How Canary Wharf almost became a ‘yuppie tombstone’ – a lesson to be learned when modernising your treasury systems

In 1987, the then UK Prime Minister Margaret Thatcher telephoned Canadian property developer Paul Reichman asking him to develop London’s derelict docklands into a glittering new financial centre. The urban myth is that Reichman, who already boasted similar successes in New York and elsewhere, looked at a small-scale map of London and deduced the half-inch or so gap between the City and the Isle of Dogs meant a quick journey between the two. If true, that misinformed deduction, along with an overoptimistic promise from Mrs T (another urban myth?) that the Jubilee tube-line extension would be ready before his skyscrapers, would almost certainly have contributed to Reichman’s company collapsing in 1992, the largest corporate bankruptcy in history at the time.

Of course, despite the centrepiece tower at 1 Canada Square being gloomily described during the mini recession of the early ‘90’s as a tombstone to the preceding yuppie boom years, Canary Wharf survived and eventually thrived, by some measures even surpassing the City in recent years.

And the ‘Wharf’s’ initial failure was not due to location, need for space or quality of real estate, but lack of connectivity. Before 1987 there was no Jubilee Line extension, no Limehouse Link Tunnel, no regular Thames waterbus, no City Airport, and no DLR. The only travel option was a gridlocked journey through winding Dickensian streets, with transport links finally becoming adequate some years or decades later. Even today, Canary Wharf awaits the completion of the long overdue Cross-Rail line.

The morals therefore seem clear for anyone building from scratch or carrying out major redevelopment…

• Make sure you sort connectivity and transport links out before or during your project, not afterwards,
• Don’t rely on promises from unproven suppliers, especially for complex infrastructure projects of a type that are prone to delay,

… and those morals apply as much to treasury systems as to real estate.

At Gresham, we’ve seen numerous treasury projects unfold for multi-banked companies, with varying degrees of success. Many companies will already have an ERP of some sort, so start with a TMS deployment, confident that the bank integration element is a commodity that can easily be achieved. System vendors, and sometimes the banks themselves, promise that automated statement delivery from multiple banks can be delivered in good time to provide enterprise-wide cash balances as soon as their solution goes live. Similarly, automated payments channels going out to the banks will also be anticipated as being ready when the TMS is ready. Thus, the business case for investment in new treasury systems is justified, whether it be for an in-house bank, resolution of reconciliation issues, payments factory, centralised/decentralised service centre/hybrid of both, or flexibility to add/remove new banks and entities when buying/disposing of subsidiaries.

But successfully implementing automated corporate to bank connectivity is not as easy as it looks. This is confirmed by our clients, who often talk of information starved TMS’s being underutilised for some time after going ‘live’, at best relying on manual upload of data to deliver value. We see many super-sophisticated TMS’s and ERP’s, with elegant functionality for complex cash forecasting, debt/investment profile management, reval capability etc, become neglected white elephants. Meanwhile, the basic but essential matter of day-to-day cash management and payments control continues to be done manually, with the usual spreadsheets and draws full of bank-portal tokens.

For a company to redevelop its treasury landscape effectively, all internal systems (ERP, payroll, TMS, in-house built platforms including any based on excel or similar, etc) must be automatically linked to all of that company’s banks. The resulting foundation of enterprise-wide cash management can then be built upon to deliver more sophisticated treasury functions.

In our Canary Wharf analogy, connectivity channels with banks equal the transport links. Tubes, light railways, water and road buses, planes, represent the different ways we can connect with banks; SWIFT, host-to-host, API’s etc. Like the transport links, comprehensive bank connectivity must be in place for a company’s overall treasury system landscape to be viable. And when planning the system roll-out, treasurers need to know whoever is promising to deliver that bank connectivity can do so to time and budget.

All before committing a penny to the project.

From 16-18 October, Gresham will be joining the brightest minds in treasury at the Bella Centre, Copenhagen for EuroFinance 2019. Find our team on Stand S24 to further discuss the importance of connectivity and Gresham’s approach to successfully delivering multi-bank projects through the award-winning Clareti platform.

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