The role of treasury and finance within multinational corporations is evolving rapidly in response to an increasingly complex global trading environment. These functions are not only responsible for managing foreign exchange volatility, interest rates, emerging risks, and compliance but are also becoming integral to the strategic direction of businesses.
Asia at the Centre: Opportunities and Strategic Priorities
A comprehensive, global study entitled ‘Pivotal: How treasury and finance enable a new era of globalisation’ conducted by DBS finds a growing interest in the opportunities presented by ASEAN markets, India and Mainland China. Three-quarters of the executives in our survey say that expansion in Asia is a strategic priority for their business.
For treasury and finance teams, this means supporting business strategies focused on diversifying revenue streams and supply chains, adopting digital technologies, and challenging traditional corporate planning assumptions.
The research identifies a leader group of companies that excel in aligning treasury and finance with business strategy. These companies stand out for their proactive collaboration with strategic functions, deepening local relationships, leveraging disruptive technologies like AI, and challenging risk assumptions, leading to greater success in diversification and growth.
The New Era of Globalisation
Globalisation, once defined by deep and rapid integration of national economies, is evolving. This new approach is powered by digital innovation and data-enabled business models as much as it is by manufacturing and shipping. It is centred on Asia but reliant on a multi-polar economic system, and it is more sensitive to sustainability and net zero than earlier forms of globalisation. This shift demands new approaches from businesses, especially in navigating the complexities of cross-border operations and supply chain disruptions.
"Asia continues to be the epicentre of growth, with businesses seeking new consumer markets and manufacturing capacities in the region’s emerging economies," says Soon Chong Lim, Group Head of Global Transaction Services at DBS. "To capitalise on these opportunities, companies are increasingly operating across borders, embracing e-commerce and delivering on-demand services to keep up with changing consumer preferences.
“These shifts require corporates to work with a wider ecosystem of partners, including banks, to tap a broad suite of solutions and services – ranging from optimisation of cost structures, data analytics and AI, treasury risk management, as well as innovative digital payments and working capital management.”
Business Adaptation and the Role of Treasury and Finance
As businesses adapt to the new realities of globalisation, treasury and finance must support key areas of transformation, including:
1. Diversifying Revenue Streams in Asia: Companies are expanding in Asia to tap into its vast consumer market and innovative potential. Treasury and finance teams help manage the regulatory and financial complexities of this expansion. Why Asia? The region’s enormous consumer market and growing receptiveness to digital innovation exert a strong pull – especially in times of volatility, uncertainty, complexity and ambiguity.
2. Embracing Digitalisation: Digital innovation is at the forefront of business transformation. Digitalisation is not limited to topline growth: new technologies are also essential on an operational level. Treasury and finance are key in implementing technologies like AI and blockchain, which enhance operational efficiency and enable new business models.
3. Driving Net Zero: Decarbonisation is rising up the corporate agenda in the wake of increased investor, stakeholder, regulatory and consumer demand. Sustainability is a growing priority, and treasury and finance are instrumental in securing financing for green projects and ensuring compliance with ESG standards.
4. Reconfiguring the Supply Chain: The need for supply chain diversification is paramount. The disruptions caused by Covid-19 and geopolitical conflicts have shown businesses the risks of a non- diversified supply chain. Many are now building greater resilience and agility into their networks, navigating geopolitical and economic challenges.
The Strategic Role of Treasury and Finance in the new Era
Su Shan Tan, Group Head of Institutional Banking Group at DBS, insists that treasury and finance contribute significantly to the answer. "Treasury and finance teams are uniquely positioned to influence the long-term success of their organisations by enhancing strategic planning, risk management and data-driven decision-making," she says. "Through these measures, companies can better navigate challenges and capture new business opportunities.” The evolving role of treasury and finance is increasingly strategic. These functions are now central to business transformation, influencing areas such as geographical diversification, digitalisation, sustainability, and supply chain management. More than nine in 10 treasury and finance teams are involved in shaping corporate strategy, providing vital guidance on risk management, financing, and operational continuity.
Challenges Facing Treasury and Finance
Treasury and finance teams face several challenges as they expand their strategic role:
1. Financing Transformation: Securing capital for growth in new markets is becoming more challenging due to regulatory complexities and economic uncertainty.
2. Securing Net Zero Consistency across regions: The drive for sustainability requires treasury and finance to explore green bonds and other innovations in transition financing, as well as to meet the stipulations of ESG reporting and compliance. “Treasury plays a crucial role in sustainability," confirms Singhal at SRF Limited. "We evaluate the impact of each project funded through banks and encourage sustainable practices throughout the company. We also prefer to collaborate with banks committed to sustainability, even if they are not the most competitive on cost, thus indirectly aligning our financing with our green ambitions.”
3. Overcoming Barriers to Digital Innovation: While digital transformation is critical, the availability of digital infrastructure varies across Asia, posing challenges for treasury and finance.
4. Finding the Right Location for Treasury: As businesses invest more in Asia, selecting the optimal location for regional treasury centers is crucial. Singapore is a leading foreign exchange trading hub and a natural gateway between East and West, Hong Kong SAR is highly rated for its tax and regulatory frameworks, financial resilience and depth of talent pool, whereas Shanghai ranks strongly across all dimensions. But Singapore’s stability, established reputation and ease of doing business – which were highly visible in the wake of restrictions introduced during Covid-19 – give the city state an edge.
Four strategic actions that treasury and finance can take to influence business strategy
To further enhance their strategic influence, treasury and finance teams should:
1. Increase Upstream Collaboration: Proactively engage with business functions early in the planning stages to ensure alignment and contribute to strategic decision-making.
2. Prepare to Challenge: Be prepared to challenge strategic decisions, especially when it comes to risk management and financial returns.
3. Deepen Local stakeholder and banking Relationships: Build strong local partnerships with banks and stakeholders to navigate regulatory environments and secure favorable financing for business diversification. .
4. Leverage New Technologies: Embrace digital tools to enhance efficiency, manage risks, and support business transformation.
Conclusion
Treasury and finance are increasingly pivotal to strategic decision-making in the new era of globalisation. Their influence on corporate planning, decarbonisation and digital transformation is already pronounced and appears to be growing at pace as businesses turn their attention to the opportunities presented by Asian markets. By adopting a proactive, collaborative, and technologically advanced approach, treasury and finance can significantly influence the long-term success of their organizations in the dynamic global landscape.
