Digital disruption: advantage treasury!
Insights from the Consumer and Pharma sectors
EMEA Sub-Sector Head for Healthcare,
Treasury and Trade Solutions, Citi
Head of Benelux Sales & EMEA Sub-Sector Head
for Consumer, Treasury and Trade Solutions, Citi
Digitisation has transformed many industries over recent years. Treasurers in Pharma and FMCG industries should begin reaping the benefits.
The disruptive powers of digitisation, coupled with rapidly evolving consumer demands and behaviour, are driving the pace at which legacy industries are rethinking their business models, innovation strategies and distribution channels.
Desmon Lewis, EMEA Sub-Sector Head for Healthcare, Treasury and Trade Solutions, Citi, says Healthcare, namely Pharma, is undergoing such transformation. At the heart of change is the industry’s historical reliance on product-centric innovation, which is moving more to data-centric innovation. In addition, a rapidly evolving ecosystem – which includes new supply chain partners and a more demanding patient – is causing pharmaceutical companies to re-evaluate their business models. Data is the new currency in Healthcare, and significant value can be pulled from data analytics.
Demographic change is another big opportunity for Pharma. Ageing populations in some geographies and the particular treatment demands of this fast-growing cohort is enabling some industry players to leverage more specialised business models. This includes the driving of new data streams from diagnostic tools and wearable devices, leading to proactive and predictive outcomes.
“FMCG is also morphing”, says Hans Oostenbrink, Head of Benelux Sales & EMEA Sub-Sector Head for Consumer, Treasury and Trade Solutions, Citi. Most visible is the transformation into multi-channel distribution models through small-scale initiatives which are increasingly sharing market space with large retailers. “This is facilitated by rapid e-commerce progress and changes in consumer behaviour and demographic,” adds Oostenbrink.
Here, legacy players may see their margins shrink and costs rise, but the innovators amongst them are recouping losses from elsewhere across the supply chain, using new, often bank-driven, solutions to strengthen relationships with suppliers.
Treasurers under pressure
A major cross-sector factor emerging is the increasing emphasis on data collection and analytics. In FMCG, Oostenbrink says “data analytics is being exploited to gain deeper customer insights and increased capacity to precision-target consumers.”
In Healthcare, Lewis observes a “sea change in data analytics”, with the raw material coming from consumers and supply chains as they increasingly adopt new tools to collect and harness data. “With the vast amount of real-world and real-time data being collected, companies will be under increasing pressure to translate it into an information asset and figure out ways to monetise it responsibly,” says Lewis.
The dynamism of these sectors is seeing prudent treasurers evolving their operations to better support strategic and growth objectives. Lewis says Pharma firms are busy experimenting with digital and data solutions “but their organisational mindset on the value and use of data must change,” he says, adding: “Being traditionally an extremely highly confidential and private sector, Pharma will have to learn to share and collaborate more, while keeping in mind the cyber-security risks that are at play.” Oostenbrink, meanwhile, says “while digitalisation is a clear focus for FMCG business teams, there is a need to transform the finance function to align it with these changing business models and become an integral part of the customer experience.”
How your bank can help
“It’s critical treasurers instil a data and ’digital first’ mindset,” says Lewis. “That requires the right tools and resources to drive consistency across new technology partnerships or acquired businesses. It means managing the increased complexity of new market expansions, managing risk and quickly adapting to change,” says Lewis. “Treasurers should expect their banks to be able to aggregate and distil the right financial data for their company on the back-end, whilst also providing a customisable, easily digestible summary of relevant financial activity on the front-end.”
Lewis says treasurers can now leverage new and real-time communication and technologies such as APIs and Citi Payments Insights (leveraging Citi’s network and SWIFT GPI) to help better contextualise data to support internal and external stakeholders. These can be used alongside existing platforms such as ERP or TMS systems.
Within the changing supply-chain dynamic, trade finance solutions can help treasurers maximise short-term cash, and leverage analytics on those requesting early payment discounts to understand how resilient their supply chain is and uncover areas of risk.
Furthermore, with M&A expected to remain strong across both FMCG and Pharma, identifying short, medium and long-term priorities for treasury as an outcome of such transactions becomes vital. Firms could benefit from solutions like Citi’s M&A Playbook, enabling focus on consolidation of people, processes, platforms and integration. By leveraging bank-offered big data and benchmarking tools, like Citi’s Treasury Diagnostics and Client Relationship Insights solutions, treasurers can now perform self-diagnostics, predicting future changes in treasury activities.
On the evidence of the digital disruption seen in just two sectors, treasurers are well-placed to step up to a more strategic vantage point. The gap between current and potential treasury capabilities is one which Lewis and Oostenbrink believe can be addressed by working with banking partners towards “a more data-centric, innovative and agile” approach.