This episode features an interview with Paolo Tonucci. Paolo is CFO at Marex, a diversified global financial services platform. Paolo has been with Marex since 2018, having joined as COO and becoming CFO in 2020. Prior to Marex, he served as Group Treasurer at Commonwealth Bank of Australia. He has also worked as Head of Funding and Liquidity at Barclays Bank in London and spent 12 years as Global Treasurer for Lehman Brothers. On this episode, Paolo discusses how to reduce your vulnerability to currency hedging, staying on top of the latest and greatest in fintech platforms, and how to effectively secure accounts against emerging cyber threats.
This episode features an interview with Paolo Tonucci. Paolo is CFO at Marex, a diversified global financial services platform.
Paolo has been with Marex since 2018, having joined as COO and becoming CFO in 2020. Prior to Marex, he served as Group Treasurer at Commonwealth Bank of Australia. He has also worked as Head of Funding and Liquidity at Barclays Bank in London and spent 12 years as Global Treasurer for Lehman Brothers.
On this episode, Paolo discusses how to reduce your vulnerability to currency hedging, staying on top of the latest and greatest in fintech platforms, and how to effectively secure accounts against emerging cyber threats.
Quotes
*“We’re always pushing. I think if you stand still, you are going backwards. There’s new products and new platforms, new languages emerging all the time. So I don’t think that you can sit on a stack and say, ‘That’s the perfect technology stack and I’m never going to have to modify it.’ We’re always looking to bring in new products. We’ll upgrade them, make them quicker and faster. And the pipeline of potential opportunities in terms of technology developments or new technology from third parties is enormous. There’s always more demand than there is capacity to develop or to bring in those technologies. But absolutely, you’ve got to move forward.”
*“You need to know your own business and you need to invest in knowing your own activities and your own currency exposures, which is more difficult than people imagine. Just because sometimes the processing and the accounting systems are not set up to handle multi currency or provide that. But that’s where you have to invest. So again, it’s a function of having the right systems and being able to extract the right data.”
*”What do you need? You need to have commercial skills. You need to think of yourself as, I think, an owner of the business, as well as being a guardian of the assets and guardian of the organization. So, you need to extend the skills that you have because it used to be perhaps a bit more compartmentalized. And you could be highly skilled in the basics of finance, because you need to know more about treasury and payments and technology and treasury, and you need to control understanding, which perhaps that wasn’t so important in the past, so that you are anticipating areas of risks. So it’s a really broad set of skills.”
*“I think the investment office always has an eye on liquidity. So I think somewhere between the chief investment officer and the treasurer, you will find that that exists. I sort of feel like depending on the organization, your treasurer is your chief liquidity officer. You know, it may not be the title they have, but it is certainly the sort of centerpiece of what I think they do.”
Time Stamps
*[12:35] Segment: Cash Crossroads
*[24:55] Segment: The Playbook
*[31:31] Segment: Report From the Future
*[36:24] Segment: Quick Hits
Sponsor
The Invisible Vault is powered by the team at Kyriba, the global leader in cloud treasury and finance solutions, empowering CFOs and their teams to transform how they activate liquidity as a dynamic, real-time vehicle for growth and value creation. To learn more visit www.kyriba.com
Links
Connect with Paolo on LinkedIn
Connect with Daniel on LinkedIn
Paolo Tonucci: I think in a nutshell you have to be the best, most knowledgeable, um, and the most commercial person in the organization. You have to know more about almost every dimension than anyone else. And that is, I think, the real appeal is that you can have such a sort of broad insight.
Narrator: Hello and welcome to The Invisible Vault.
This episode features an interview with Paolo Tonucci. Paolo is CFO at Marex, a diversified global financial services platform.
Paolo has been with Marex since 2018, having joined as COO and becoming CFO in 2020. Prior to Marex, he served as Group Treasurer at Commonwealth Bank of Australia. He has also worked as Head of Funding and Liquidity at Barclays Bank in London and spent 12 years as Global Treasurer for Lehman Brothers.
On this episode, Paolo discusses how to reduce your vulnerability to currency hedging, staying on top of the latest and greatest in fintech platforms, and how to effectively secure accounts against emerging cyber threats.
But before we get into it, here’s a brief word from our sponsor…
Narrator: So please enjoy this interview with Paolo Tonucci, CFO at Marex, and your host, Daniel Shaffer.
Daniel Shaffer: Well, Paolo, I think with Marex having some API and AI, um, interests, there's a great opportunity to kind of uncover some of that, but beyond just pitching and promoting, you know, Marex, let's, I just want to hear about like your thoughts as a financial professional, you've been through the ranks. I mean, you've done the banking bit, you know, you've really been a part of kind of how to finance companies, large and small. And I think you have a unique perspective on the value of technology as it is a facilitator of liquidity and finance to keep businesses moving or to potentially help businesses grow.
Paolo Tonucci: Yeah. I mean, as you say, I've been through the ranks, I've seen the sort of evolution of, the finance function. Um, I think that, you know, finance has probably become a little bit more central to, most decision-making, um,
for one reason or another either it's because of this sort of importance of, reporting accuracy or. Onus on rapport, cutting accuracy, or, or because of the need to manage your balance sheets and your liquidity and your cash, but it's certainly become, more important. Um, now when I started, you know, technology was really quite rudimentary and it was quite difficult to, sort of even get, um, you know, basic information. Um, my, my sort of starting um, place in the industry was trading bonds, getting sort of positions was difficult. Um, let alone sort of understanding all of the, sort of cash positioning behind that. But, um, In my career in the last 25 or so years, we've seen huge improvements. Um, in, the level of information there's sort of speed in which it's, you know, it's being generated the sort of accuracy, the insights you can get. And I think it's allowed us, um, as you know, financial institutions, as players in sort of financial markets to, you know, to service a lot more clients. And to do so in much larger size than would have been the case. not all that long ago. Um, and it, and it has absolutely transformed the sort of quality of the offering that, that you can have. And you can see that, you know, that, that evolving, whether it's through, you know, API APIs, which allow, connection for data or for execution or whether it's through, some of the sort of new, the new opportunities around sort of artificial intelligence. I mean, you can see how those might improve our, client offering and for a firm, like merits, you know, that's really the sort of center of everything is, you know, how do you improve your client offering? How can you, you know, service more clients and I sort of high quality way. Um, and that's certainly at the center of how I think about, uh, technology.
Daniel Shaffer: Yeah, absolutely. and you know, as the world opens up again, if we're doing a slow reopen that customer service and human connection and the sense of feeling like you're offering a value added service beyond just servicing the client is really critical today. People are looking for something more, and technology in many instances can provide some extra data, Marex, insights that they may not have thought about. Uh, are you leveraging those insights, uh, yourself Paolo, or your company Marex, um, to help you with. I see a bigger picture about the opportunities in front of them.
Paolo Tonucci: Yeah, absolutely. I mean, we have, you know, a variety of ways in which that's provided or offered to, uh, to clients and it's, and we're always looking to extend that. So we, you know, we have a, uh, a central client portal, um, which allows you to get, um, access to quite a lot of, you know, underlying market data allows you to get access to execution capabilities that allows you to, uh, to get access to particular channels of information that you might be interested in. So it might be that your particular interest is in agricultural products. And, um, and so we have, you know, variety of ways in which you can filter that information and in the past, those, those were only really accessible through research reports or emails being sent out. And then now it's much more digestible. you can more easily follow the, sort of chronology, you can download the data. You can, you know, you can reformat things into something which is more useful for you. So, you know, I think that, that evolution. Yeah. Um, it is, is it's sort of playing out, um, in a better quality product. I think there's still quite a long way to go. Um, I mean, we're not unique in doing this. I think it's been, you know, it's been sort of center of a lot of financial services, um, improvements, the access to information, the access to execution, whether that's internet banking or mobile phone banking for sort of retail customers, whether it's sort of investment, um, for your, broker, um, or in our case, you know, for the more, sort of professional level, um, you know, transactor, the access to those capabilities is now much more centered around electronic and electronic.
Daniel Shaffer: but it's really fascinating to hear that. And I want to dive in even more. So let's back up a little bit though. Paolo, before we do, you gave us a hint of where it all started for you in the bonds market, et cetera. But tell me even more fundamental to getting into banking, bonds, et cetera. Like why was finance on the radar for you? How did that bubble up? I mean, there's so many things to do in life. What was it for you that made finance the one.
Paolo Tonucci: well, I, you know, I started, my career in the early nineties, so in a really, very long time ago. And at that time, in fact, before then, um, you know, there there'd been, you know, this huge, um, transformation in the. sort of banking sector in the UK. And it went from being this really, you know, rather, um, you know, old fashioned, antiquated and, and sort of, uh, um, protocol-driven market to one, which was much more open. I was at school when, you know, big bang happened in London. It was right at that time when, you know, some of my friends were, you know, moving into the city. And, it had a lot of profile. it was, I, you know, I thought a very sort of exciting time in that industry. There were, you know, other industries that I think were emerging then, but. Yeah. I was probably a better finance person than I would have been a DJ or music, you know, so that, that wasn't really a sort of path that was, was likely to yield as much as success. So I mean, slightly sort of filtered into that because it would just happen to, have a lot of attention, um, and be an area where there was a lot going on. And as you know, once I came out of university it sort of evolved the sort of the establishment in London had become, um, very international. Um, there were a lot of opportunities and they were really interesting. I mean, this was the time when, those sort of capital markets were growing enormously. So yeah, I think, that drew me into it.
Daniel Shaffer: oh, by the way, Paulo, for some of us who are thinking the big bang is when kind of the, the start of time. Um, Well, maybe some of our listeners aren't familiar with that. Can you share.
Paolo Tonucci: Yeah, the big bang, the big bang, uh, in was in 1987, essentially the deregulation of, um, the, uh, the sort of London-based capital markets. it was at that point that essentially all of the sort of us and international, um, investment banks established, um, offices in London, London was looking to become the center of, uh, of, you know, international capital markets and to compete with New York, which was much more established. Um, so, you know, opening up stock markets, opening up, the, uh, sort of fixed income markets. And so it was that point of deregulation. Um, and, and I guess the sort of terminology was, suitably exaggerated, make it sound like it was the beginning of, uh, you know, the beginning of the universe. Um, but yeah, that 1987 was that, uh, you know, that point of director.
Daniel Shaffer: But it was maybe the beginning of the financial epicenter for the UK, as you're saying that moment in time, that really was the catalyst for where the region is today. Quite frankly.
Paolo Tonucci: Yeah. I mean to up to then, I mean, the UK market was really very sort of UK centric and really old-fashioned, um, and you know, literally, you would have runners taking bags of securities from, one office to another, um, and, that deregulation opened up the market to a lot of international players in particularly, I mean, Japanese and American banks really w w where the, sort of dominant and earlier, participants, it, it, led to a lot of investment in infrastructure, um, and you know, the infrastructure to support those operations in terms of, you know, the communications networks, the sort of legal infrastructure, the settlement infrastructure, you know, all of that happened around that time. And I think it did act as a catalyst for, this explosive growth in, financial markets, which then sort of ran, you know, for 20 years,
Daniel Shaffer: Yeah, no, that's fantastic. And I think that your idea about going to, uh, potentially considering the DJ, uh, gig versus a finance, uh, both equally sexy I'm sure, but
Paolo Tonucci: Yeah, well, some people might think that most would disagree.
Daniel Shaffer: maybe the long-term play was a, a little better thought out for finance, but it is an exciting time. It was then, and it has been evolving. And I think now. Another set of, you know, the open banking, um, kind of another layer of relaxing of regulations has created opportunities for finance leaders again, and also startups and fintechs, which has been really a hot area of commerce and interest in business development for many years. Um, did you think about your kind of financial beginning then in, uh, 1987, you said, because it was something that really was getting a lot of attention. How did you first jump into it? Like, what was your first or your teller at a bank? Did you, um, get into finance or economics and college or university? What, what was your foray.
Paolo Tonucci: I was still at school in 80, in 87 and a high school in 87. I went to university, um, where I studied economics. and, you know, probably at that time, I actually was perhaps a little less popular though, than it is now, at least what I'm told, but, uh, um, you know, I was fortunate be able to sort of study at Cambridge, which was, you know, w a very sort of well-regarded university. And then, when I graduated, there were, sort of quite a lot of opportunities just because the market was expanding. They were looking for, you know, young people, who were numerous, that had, you know, my type of background, sort of quantitative background. So I I'm, I'm moving. At that point onto a trading sales and trading desk in bonds, bonds being, you know, fixed income securities. And, um, that time it was, it was mainly, um, it was many Euro bonds, corporate sort of issuance and some, sort of municipality type issuance. So that was, uh, my first, sort of, um, foray into, uh, into finance.
Daniel Shaffer: Well, I had no idea. We were going to have the chance to talk to a quant. That was a, that's really an interesting background. And, and maybe something we can talk about here, um, in our next section, as we think about technology and the cash crossroads, As you were saying in an interesting way that deregulation happened and people were no longer running packets of information down the street, there were, um, opportunities for technology to come in and certainly technology is now more advanced than it was then. Um, but with the help of, of people who really understand the technical aspects of, the math of the, Uh, regression analysis, um, technology became an aid. I'm just curious as someone with your background in banking Paolo, what is your vision for technology and, and how have you seen it help yourself or others in the field?
Paolo Tonucci: I mean, technology is, you know, is, is an enabler. it's a liberator of, tasks, it's sort of an enabler of, you know, people being able to provide, um, a better service to customers or a better product, you know, if it's sort of serving an internal, model. I mean, initially, you know, my, my time and sort of ability to process, you know, complicated and large amounts of data and, you know, value new instruments, that was enabling the growth in that market. You couldn't have, you couldn't have had, you know, capital market instruments, whether those are securities or the derivatives around those without, you know, the technology to be able to generate, you know, risk, um, and pricing information. we know now that's very sort of well-established processing capabilities are, Multiples being a millions of times greater than they were. you can now get really refined information. Um, you can provide really very sophisticated offerings that, um, you know, wouldn't have been available before. It's allowed us to compress pricing. The market's been able to compress pricing and still have, you know, viable business model, but it's really about sort of enabling that, that evolution the way that I think about technology is, um, to, improve processes, improve client offerings, alleviate some of the bottlenecks, which might well be a function of sort of manual tasks. Um, and, that, is sort of also, um, reflected in the client offering. So if we can take ourselves out of, having to process on a direct basis, the, um, confirmations or, they sort of communications because it's just done automatically. Well, I think that's good for everyone. It's good for the clients. It's good for, it's good for us.
Daniel Shaffer: So Paulo, you were talking about the technology being an enabler. there's two things that are very interesting here that I wanted to kind of really unpack. And that is, I mean, technology has done so much and I think we take for granted the value that is generated as a result of the technology. One of the areas of value you said was the bottleneck. how does technology really on lock the bottleneck or make data move faster? So decisions can be made more quickly, more efficiently. it's like saying, you know, Everything is more efficient and streamlined. That sounds great. But what is that bottom line value to the customer and to a company like Marex? Why does that matter?
Paolo Tonucci: quite simply, I think, as you, as you remove sort of manual interventions, in any sort of process, you are going to see, a faster transaction or a faster response, um, and you're going to be able to reduce costs because, you know, the fact is any sort of manual intervention has a more, direct, sort of financial impact. Um, I mean, for, for us, if we are, uh, able to issue a security, um, and, um, all of the settlement and confirmations are on a straight-through basis without sort of any very, very limited manual intervention, we'll be able to do many more of those transactions and we'll be able to do them at much finer prices and still have a viable economic model, which, it's not about, you know, making super profits because, you know, typically these things only last for some time, it's about being competitive. Um, and you know, the customer getting a better experience at a lower price. Could you put a percentage on the value or a dollar amount, uh, that in the absence of technology, you would be 30% slower. Is there a way we could maybe quantify that? it's hard because I mean, for a business like ours, we would measure our productivity in terms of commissions or, or revenues. I think the, you know, our ability to service clients, It's so dependent on, um, on the technology and we, you know, w you almost couldn't imagine doing it without technology. It's certainly worth, I think, you know, 50 plus percent of our revenues, I think, you know, everyone would be 50% less productive if we didn't have access to, you know, really very sophisticated technology, you know, whether it's communications or market information, or, or sort of ability to process that and, and come up with, ideas, um, for products for clients. So, yeah, it's, it's really very central it's almost inconceivable that we, we could sort of operate without, you know, very, very high dependence on technology.
Daniel Shaffer: Yeah, absolutely. I mean, Kyriba is a financial technology solution provider, and so I'm swimming breathe and live that reality. Um, but even in the simplest form when your internet is down or your phone dies, you suddenly have that vulnerability. And I would imagine when you're in a fast paced financial technology firm, Uh, in a very global fast-paced technology center, like you are in London, it would just be crippling in the absence of having that technology. So I guess, you know, when you're looking at your, uh, team in order to really make things happen for your clients, how do you bring it to the table or is it just the expectation? Is there that the technology will always be there to be that enabler, or are you constantly looking to maybe innovate and push the envelope with your developers to make that technology better?
Paolo Tonucci: We're always pushing I think if you stand still, you, are going backwards. Um, and you know, there's new products and new, sort of platforms, new languages, um, you know, emerging all the time. So I don't think that you can, sort of sit on a stack and say, that's the perfect technology stack and I'm never going to have to, modify it. Um, and so we're always looking to, Bring in you products we'll upgrade them, you know, make them quicker and faster. and the, you know, pipeline of potential opportunities in terms of sort of technology developments or new technology from third parties is, is enormous. there's always more demand than there is capacity to, develop or to, to bring in those technologies. But absolutely you got to, move forward. I think even the sort of best established products that have got, you know, huge, sort of support basis in terms of, you know, the infrastructure they need to evolve. They're not going to be, viable forever.
Daniel Shaffer: Yeah, absolutely. just to unfold a few more layers on that. We were just talking to, as I said, the financial times, and they were asking about, you know, this massive, uh, financial impact from currency exchange. And I'm, really curious what your thinking is on that, where we're seeing, you know, billions of dollars of impact to just a quarterly earnings that are recorded by one company. Some companies are actually providing guidance that they are anticipating, um, you know, half a billion dollars in losses, just from FX as this global financial challenge on so many levels, geopolitical, uh, the supply chain disruptions. What are your thoughts there in terms of the best way to manage that going forward?
Paolo Tonucci: it's a challenge for, you know, any international company. We, we have a, you know, a large U S business and we have a lot of clients, um, that, you know, transact in us dollars. So even away from, just the U S clients, there's a lot of activity in us dollars it means that you're going to have a, um, you're going to have FX exposure. You're going to have a difference in currency between, you know, some of your costs and some of your revenues. Um, and for every company, you know, that's got to be, um, thoughtfully managed. sometimes the sort of accounting requirements make that quite difficult. Sometimes the sort of quality of information that you get makes it difficult. So we hedge on. Risks. we've got quite a sophisticated way of doing that. There's no perfect hedge. And so you inevitably end up with some impact from, uh, from FX movements. Um, but it's, you know, It's being part of these sort of global markets and, um, you know, as part of globalization. So yeah, it's, you know, right now it's, uh, it's a big thing for us companies, um, us reporting companies, some will benefit because, you know, like for us, our Sterling cost space is now lower. Um, and, you know, a lot of us companies will suffer.
Daniel Shaffer: Yeah, the strong dollar is not making it easy for those us companies who were enjoying the opposite when the dollar was a little weaker. Um, so these are new headlines. And when you're talking about this, you know, organic exposure elimination, or finding ways to kind of reduce your vulnerability to currency hedging or a currency exchange, what do you think is the most effective approach? I know you have a little background there or potentially, what are your thoughts to other CFOs who may be facing the same?
Paolo Tonucci: there's actually a lot of instruments that are available and they're relatively, low cost, you know, F the FX markets is extremely liquid. So whether you, you know, you're transacting spot or forward or options, you'll get, um, a good offering. my advice would be, you know, talk to your banks because, you know, they'll have experts in, in this. And, you know, they'll, they'll provide some guidance, but really you need to know, your own business and you need to invest in knowing your own, um, your own activities and your own sort of currency exposures, which is more difficult than people imagine, just because, you know, sometimes, the processing and the sort of accounting systems are not set up to handle sort of multi currency or provide that. Um, but that's where you have to invest. So again, you know, it's a function of having the right systems and being able to extract the right data. we hedge our exposures through, you know, largely through, the sort of forward currency markets and, you know, we find that to be quite effective.
Daniel Shaffer: Having the right systems and really being able to have a clear vision of that data. Is it required in real time to.
Paolo Tonucci: it is for some, um, activities. I think, you know, if I were to sort of prioritize them, I mean, I want to know my cash positions in real time. Um, first, uh, above everything else. do I need to have all of my sort of currency transactions real time? Probably not because there's a more predictable pattern to these and you're not going to have quite the same, swings. Do I want to know where the FX rates are and where I can execute real time? Of course. and I think systems have evolved to actually provide you more. of those things that are the benefit from building real time execution systems, for example, or cash management systems are much more focused on real time information than a typical accounting system.
Daniel Shaffer: am I hearing some of your background as a treasurer come into play there, but knowing that cash position in the back of your pocket is critic.
Paolo Tonucci: Yeah. I think, I think that, you know, in any finance professional, um, you know, Would put cash management now in, the sort of highest priority, most important, um, segment of their, you know, responsibilities. I mean it certainly, it's, there'd be more profile and there's been more importance to attach to it. I think because companies perhaps a bit more leveraged or perhaps, there's been more sort of volatility in terms of cash management. Absolutely. I think, you know, that is a skill that has, um, you know, certainly, uh, developed and improved over the last few years.
Daniel Shaffer: That is an amazing point that you're making. And one that really kind of perked my interest because I think that, especially in this next section called the playbook, we want to uncover, what is it that's meaningful right now. We hear a lot about cash management, liquidity at the center of the financial decision-making process. You're saying it's not only at the center, it's at the top of the pyramid as the number one priority. And earlier in our conversation, you know, Paulo, you said the technology helps you do business in a more refined way that you can do business in a more streamlined way. And so I'm wondering if the value of technology is creating opportunities at slimmer margins that the liquidity then and the cash position becomes even more critic. And in that case, is it just today that liquidity will be important or really going forward as technology is creating more opportunities in the margins? Won't it always be at the forefront of every financial leader's decision-making process.
Paolo Tonucci: you know, for me, it's difficult to imagine that it's going to be less important. the idea that sort of liquidity management is going to become less of a priority, I think is, you know, that feels very remote, the sort of importance of, uh, of sort of cash and liquidity management is, perhaps as a function of the amount of sort of leverage that many companies have, perhaps it's a function of, you know, the rate of change now that we're seeing in terms of the cost of debt, perhaps it's a function of, the differential in rates that you can get. but right now, I mean, for most corporates, for most large corporates, this is going to be as important to their profitability and to their viability as anything, if not, you know, the most important thing, but, you know, outside the basic business model, sort of viable, I think, how you're able to run your balance sheet and the returns that you were able to get, and the costs of, financing are gonna have a tremendous impact on your results. And, then as you say, there's also the other financial, um, market type of, uh, of impacts such as, you know, FX, but, you know, interest rates have gone from, you know, they were at 0% for you really very, very long time. I mean, give or take, you know, a relatively short period of three years ago when they, sort of crept up. Um, but they've been a, you know, 0%, um, for most of the last, you know, 12 years, 13 years. Um, and now we're seeing interest rates that know might well normalize it, you know, three, 4%, um, the sort of differential that you get between different currencies, between different instruments, either as a borrower or a lender, are you going to be very important? So yes, you need that information in order to be able to, um, manage that effectively. And it will have a very big impact on your business profitability because margins generally have become tighter.
Daniel Shaffer: and as you say, the FX is one of those areas, uh, where there's more volatility these days around your cash position and understanding your cash position are other areas around the volume of payments that are being made and potentially the risk within that payment structure like fraud. For example, is that a consideration for today's CFO?
Paolo Tonucci: sadly it is. Yeah. I mean, I think the sort of. The risks of, um, some type of, you know, payment issue, uh, or the risks of some type of, either sort of fraudulent or criminal, engagement, uh, you know, certainly exist. And we've seen, sort of plenty of, examples of, you know, credible and, sort of well controlled organizations, sort of suffering, for that. So you do need to have, an alertness to this and you need to, you know, put in place all of the sort of necessary protections and, they won't be absolutely watertight, but you can make them close to, you know, close to water up. you've got to have considered what they are. Um, and when we spent a lot of time on cybersecurity, we spent a lot of time on perimeter protection for our, sort of technology assets. Um, we are, um, you know, very controlled oriented. It takes it around know payments processes as you need to be.
Daniel Shaffer: A hundred percent, but there's a multilevel security approach in order to really be completely confident and have the ability to sleep at night. I would imagine, um, you talk about perimeter security and, it's also that the large, at least reports that I've been reading as well as kind of the sec or BEC the phishing scams and the other types of, um, sophisticated impersonation, uh, that is, you know, bringing up a lot of, especially with technology, um, potential challenges. Um, I just saw the movie Maverick. I'm not sure if you're picking that up there, but, um, the new top gun. Tom cruise movie. And you know, there's been some facial simulation technology. That's probably controversial at a level of even payment fraud. Um, if you could imagine somebody zooming a, your face onto theirs and, and, uh, having you ask to move some money, um, what are the other internal protocols that you would have to have to make sure that doesn't happen?
Paolo Tonucci: no, I mean, it's, you know, some of, the technology or the sort of higher profile, um, uh, sort of images that you've seen of, these deep, deep, impersonations are terrifying. Um, and, and, and, it does mean that, you know, you can't just rely on sort of single source verification. It can't just be a zoom call. Um, you do need to have, you know, multifactor multiperson, um, you know, controls. Um, but the reality is, the criminals will, you know, modify and find sort of ways around this. You need to have a mindset where you're always looking to anticipate and, make that, um, as sort of difficult as possible. but it's, yeah, some of it is, extraordinary. and it is quite.
Daniel Shaffer: on The one level. I, agree with you. It's incredible and fascinating. The technology is where it is and at the other it's, let's make sure that there's an AI that is analyzing your payments and data against known bank accounts or unknown bank accounts to ensure that these aren't bad actors, uh, and multi-person multi authentication broke critical there. So great points to make and I think helpful for the community. Absolutely. So. You know, there's a lot of risks where you sit Paolo. The CFO has many things to consider when it comes to ensuring that the company is able to evolve and grow in a predictable and reliable manner. Um, what do you think the next generation of finance leaders really need to become a CFO? And in this section, we call the report from the future.
Paolo Tonucci: There's no, um, organization that now needs a CFO just to be a reporting person. So they're sort of, the old image of, having a, you know, CFO is essentially, um, you know, just, just providing sort of annual reports and management reports. finance has sort of moved itself into, um, the, frontline of business and sort of business decisions and whether that's, um, you know, resource allocations or whether it's, the, uh, commercial transaction decisions, the, you know, questions around, the profitability of individual businesses or clients, you know, it's a much more central to the sort of operation of a business. So w you know, what do you need? You need to have, you know, commercial skills, um, you need to think of. Um, as I think an owner of the business, as well as, being a, uh, sort of guardian of the assets, um, and, you know, guardian of, the organization. Um, so, you need to extend the skills that you have because it used to be perhaps a bit more. Compartmentalized. And you could be, you know, highly skilled in, you know, the basics of finance, because you need to know more about treasury and payments and technology and, um, you know, treasury, um, and you need to have, you know, control, um, sort of control understanding, which perhaps that wasn't so important in the past, so that, you are anticipating, you know, areas of risks. So it's a really, you know, it's a broad set of skills. Um, I mean, for me, it's, uh, know, really sits at the center of, the organization, the commercial organization, great platform to influence the business. I mean, there's a very high number of CFOs that become the CEO for, you know, for a good reason, I think within this sort of C 100 it's, somewhere in the. Yeah, 30 to 40% of, you know, CEO's have come from, from the finance world. So, you know, great platform to, you know know the, commercials, influence the commercials and to, you know, become an effective commercial leader. I think in a nutshell you have to be the best. Most knowledgeable, um, and the most commercial person in the organization, you have to know more about almost every dimension than anyone else. And that is, I think, the real appeal is that, you can have such a sort of broad, insight.
Daniel Shaffer: We've heard a lot of CFOs say that this is an incredibly competitive set. And as you are just sharing with me, you know, it's thought to be the one that's ahead of everyone else in their own role in order to be the best business partner that you can be. And in other words, you're having a lot of empathy and insight at the same time to understand where they want to go as a person and where they should be taking their function to help grow the business. Is that an exciting part of the CFO role for you?
Paolo Tonucci: Absolutely. I think the, opportunity to, um, help your partners, you know, help your colleagues, you know, build successful businesses, and drive certain outcomes. it's really exciting. Um, and perhaps, um, Talking my own book, but, um, you know, I think that you have perhaps more, um, influence in terms of the financial success than, you know, almost any other area now. I mean, that will vary by business, but certainly in my, in my experience, you can have, you know, enormous impact.
Daniel Shaffer: well, not only can you have great impact when you have strong relationships and you're in a competitive, but supportive way to help improve all the business leaders in your organization. But as you were saying, Paulo technology really does help. And as a CFO of the future, would you encourage other CFOs, uh, to think about the value of things like artificial intelligence? Are there other emerging technologies that you think Are significant and will help financial leaders?
Paolo Tonucci: you absolutely have to know. A good deal about technology and whether, it's the sort of broad, categories of, development like AI or whether it's cloud computing or whether it's, a slightly more, um, you know, functional understanding, you absolutely have to know the technology, and you have to think about the way the technology supports your sort of process and your, access to information. So anyone wanting to be a CFO must must know, uh, about technology and must want to know about technology because, it's so fundamental.
Daniel Shaffer: Well, we're, moving in a faster pace and with much larger amounts of data. And as you said, in order to create an efficient business model, you need to have insights about that data. Um, let's just wrap up this podcast with a few quick hits. And these are just answers that are off the cuff. Don't need to be real in depth, but as you're saying that kind of digital literacy that's required for the modern CFO or the future CFO, um, is it creating a specialization? Are CFOs becoming more specialized or is there a more general, uh, expectation that the CFO knows a little bit about everything?
Paolo Tonucci: I think you're actually, you know, becoming less specialized. So you're less the sort of finance geek and much more, you know, the sort of all around, business interpreter. Um, so yeah, it's less specialized, but you have to obviously, you know, invest your own time. I think it probably puts, you know, quite a lot of demand on, you know, the individuals to invest time and understanding the sort of emerging technologies or indeed for sort of available technologies.
Daniel Shaffer: Yeah. And, you know, along with that, I mean, kind of the logic seems that there's a place where the CFO is going, and that is being really not a generalist like Jack of all trades master of none, but actually masterful in aligning all of the trades in a way that is productive with that core finance. Would you agree with that?
Paolo Tonucci: Absolutely. it's, I think probably a more demanding role than it, has been in the past because you know, the breadth is, um, greater. and the need, to be knowledgeable in, in a, in a wider number of areas is greater. And perhaps that part has posted a sort of more pressure on, on the CFO then, just being the, you know, the finance guy. Um, but that's said, I mean, it makes them more interesting. Um, it gives you more opportunity to sort of influence and to help, help shape things. Um, but ultimately, as you say, it's about, um, having enough information that you can make sure the alignment is appropriate. You're never going to be the most knowledgeable in any single area. So you just have to know enough that you can identify who the sort of key people are and what the right questions are to, to ask them. So it has, for me, it's become more challenging, but also, you know, very much more interesting space.
Daniel Shaffer: Yeah. And I, you know, along with all of that, as companies grow, there's always going to be that need for having an understanding of your liquidity and cash position, because at the heart of any organization, you know, you just can't grow. If you don't have that. It seems to me that there could be a place where the CFO becomes, as you're saying that master of the alignment and enabling the team and partners, but then potentially there's room for a chief liquidity officer. What do you think about that? Is there going to be a new specialization at the chief level that may be focused on liquidity?
Paolo Tonucci: I think sort of investment office, um, has always has an eye on liquidity. So I think somewhere between the sort of investment office, you know, chief investment officer and, you know, the treasurer, you will find that, that exists. I sort of feel like it, depending on the organization, your treasurer is your chief liquidity officer. You know, it may not be the title they have, but it is, you know, certainly the sort of centerpiece of what I think they, they do.
Daniel Shaffer: It might be the title they deserve though. Right?
Paolo Tonucci: And in my opinion, maybe that's right.
Daniel Shaffer: I'm leading the witness. I know. I apologize. Well, listen, um, couple of quick questions. Do you think artificial intelligence will replace.
Paolo Tonucci: No,
Daniel Shaffer: No, there's too much alignment. And why do you think that artificial intelligence is just going to be still an enabler regardless of the scenario? '
Paolo Tonucci: cause um, I mean, at least for the sort of foreseeable future, I think the, sophistication of human thinking is going to be monumentally greater than, AI. But I think there are very, good applications where that won't be true. So medical science, in some of the sort of geospatial analysis, that absolutely wouldn't be true. I think that's remainders opportunities. We have an investment in an investor. Programming Indonesia, mangrove swamp. I'm a mangrove regeneration. you can't do that just with, with sort of human involvement. It has to be down to geospatial analysis using technology so that there are applications where, um, that will be applicable, but in a broad sense, it's going to be difficult to see, that sort of being.
Daniel Shaffer: Oh yeah, absolutely. A friend of ours, uh, a friend of the podcast, uh, is doing some work in Africa and there's a lot of space to cover there. And So if you think about how dis intermediated the financial, uh, environment is, technology is making a big splash. You know, I don't think we had a chance to really dive into Marex. Well, why don't you give us, like, what does Marex do? How is it serving the, the, the globe? Tell us a little bit about Marex.
Paolo Tonucci: Marex is a financial services firm. Essentially we, you know, we are, we provide a platform for clients to access markets and liquidity, and, you know, that varies from, you know, commodity players. for example, we have very large agricultural, um, uh, agricultural players in the U S that are clients of ours. They have, you know, needs to, hedge their exposures, to hedge their production, in some cases to sort of help with the, you know, physical, um, elements of, uh, of their activity. And Marex can service that, um, as well as, you know, much wider range Of access to market. So that's what we provide, you know, w we're wholesale. So you're probably not going to see us in the sort of retail space, but, you know, we, think we're sort of carving a, a, a sort of important space in being a provider to, you know, a large, number of, professionals that need access to these markets.
Daniel Shaffer: Well, when you think about, especially right now, being able to help a company that provides grain and supplies foods to the world, it has a, uh, quite a large role as we're seeing difficulties in some areas not only with. Some of the kind of environmental impacts of the high heat temperatures, but also just, the challenges in the Ukraine and Russia making supply chain, uh, transportation, more difficult. Um, would you say Marex is helping companies, um, just facilitate movement of product or the funding of the services to enable the business to move.
Paolo Tonucci: We facilitate the, management of their activity. more on the, um, financial side. So in terms of hedging, their output and ensuring that they have price protection, um, then you know, with the logistics, there are some cases where we provide financing and, you know, that's also, you know, important. I mean, a lot of these businesses are very cash intensive. You know, all your cash is in your crops. Or in your, in your production. So, um, yeah, so we, we've facilitate that and, uh, know hopefully, that makes the market a little bit more efficient and, ensures that, um, you know, at least there's a sort of, um, continued serviceable, market for this, unfortunately, you know, uh, I think some of these geopolitical issues, it's very difficult to watch that without, you know, just, just feeling, the personal and the human cost and impact. Um, and I wish we could do more with that, but, what we try and do is at least sort of help with the market more generally.
Daniel Shaffer: Excellent. Well, that's a great point to close on that. Marex it's really doing what it can to help the market in general, and really push these businesses and clients with better technology services. Paolo, it's been a real pleasure hearing from you and your background and experience on your road to CFO. And I hope all of our guests, and I know that our guests will really benefit from some of the insights that you provided.
Paolo Tonucci: Thank you so much.
Daniel Shaffer: Thank you, Paulo.