TD Survey: Finance Professionals Split on Potential Economic Recession

Half of corporate treasury and finance professionals do not believe an economic recession is a threat in 2020, according to a recent survey conducted by TD Bank at the 2019 Association of Financial Professionals Annual Conference held in October in Boston.

Instead, payments fraud and cybersecurity risk are high on their threat list, with 40% of respondents reporting this category as a top operational challenge for their organization this year.

Specifically, about one-in-three (34%) respondents said they are unconcerned by a potential economic recession, while 16% do not think that a recession is even imminent. Of the 50% of respondents who did indicate some qualms about a recession, they are implementing the following to help safeguard their organization:

  • Increasing capital reserves (25%)
  • Holding off on large capital spending projects (18%)
  • Accelerating debt payoff (11%)
  • Refinancing debt to save cash (8%)

“Finance professionals clearly won’t be fretting much over the prospect of economic volatility in 2020, but cybersecurity is understandably a continued worry and the headlines show they are right to be concerned,” said Rick Burke, Head of Corporate Products and Services at TD Bank. “The half of companies that report that they are preparing for turbulence in the economy report they have strategies to maximize finances to weather potential challenges.”

Promising Approach to Faster Payment Solutions

In addition to surveying concerns for 2020, the TD report looked at opportunities to grow in the coming year.

The largest opportunity for innovation in corporate treasury is faster or real-time payment use, according to 46% of respondents. With the increasing options for faster and real-time payments, the space continues to evolve. In fact, 30% of survey respondents already use faster payments, including RTPs for corporate treasury, and 18% expect to adopt one of these payment options before the end of 2020.

Of those who responded that they don’t currently use or have a timeline to use faster and real-time solutions, 16% believe they need to implement them soon, while 14% revealed that they would love to use faster payments, but are waiting to move forward until they can reach all endpoints through a single solution.

As in previous years, however, the interest in using technology solutions does not match corporates’ ability to currently adopt them. About a third (32%) of respondents named the ability to adapt to faster electronic payments as a top operating challenge in the 2019 survey, while 37% named this same obstacle in a similar question in 2018.

“Adoption of the newest payment standards will pay dividends for organizations over the long term,” said Burke. “The cost to companies of not doing so will increase exponentially in coming years and inaction also presents operating risks. The best time to upgrade was yesterday, but today’s your next best bet.”

Blockchain Spending Falls Flat

Although technology continues to impact treasury operations, only 6% of professionals named blockchain and distributed ledger technology as the most opportunistic area of investment for treasury operations in the coming year. This weak predicted spending is in stark contrast to the 92% of respondents who, when led to consider the favorable aspects of blockchain in corporate treasury, named at least one positive benefit the technology would bring to the payments industry. Those benefits were speeding up the payments process (28%), improving cross-border payment efficiency (22%) and reducing payments fraud (22%).

The top areas of treasury operations where organizations do plan to invest and/or see the most opportunity include:

  • Data, analytics and reporting (23%)
  • Cybersecurity and fraud protection (22%)
  • Artificial intelligence, machine learning and robotic process automation (22%)
  • Automating payment and payment posting processes in A/P and/or A/R (16%)

Survey Methodology

TD Bank polled finance professionals at the 2019 AFP Conference held Oct. 21-23, 2019, in Boston, Massachusetts. A total of 329 responses were collected from industry professionals, including business end-users and financial and technology services organizations.

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Terry Mulreany
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