy to

hack.

Of the respondents, 21% indicates that the

increased payment fraud and/or cybercrime had a

significant impact on organisational processes. 73%

indicates that there is a moderate impact and 6%

indicates that there is no impact.

What do you think of this result?

I am shocked by the fact that 79% of the respondents

answer that there is only a moderate or no impact.

Only 1 in 5 appears to have made a serious efforts.

Perhaps it is just labelled as a one-time incident: “It

was bad luck, let’s pay more attention to it next

time”, without taking harder measures and

implementing or adjusting procedures. Whether

people feel ashamed, have only a short-term horizon

or an arrogant attitude such as "it doesn't happen to

me", I don't know.

We asked the respondents an open question on how

they prevent, detect and combat payment fraud.

The most frequent answers are: 1. stricter internal

procedures, 2. train users to create awareness and

3. automate processes to reduce human

intervention. What do you think of this result and

can you add to it?

In the case of CEO fraud, pressure on people and

social engineering is used. I don't read that

anywhere. Fraudsters analyse the communication

and authorisation lines within the organisation, but

also have a good understanding of the corporate

culture. Otherwise you would not be able to target so

much money by using fraud in such a short period of

time. I totally miss that aspect.

Companies mainly focus on procedures and AO/IC

but hardly at all on the cultural aspects. You should

ask questions like: How could this have happened

within our company? Why were we vulnerable? Why

didn't you call?

Interview Edwin Slutter, Added Value FinanceCEO fraud “It can happen to anyone”

13

Edwin Slutter,Added ValueFinance

How do you change the corporate culture, which

you have identified as an important underlying

reason for making corporates more vulnerable to

payment fraud?

It is not only payment fraud; it is also about the rest

of the organisation. How is your “speak-up culture”?

Do people actually walk easily into the director’s

office? Are you really as “open” as you would like to

be?

Many directors and managers like to display a bit of

their power and create some distance from the rest

of the organisation. In almost all cases of CEO fraud,

organisations become vulnerable through the

behavioural- and cultural component.

Of the respondents, 58% indicated that they did not

use an external party to prevent, detect and combat

payment fraud and / or cybercrime. Do you think an

external party could deliver added value in this? If

so, how?

Some of my contacts sometimes invite "mystery

guests". Then someone just walks in at the reception

and before you know it, they got their hands on a

pass, which gives them access to the boardroom.

Next, they present themselves and claim that they

work within the company. This is also the case with

IT. Let’s be honest: who knows everybody in very

large companies? You can quite easily introduce

yourself as a new employee and ask the reception to

make an access pass. I think it's always a good idea to

have someone from the outside check on the

procedures within your company.

The majority of respondents indicates that there is

only a limited or no response and / or backup plan

for their treasury department in the case of

payment fraud. Do you think such plans have added

value?

I recognise that this is not well organised in many

organisations. Also with respect to payment

processes, I think that many organisations do not

have a back-up plan. They tend to have these for

their primary processes which are critical to the

business, but not always for their payment processes.

In your white paper dated May 2019, you mention

that with respect to CEO fraud "the corporate

culture is the greatest danger". Can you explain

that?

In my white paper, I describe 3 important topics:

• Pressure

• Occasion

• Rationalisation.

Pressure is an important topic as in two-thirds of the

CEO fraud cases, pressure is identified as one of the

main causes of vulnerability. “You are made

important; you are being asked to keep it confidential

and keep the number of staff involved restricted”.

Instructions are sent from top management and you

become part of the inner circle.

Fraudsters who know how to use the right tone of

voice in their communication, who have insider

knowledge and how to build it up well, can get a long

way. At Pathé, it was not about a few e-mails, but a

three weeks period of intensive correspondence.

Which type of organisation has the highest chance

of payment / CEO fraud?

In my white paper I refer to Hofstede's model of

cultural dimensions (see Figure 2). The message I

want to give is: “The closer you get to the core of the

web diagram; the more critical a company’s exposure

will be. The more components, the more critical it

becomes.” Examples are closedness, decision-making

by a few individuals, a high degree of geographical

and hierarchical distance and organisations where

results are more important than procedures.“ A lot is

shared between friends, but people in organisations

behave in a more restricted way because of the

power relations.

“If you manage to run a company in which people are

open and honest with each other and where there is

a true ‘speak up culture’, you will make much better

decisions.”

Edwin Slutter,Added Value Finance

Figure 1: Slutter, E. (2019). CEO-fraude: Bedrijfscultuur vormtgrootste gevaar. Added Value Finance

14

Could the Pathé fraud case have been prevented?

"With just one phone call to the Holding in Paris, a lot

of damage could have been prevented….”, but this

was forbidden.

Was it because of the pressure from the corporate

culture, that this phone call did not take place?

At Pathé Netherlands there were no second thoughts

in the three-week period in which the fraud took

place. We have asked many critical questions and

flagged that we always needed two signatures. But

those documents were presented by the fraudsters

and the funds were received from Paris.

All communication was via email. The

recommendation is nevertheless always to call in

case of doubt, despite confirmations, with the risk

that you might embarrass your top management by

not solely trusting on their instructions.

In many corporates (in the Netherlands) the sole

communication is via email and there is hardly any

face to face contact. People believe that

communication by email is safe. It is “on paper” and

that can also lead to a certain "cover-your-ass”-

behaviour.

Edwin also points out that the

intergroup/intercompany authorisation structure

should be properly structured. There are situations

where the local subsidiaries have a manual system

with insufficient clearing procedures for invoices.

Local subsidiaries are dependent on funding from the

holding entities to be able to meet the payment

instructions of the fraudsters. There is then a high

chance that you will find out too late that the

Treasury transfer has already been executed.“

The chance that CEO fraudsters focus on subsidiaries

is more likely than that they focus on the holding

company.

Treasurers should be more critical about why

intercompany funding is needed. When the cash flow

is positive, don’t be afraid to ask why they still need

funding.” The Pathé head office should therefore

have asked to the Netherlands: “Why do you need

those large amounts of funding as a subsidiary? "

Fraudsters also target subsidiaries that are profitable,

because when there is no cash generated, there is

nothing to steal. And intercompany funding is also

more easily available for the profitable subsidiaries in

an organisation than the less profitable parts.

Treasury therefore also has an important role in

preventing CEO fraud.

Why did you set up Added Value Finance?

I wanted to share my experiences and for that reason

I started Added Value Finance with 3 service lines:

CFO Services, Financial Management and Corporate

Finance. I am a Registered Accountant and have 30

years of experience in Finance.

I also support organisations in identifying, solving and

preventing the risk of CEO fraud, based on my

analysis and improvement of the corporate culture.

By reducing the weak spots, the organisation is better

protected and is more resilient to these so-called

"whaling" attacks.

I also act as a speaker at seminars and business

presentations or as an in-company trainer.Edwin Slutter,Added Value Finance

Figure 2: Slutter, E. (2019). CEO-fraude: Bedrijfscultuur vormtgrootste gevaar. Added Value Financing

15

In general, treasurers are being asked to play a more strategic role in corporate activities such as capital allocation.

This is in reaction to increased focus by stakeholders (internal and external) on optimising the use of cash on their companies’ balance sheets and on ensuring holistic risk management.

Treasury Organisation, Business & Development

Respondents rate

their career with a

7,5 compared to

6,5 5 years ago

How would you rate your career in treasury now versus 5 years ago?

On which treasury subject did you have your most rewarding success?

58% Cash- and liquidity Management

21% Corporate finance

27% Treasury organisation and development

24% Financial risk management

27% Technology

9% Bank relationship management

A remarkable result is that the

majority of the respondents

name Cash Managementas the topic which gave them

their most rewarding success.

This is surprising as treasurers

also name Cash Management

as the subject they

unintentionally spend most

time on.

Apparently, this effort pays off.

0

2

4

6

8

10

12

14

3 4 5 6 7 8 9 10

5 years ago Now

What do you like most about the treasury function?

• Dynamic, many projects and high impact• Connecting with internal as well as external parties• Varied: not a single day is the same and never a dull

moment• Being in the centre of all finance functions• Adding value to business by optimising financial

architecture• Balance between strategic and operational issues• Multi-disciplinary / multi-tasking/ international

aspects / macro economic aspects / financial markets

Treasury organisation

Reasons for improved rating are:• Broader responsibilities • Progress in development• Seniority

17

81%Of the treasurers is earlier

involved in sales/tender

processes than 3 years ago.

On what subjects is treasury involved in / working with the business? (Multiple answers possible)

77%Of the respondents make use of

scenario analysis as part of risk

management.

Best practices in sharing knowledge / treasury policies with the business:

“Business engages into risks. Treasury can support the business to mitigate this.”

“Better relations with business and sharing of knowledge can lead to the fact that Treasury is (earlier) involved with certain purchase contracts, which can lead to recognising embedded derivatives.”

“Sharing a one-pager is better than sharing a full policy doc. When visiting discuss the policy”

“SharePoint with guidelines/policies. This needs to be frequently reviewed.”

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Supply chain finance

Purchase to pay

Trade finance

Cash collection

Risk management (tender) process

Payment terms and conditions (incl. currency)

Cash flow forecasting

Business & development

“Treasury can support the Business through financing & risk management solutions to win Business.”

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Can you please tell us how you first came in contactwith the Treasury business?

After my graduation internship, I continued to work forHeerema. My first job for Heerema was in anoperational department, where I did administrativework. Via a mobility program within Heerema, Iswitched to the financial department. Here I wasmainly responsible for management reporting. Soonafter that I switched to the Treasury department,where I started as a Cash Manager. After a year asbeing Cash Manager, the function of Treasurer becameavailable, which I have been doing for the past 2 years.

Is it a one woman show?

The Treasury department at Heerema is a two womenshow. In my team I have a Cash Manager reporting tome. My team reports directly to the CFO, which meanswe are all closely connected to each other. Our goal isto be in the middle of the organisation. We try to beinvolved in both the Commercial side and the Legal,Tax and Finance side.

What do you spend most of your time on?

A lot of time is mainly spent on communication, bothinternal and external, making sure that we areinvolved in commercial projects or in theimplementation of certain projects. We basically haveto make sure that we are well informed, by all internalparties in the organisation. Next to that we have thecommunication to and with the outside world,specifically with the banks. This is because we alsospend a lot of time on KYC these days. If you do notmaintain this, it can have considerable consequences.

On sustainability, a few years ago Heerema issued agreen finance product. Were you also involved inthis?

I was not involved in the issuance of the green bond.Back then I was still working in another departmentwithin Heerema. At that time Heerema did aconsiderable investment in one of our ships in anattempt to make them greener. Another kind of fuelwas used in our ships, subsequently reducing theiremissions of carbon dioxide.

Heerema has had many of these initiatives in the pastyears. One of them being the usage of shore power,instead of letting ships run on their engines, while theyare docked.

Could you perhaps tell us a bit more about the greenproduct Heerema issued back then? Did you have tomeet certain goals?

Back in 2015, when Heerema issued the product, itwas issued in accordance with the Green BondPrinciples. Rabobank acted as Green Advisor andKPMG in conjunction with Lloyd’s Register asindependent verifiers. Right now there aren’t newgreen financing initiatives in which Heerema isinvolved in addition to the sustainable activities theydo themselves. Heerema wants to contribute in thisway to a sustainable future. We are quite proud onwhat we are achieving, especially when parties like theport of Rotterdam acknowledge our efforts. Thinkingabout a sustainable future is one thing, but actuallytaking action to support this is a second. It takes timeand a lot of effort, but we are delighted to see theeffects of our actions.

We also asked about CEO fraud, and in thebarometer, we see that 82% of the respondents hasbeen in contact with payment fraud or cybercrime.Did you ever experience that with Heerema?

I acknowledge many attempts to fraud, but we have alot of internal rulebooks and procedures, that tell ouremployees how to act when certain events happen.We had one example in which I had to initiate apayment which was instructed by someone who wasnot an employee of Heerema.

The way, in which fraud attempts are made, aresophisticated. Signatures, phone calls, certain data,everything is exactly copied.

Organisational culture is a big factor when it comesto fraud and the prevention of it. Do you just pick upthe phone and call the CEO when you don’t trustsomething?

Our culture is like: “Please call each other, if only todouble or triple check it. We don’t want to make thesekinds of mistakes.”

We are also very open to discuss the chance of amistake. We have had one payment, which slippedthrough to the authorisation stage. The entire financeteam came together to check it and we eventuallywrote new procedures on how to identify suchfraudulent payments.

Since then, we just consult with each other to preventsuch incidents, which is also supported by the CFO andCEO. A completely open culture, in which checking apayment or each other is completely normal. Somefraud attempts are even discussed in board meetings,just to let everybody know to be on their guard.

19

Interview Lisanne RijndersTreasurer, Heerema Marine Contractors

Lisanne RijndersTreasurerHeerema Marine Contractors

Lisanne RijndersTreasurerHeerema Marine Contractors

Examples of payment fraud, where multiplecountries and multiple cultures are involved, arementioned by the interviewer. The differences inculture being the main reason why it went soterribly wrong.

What possibly also contributes to Heerema’s solidprocedures is that we are fully centralised. Whenevera company is decentralised the responsibility is a bigfactor in how thoroughly an employee checks apayment.

The next results from the Barometer are about KYC,and what we see is that KYC bank processes haveincreased substantially. Do you also experience this?

I see that in the past three years, since I am workingin treasury, the amount of time spent on KYC hasincreased tremendously. Banks should be enablers ofthe business, but right now that statement is notentirely true. KYC updates used to be a yearlyprocess, but right now we see banks doing theseupdates every three months. It feels like a neverending process.

Certainly banks do not want to do this, they areobliged to. Banks just want to do it right and theyhave to comply to the regulators.

Do you have best practices in place at Heerema torelieve the KYC burden?

We try to cluster KYC processes at the bank’s side. Ifone of the entities is due in 4 months and two otherentities are in KYC process right now, we ask the bankto do them all at the same time.

“I always have a kick-off call with the KYC employeesof the bank, just to set things straight and manageexpectations from both sides.”

I also hope that banks will standardise the processesof KYC; at the moment it’s a yellow paper at thisbank, a green one with another. There is no commonstandard in the process. We hope this will be betterin the near future, just in order to save time on theprocess. Heerema would love to participate inworking groups on how to improve these processes,both for ourselves and for the banks.

The Treasury Barometer result shows that 24% ofthe correspondents are considering changing itsbank due to the KYC-process. Do you noticedifferences between banks in the KYC-process interms of for example transparency, lead-time,quality?

We experience significant differences between banksregarding the KYC-process. Heerema is notconsidering switching their cash management banksdue to KYC-process, primarily because it considerstheir relationships with their banks as a long termrelationship. However, I can imagine that there arecorporates who are considering a change of bank ifthe KYC-process is causing business disruption,especially if you have ‘backup’ banks in your bankconsortium that could deliver a better KYC-process.

Are you aware that the LIBOR and EURIBOR rateswill be phased out during 2019 to 2021? Have youperformed an impact analysis of what the IBORphase out will mean for Heerema?

Heerema has gathered information about the IBORphase out. In 2020 a company-wide impact analysis isplanned in which Legal, Tax and Finance will beinvolved. Heerema will assess the impact of the IBOR

phase out and it will share the results both internallyas well as externally where needed. I recognise thatprocesses, procedures and policies will need to beadjusted, and also systems in particular becauseHeerema’s lean Treasury department is highlyautomated. I expect that resources from systemproviders, lawyers and other market parties willbecome scarce, because they will be fully bookedwhen the deadline approaches.

The IBOR phase out will impact many aspects andstarting early with an impact analysis is necessary,because time passes very quickly.

Does Heerema have a Treasury roadmap? WhichTreasury topics are highly on the agenda? Is OpenBanking on the agenda of Heerema?

The Treasury roadmap of Heerema is integratedwithin Heerema’s broader Finance roadmap.However, topics such as the IBOR phase out will beinitiated and led by our Treasury department. In myopinion Heerema’s Treasury department has alreadybeen positioned quite well. “My team is followingmarket developments and we are pushing ourselvesto continuously develop and improve processesfurther.” Regarding technology, we are using SWIFT,host-to-host connections and electronic bankingsystems as bank connectivity channels. The host-to-host connections and electronic banking systems areused as a security backup. My department tries todiversify in banks as well as in bank connectivitypossibilities.

20

Developments around Treasury technology, such asinstant payments and instant reporting areindicating that the Treasury job is growing towards a24/7 job. How do you perceive this development?

It depends strongly on the sector in which a companyis active. Heerema is not active in the retail businesswhich means that for instance cash flow forecastingon weekend days is not relevant for Heerema. “It isimportant to be aware of new developmentsalthough they might be less relevant for yourcompany.” For example, on the instant reporting sideit becomes relevant when banks are deliveringaccount statements on Saturday’s and Sunday’s.Systems need to be adjusted accordingly. I do notforesee a 24/7 Treasury job at Heerema.

One of the results of the Treasury Barometer showsthat regulation is becoming increasingly importantbut is apparently not a big driver behind theTreasury roadmap. How would you explain this?

I think that regulation is a requirement by banks, forexample, and that it is therefore not separatelymentioned on the Treasury agenda. For instance,Heerema has an improvement of the KYC-process onthe agenda and is exploring the possibility ofconnecting to a KYC platform. However, I think thatKYC is a must and therefore pure KYC regulation isnot part of the Treasury roadmap of many corporatesas compliance to regulation is fundamental to your“license to operate”.

21

Lisanne RijndersTreasurerHeerema Marine Contractors

As the world’s premier benchmark for short-term interest rates, LIBOR is published in five currencies and underpins around USD 300 trn. worth of financial contracts, derivatives, bonds and loans.

Treasurers will now have to untangle LIBOR from

their operating models, renegotiating contracts and

shifting the way risk is calculated and managed

within their organisations.

Financial MarketsIBOR Phase out

It is remarkable that most of the respondents who

have performed an impact analysis conclude that

the impact is modest or low.

Most probably this is caused by the fact that these

corporates are predominantly or only exposed to

EURIBOR for which there is no phase out planned

yet.

Financial Markets IBOR phase out

“We strongly recommend that corporates perform an impact analysis and become operationally ready for the

IBOR phase out as soon as possible.”

Marnix Verhoef, Programme Director IBOR, Rabobank

15% is not aware of the

IBOR phase out

Are you aware that the LIBOR and EURIBOR rates will be phased out in 2019-2021?

Have you performed an impact analysis of what the phase out will mean for your treasury?

42% 58%

If you have performed an impact analysis: what have you concluded that the impact will be?

0%

10%

20%

30%

40%

50%

High Modest Low

14%

50%

36%

Of the respondents that have

carried out an impact analysis

remarkably concluded that the

impact will be modest or low.

23

Background

Marnix Verhoef is the Programme Director for theRabobank IBOR transition programme sinceDecember 2018. The programme team is responsiblefor the worldwide preparation and migration fromthe current interbank offered rates (IBORs,specifically LIBOR and EONIA) to new AlternativeReference Rates (“ARRs”).

Before joining this workgroup, Marnix was atRabobank amongst others an equity derivativestrader and most recently, as COO of FinancialMarkets, he was globally responsible for businessdevelopment and (IT) change processes such as EMIR,MiFid etc.

As such, Marnix has hands-on knowledge of thefinancial products currently affected by the IBORmigration.

Organisation and challenges

Marnix explains that the IBOR Programme

coordinates globally the massive efforts of Rabobank

to migrate in about 2 years the IBOR benchmarks that

have been on the market for about 40 years.

The IBOR transition programme is organised around

the various business lines and involves all business

areas impacted by this migration. The size of this

migration exceeds many of the previous regulatory

developments as for this purpose the Rabobank

needs to ‘rebuild its infrastructure’ around the new

ARRs with respect to a high number of areas such as

(cost of) funding, ALM, risk management, financial

markets and the product offering to clients with

respect to for instance working capital, cash

management, lending and financial risk management.

Marnix explains that it is very much a dynamic

process in which Rabobank considers the guidelines

and observations from the risk working groups of the

Central banks and the market consultations from the

side of ISDA and LMA as input for the upcoming

migration process.

A major challenge for this migration is, in the view of

Marnix, that there are many aspects of LIBOR

replacement that still remain unclear as thinking

continues to develop. The accounting treatment for

changes to LIBOR based instruments and hedge

relationships is one example. Indeed, certain key

unknowns may not be resolved until the final few

months before the transition as new industry norms

become clear.

The programme team is responsible for collecting all

data in the Rabobank, analysing the impacted

exposures, setting up dash boards and coordinating

the action plans. This includes the internal

communication with Rabobank product owners and

relationship managers and also the external

communication with clients thereafter.

Implications for corporate clients

The programme team is currently preparing the

upcoming external communication towards corporate

customers. Rabobank wants to engage in an early

dialogue with its clients to discuss the impact and

consequence of the transition to alternative

reference rates.

Marnix emphasises that for the exposure analysis, it

is not only important to take into account the first

level exposure (amounts related to financial products

impacted) but also the 2nd level exposure, i.e. the

impact on processes.

24

Marnix Verhoef,Programme Director IBOR,Rabobank

Marnix Verhoef’s view on IBOR TransitionProgramme Director Treasury IBOR, Rabobank

He says: “We strongly recommend that corporates

perform an impact analysis and become

‘operationally ready’ for the IBOR phase out as soon

as possible” as time for preparation is limited (1st of

January 2022, publication of IBOR rates is expected

to be stopped) and resources needed such as

lawyers, market data providers, valuation advisors,

tax specialists, technology vendors, treasury

consultants, bank migration teams, etc. will become

increasingly scarce in the coming months.

Awareness on the side of the client should therefore

soon be translated into action so that their

infrastructure and processes are updated and

upgraded (just as the banks are doing).

Corporates should also be aware that liquidity and

market pricing of IBOR products may deteriorate

well before the above deadline as market

participants will stop issuing IBOR based products

with a maturity over the deadline of 1st of January

2022.

Note also that liquidity and a robust pricing and

valuation of the new ARR based products will need

to be built up from scratch. Current volume in ARRs

is still low and Marnix predicts there will be a

‘turning point’ when volume in new ARRs will

increase and pricing of the new products improves.

The anticipated dialogue with the clients can

preferably be held after this turning point but it is

difficult to predict when the turning point will be

there.

The corporate clients will in the coming period be

invited (client per client) for a dialogue with

Rabobank to discuss how to migrate from the

current IBOR based product towards the ARR

alternatives.

Term rates or not?

Currently the ARRs are overnight rates and at thismoment it is uncertain if and when term fixings willbe developed by the industry. Clients may have toswitch to overnight rates, compounded and paid inarrears. That would lead to uncertainty as to whatthe exact amount of interest will be until the last dayof the interest period for all parties involved.

EURIBOR

For EURIBOR there is currently no replacement rate

foreseen. Instead the administrator of EURIBOR has

sought to strengthen the calculation methodology. In

the meantime, ECB has already launched an

alternative for the EURO overnight rate, €STR, as per

2 October 2019.

25

Marnix Verhoef,Programme Director IBOR,Rabobank

In a time of increased digitalisation,payments acceleration and newbusiness models in the whole valuechain of payments processes and bankconnectivity, treasurers are becomingincreasingly keen to leverage on theopportunities.

However for a treasury department tomanage and steer away from currentmultiple separate systems, managingolder technology and interfaces, anddealing with multiple bankrelationships, is not an easy task.

Cash Management, Connectivity & Treasury

Roadmap

Cash management &connectivity

How many cash management banks provide bank accounts to your organisation?

Which channels do you use to submit payments to and receive bank account statements from your bank?

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

Electronic bankingsystems

SWIFT Host-to-Host Ebics

How would you describe your organisation’s payment processes now?

How do you want your organisation’s payment processes to look in the near future?

The instant and real time

payments schemes around the

world and the expansion of

technology will transform

treasury departments into a

world of real time 24/7

liquidity, based on more

centralised control and local

empowerment.

Decentralised43%

Combination18%

Centralised39%

Decentralised18%

Combination33%

Centralised49%

Shift

from decentral to central 27

Cash management& connectivity

Regulation is becoming

increasingly important but is

apparently not a big driver of

the treasury roadmap.

Do you have a Treasury Cash Management Roadmap?

Yes 42%No 58%

Do you have an IT Roadmap to support your treasury processes?

Yes 58%No 42%

What are your drivers to include one of the above topics on the Treasury roadmap? (Multiple answers possible)

88% Operational efficiency

39% Increased control on payment processes

36% Cost reductions

33% Centralise processes

24% Bank rationalisation

15% Regulation & Legislation

Which topics will be (less) relevant for your treasury department in the upcoming years?

The reference rates debate is a

hot topic in the upcoming 2-3

years. After those 3 years we see

a decline in importance

Cash pooling is considered less

important in the upcoming years

There is a trend to further digitalise

the Treasury department:

• E-Signing

• Blockchain

• Digital identity

Are we migrating towards a 24/7

Treasury job? 24/7 reporting and

Instant payments grow in

importance in the upcoming 3-5

years.

Open banking & PSD2 is currently

not high priority of the Treasurer.

To gain the full value of new

cloud-based solutions, multiple IT

solutions can be set up. On the

other hand communication and

interfacing between those

systems is a challenge, since data

will be exchanged in different

formats.

However, the perfect solution

doesn’t exist and treasurers are

encouraged to define their

Treasury and IT roadmap.

28

BackgroundNico Strauss has not followed a standard typical bankcareer path.

He started his working life at Dun & Bradstreet as asales manager, after which he moved to the paymentprocessing fintech Worldpay where he worked insales functions for the first five years. He thenswitched to take up responsibility for strategicalliances where he was responsible for negotiatingwith many banks. These negotiations were not easyas banks were at that time neglecting or ignoring thefull potential of the payment revolution that wasabout to change the value chain of banking.

In 2018, Nico started at Rabobank “to change thebanks from within instead of from the outside” andhe has had no regrets about this move ever since.

Nico, as tribe lead, reports now to the board and isresponsible for developing the B2B Services in itsmission to unlock the bank and create “a cooperativefor the 21st century”. In this unit Rabobank hascombined, for the first time, its payments services,identity and open banking expertise into a singlebusiness unit.

They operate as a start up within the bank with theirown end-to-end services adding sales and support towhat is often just a product unit within most banks.

Rabobank has hired many others (besides Nico) with anon-standard background from various sectors and onall levels to develop Rabobank in this transition. Theunderlying reason for this is simple: “because the

client asks for it”.

Co- creation with customers

The Rabobank developer portal is also part of the B2Bservices unit and is an open collaboration platformwhere Rabobank, clients and developers worktogether on new applications via ApplicationProgramming Interfaces (APIs), which is softwareintermediary that allows two applications to interfaceto each other. Rabobank was the first in TheNetherlands with all API’s live in test and production.

Nico expects that the developer portal will increaseexponentially in the coming years. In the view of Nico,a good developer portal is the place where, overmultiple dimensions, multiple options are shown formultiple stakeholders (such as developer, productmanager, management) as a showcase for what ispossible.

For example, in the old days you could set up theportal with as many API’s as you wanted and thenwait for the audience to come. That is not how itworks, as what counts is how many APIs are used.

It is not only about the portal; with APIs you shouldalso have a team with commercial people that canhelp the clients make use of the improved or newfunctionality. In the end, all stakeholders involvedneed to see the showcase in order to see how theycan make use of this functionality.

In addition, a good implementation team is needed aswell, since customers need solutions that are tailormade for their needs. In this sense real "self service”is difficult to achieve, because customers initially have

to rely on the Rabobank. The current developer portalis a starting point but will certainly progress in thecoming years.

Nico emphasises internally that products should bedeveloped into an API from the start, by design.Years ago at Amazon they said: “nobody buildsanything here if you cannot communicate it to therest of Amazon and/or to the outside world.”Rabobank has the same ambition.

Rabobank aims to develop “Banking-as-a-platform”and “Banking-as a-service” in which FinTechs andother third parties are allowed to connect withRabobank's systems directly via APIs so they can buildbanking offerings. The strategy is twofold: (i) improvethe Rabobank platforms (such as Rabo app) radicallytowards the best in class and (ii) to facilitateRabobank’s presence in the third-party platformswhere the customers are present.

Nico Strauss’ view on Rabobank’s innovationTribe lead B2B Services, Digital Transformation Centre, Rabobank

29

Nico StraussTribe Lead B2BRabobank

With respect to Innovation, Rabobank has set up a full-scale innovation-hub to generate ideas from inside theRabobank organisation, including the so-called “moon-shot” programmes, under which several ventures havebeen founded (like Peaks, Tellow, SurePay) and theestablishment of an EUR 150 mln. fund to financefintech and ag(ri)tech start- and scale ups.

In addition, Rabobank invests in ideas from the marketthat fit in with the strategic portfolio.

It is all about change and partnersBanking has always been a somewhat closed andintroverted sector and they were accustomed to doingtheir things on their own. That is now rapidly changingas everyone needs to cooperate with everyone andpartnerships with the stakeholders in the ecosystem(clients, clients of clients, innovators etc.) are key tothe development of the bank. Nico: “We shouldbecome better, the user experience should improve,and we should lighten the burden of our customers,but everything within the boundaries set by theregulators, so with the same security standards asbefore.”

You can see that the world is at a massive turningpoint: Bigtechs like Google and Facebook, which weremassively loved by the public, are now also havingdifficulties with the regulators. Banks are wellpositioned to step into that space as they have putmore emphasis on trust and security in the recentyears than these Bigtechs.

Nico explains that the transition the Rabobank is goingthrough nowadays, is not so different from thetransition that he experienced when he worked forWorldpay, as that transformed from a banking

department of RBS into one the world’s biggest startups.

Multi-bankingMany banks are now positioning themselves as inwardlooking and are building multi-banking platforms toprovide account (real time) visibility and paymentinitiation as an alternative to the SWIFT connectivity.

For example, Rabobank is active with an InstantPayments API, but is also building a lending platform.Via this platform SME’s can obtain funding for theirbusiness much more quickly than formerly, via astraightforward KYC.

For the corporate treasurer, Rabobank did research onAPI aggregation to make sure that all requirementsfrom Rabobank and its clients are included in thebusiness desks so that more functionalities can beoffered, such as payment initiation and instantpayments.

It is not Rabobank’s ambition to roll this out globallybut mainly to focus on The Netherlands and WesternEurope.

An often-heard internal question is: ”Are we going todevelop it ourselves, via partnerships or via third-partydevelopment?” The bank used to be all about, if it’snot invented here, we are not going to use it.

But via these partnerships and third-partydevelopment programmes Rabobank is rapidly losingits syndrome of “not invented here so we don’t do it”.They are now capable to develop much more quicklyvia partnerships than it did in the past, fully on its own.

Open Banking and the value of dataPayment Initiation (PIS) is possibly not the mostwanted functionality right now, but AccountInformation Services (AIS) is.

And with AIS the big question is, what do you do withthe data, as Nico emphasises that - although we cando a lot right now- we are not going to do it all asRabobank is to a certain extent more restrained thanother banks as Rabobank claims that security of thecustomer data is for them a vital concern.

An interesting development will be when variousportals will start to cooperate with each other.As an example: if you see a house you want to buy onFunda, you can in one click check whether you canfinance it and with the next click you make anappointment with the estate agent as well.

Nico StraussTribe Lead B2BDigital TransformationRabobank

30

Barometer resultsNico is not surprised at the Barometer’s result that OpenBanking and PSD2 is not high on the corporate treasurer’sagenda. Just as retailers were sceptical about the internetin the early years, many corporates have a wait-and-seeapproach and are stuck in a classic chicken and eggproblem. The merchants want to do it only when allconsumers use it and the consumers only start using ituntil all merchants provide it.

It is up to the banks, Fintechs etc. to market solutions.Start small and make the pool of users larger over time. Inthat way, Ideal was also invented in 2004. That startedsmall scale, then increased exponentially until in the end itbecame market leader with the majority share of themarket.

Solving treasury issues through co-creationWith respect to 24/7 reporting, Nico says: “be carefulwhat you wish for”, as 24/7 reporting and instantpayments and technology will turn treasury into 24/7 realtime dashboards, but many treasurers are still hesitant tomanage these exposures in the weekends as well as aresult of that new technology. But Nico is open for ideasto turn that challenge into a solution so that treasurerscan go home for the weekend.

Links for further readinghttps://www.creditexpo.nl/rabobank-en-mollie-werken-samen-aan-beter-overzicht-voor-consument/

https://www.finextra.com/newsarticle/33965/money-2020-europe-2019-qa-rabobanks-nico-strauss-and-signicats-john-erik-setsaas

Nico StraussTribe Lead B2BDigital TransformationRabobank

31

Epilogue

In March each year, the Editor Panel meets toshare ideas on content and improvements tothe next edition of the Treasury Barometer.

The Editor’s Panel increased from 3 to 6, ofwhich 4 are new members. That resulted in anEditor’s Panel meeting with a lot of fresh ideasand insights both from the corporate treasuryas well as from the treasury educationcommunity (via Frans Boumans of HogeschoolUtrecht).

Together with the Editor’s Panel, we decided tobroaden the number of themes from 3 themes(in 2018) to 5 in this year’s survey.

This year’s questionnaire was completed by 35respondents. We will evaluate the options toincrease the number of respondents for nextyear’s survey.

This year’s edition walked you through many ofthe hot topics that the Treasury face nowadays.

Sustainability seems to be established as acore value and has moved beyond the initialhype, but the results of the Barometer showno increased activity.

With Fraud, we have clearly chosen a trendingtopic as the treasurers are still trying to findthe right responses to the increased cyber andpayment fraud activity, advanced technology

techniques and social engineering that is beingused nowadays.

The KYC topic has never disappeared from thetreasury agenda, but the treasury departmentsare now ‘flooded’ by new regulation and evenstricter rules and more questions and,therefore, longer lead times for opening bankaccounts and other bank products.

The IBOR phase out effect will be temporarybut will lead to a total rebuilding of the bank’sinfrastructure which will be pushed through totheir corporate clients, who are just beginningto become aware what is ahead of them.

With the development of cash managementand technology innovations and massive value

chain changes, treasury departments areincreasingly in need of a Treasury and IT roadmap to guide them to the multiple solutionsavailable.

The content-interviews were again a greatadded value to the results of the survey. Weare therefore very grateful to the 4 personsthat agreed to be interviewed for the TreasuryBarometer, as they gave more insight into thesubjects.

We are also very grateful to the DACTorganisation that the Round Table, at which wepresent this year’s edition, can be held on 14thNovember 2019 at the location of the DACTTreasury Beurs 2019 before the Eat, Meet &Greet event and that invitations for this eventare being sent out together with the DACT.

We trust that you have enjoyed reading TheTreasury Barometer and we would welcomeyour ideas, participations and thoughts fornext year, so that we can make the 2020version even better.

In summary, we are really proud of this editionand would like to thank all that have been partof creating the Treasury Barometer 2019.

Kind regards,

The Treasury Barometer team 2019

From the Treasury Barometer 2019 Editorial staff

33

ContactIf you have any questionsabout the contents of this TreasuryBarometer report, or if you would like to contribute to future reports or to participate in the Editor Panel, please contact:

Robert-Jan WekkingEnigma ConsultingManaging PartnerPhone no. +31 6 24 32 08 78E-mail RWekking@enigmaconsulting.nl

Bart JonkheerRabobankHead Transaction BankingPhone no. +31 6 53 17 03 15E-mail Bart.Jonkheer@rabobank.nl

For further information please go to www.Rabobank.nlwww.enigmaconsulting.nl

Contact