GUEST: Tom Lang, Executive Vice President, Treasury Management, Product and Operations, PNC
HOST: Jack Sweeney of CFO Thought Leader
Machine Generated Transcript (unedited)
CFOTL: Hi, it’s Jack Sweeney with the CFO Thought Leader Podcast, and we’ve caught up with Tom Lang, executive vice president, head of Treasury Management Product and Operations at PNC.
Tom is attending the AFP Conference in Philadelphia this week, and he promised to answer our questions.
Tom, we have a few of them for you. First, thank you for your time.
Jack, thanks for having me.
What we really wanted to ask you about is middle market businesses, and as they come out of the pandemic. Now, one of the things we heard regarding middle market businesses is that they really did kick off some digital transformation efforts during the pandemic. It was an accelerant.
And I’m wondering, first of all, did you see the same in the treasury management realm? Is that true for the treasury management realm?
Yeah, we did for sure. At PNC with our treasury management platform, we have an end to end solution that we offer our customers, and that really allowed us to work with our customers during the pandemic as they adapted to a whole host of changes.
You identified one change, which is the digital change where all employees were forced home and they had to rethink their whole business processes. And one of those was, “How can I move from paper to digital?” And we saw that across the board with a host of our clients. Some of that was about, “How can I interact more digitally?” And other parts of that is… Forget moving from paper to digital, “How do I use a bank to perhaps move some of my operations that I would do, have people coming to the office every single day, and how do I move some of those to another provider?”
We were able to help many middle market clients accelerate plans to both digitize their operations, but also automate their operations to make them more efficient.
Help us understand when it comes to mid-size companies today, what capabilities distinguish treasury savvy businesses from let’s call them the treasury laggards, the guys who are behind. What really distinguishes those two groups?
Yeah, I think it’s adopting technology. Like looking at your treasury operation and saying, “Where can I implement technology that will help me solve problems, make my business more efficient, and I think most importantly, allow my people to focus on the value-add things that position my company to be better off.”
For instance, I think one thing that we have seen that got accelerated by the pandemic is something along the lines of cash forecasting. Cash forecasting is critical to every single treasury operation, especially true within middle market companies. And historically, this has been done through Excel spreadsheets, and not just Excel spreadsheets, but getting in a room together and saying, “All right, who’s done part A? Who’s done part B? Let’s bring that all together so that we can get to a cash position that we feel comfortable about,” and then those little interactions that occur in the office in order to bring it together.
That is a lot of work, a lot of effort just to get to a single picture. At PNC, we have a cash forecasting solution that we’ve worked with clients through the pandemic to use our tool to collect this information in order to produce forecast, and then really focus that time on what are the different scenarios that could happen?
We are seeing right now this rapid change in rates, and that has required a lot of thinking, a lot of strategizing from treasury departments. And those that are using more advanced tools can focus more of their time on helping their company solve problems than on doing the what I will call the day to day work.
I want to ask, what is the primary incentive for convincing, again, a laggard treasury department to step up their game and adopt a world class solution? Let’s call it the state of the art solution. What’s the incentive? Is it cost savings? Is it something else? What is it?
I think it’s a few things. So one definitely is cost savings. There are many areas in which automation allows our clients to reduce costs. Think of this specifically in the payables area, our invoice automation and integrated payables solutions allow clients to get out of the business of processing their own invoices and approving payments. Obviously, we provide complete control so that you have access to information and have a very controlled workflow. That’s an example of cost savings.
But I think another benefit is to have a greater insight into your cash positions and control of your cash positions. We just talked about one with cash forecasting.
And then I think what’s increasingly true for many clients, and this is true within the middle market, is the experience that they’re providing to their key trading partners or those that have a consumer aspect that are primarily B2B, having a C that touches them in some way.
The expectations of what those interactions are going to be, either from a B2B perspective, or a B2C perspective from all of our partners is that they’re increasingly digital, increasingly easy to use, and increasingly providing value-add data so that we can trade with each other more efficiently. Or, that in the case of a consumer, that they’re able to interact the way that they want to interact. I don’t think it’s so much of a choice because the world around us is happening. It’s how you choose to adopt and prioritize what is occurring. And importantly, what’s most important for each individual company out there.
Everything we do at PNC is client first. And so everyone’s transition from what I would call a very transactional historical cash management business to a transformation that impacts either other businesses or other consumers. Everyone’s got to shape that themselves. But it is happening.
Tom Lang, executive vice president with PNC. Thank you for joining us.
Thanks for having me.