Treasury

4 Technologies Driving Treasury Transformation

For corporate treasuries on a path to transformation, looking at external change agents, including technological innovations capable of disruptive process automation, is every bit as critical as identifying the internal drivers of change.


This is the third article in a series covering treasury transformation. To read the second article in the series, please view 5 Tools for Change: Identifying Treasury Transformation Opportunities. To read the third article in a related series covering corporate actions, please view Treasury Integration Post-Close: An Opportunity for Improvement.

Transforming treasury operations to support your organization’s future growth starts by looking within. Our first article in this series provided a road map to assess your organization’s current capabilities and operational structure. The second article took a deeper dive into opportunities for improving future scalability and identifying treasury functions most in need of transformation. Now, we’ll focus on the external change agents expected to influence treasury functions in the near future. The most disruptive of these is the emerging technology you and your banking partners are likely to rely on in the near future.

Technologies Delivering the Future Today

Treasury innovation currently rests on four emerging technologies that are already finding application in today’s treasury operations. These are application program interfaces, robotics, artificial intelligence and cloud systems.

Each of these innovations streamlines and automates manual processes while saving time, reducing errors and quickly scaling to an organization’s evolving needs. To better understand their strengths and best applications with respect to treasury automation, we’ll look at each separately.

1. Application Program Interfaces (APIs)

APIs work behind the scenes to provide seamless communication and a more fluid end-user experience. They fuel efficiency by accelerating the shift from batch to real-time processing. For example, today most corporates receive their account balances at set times during the day through SWIFT MT940 messages. An API can eliminate the delay, providing nearly instantaneous access to balance information through a treasury management system, enterprise resource planning software or online banking portal.

Additionally, APIs can enable batch processing of payments across multiple banks and assist with information received to reconcile payments. When reconciling payments, APIs would create the cash receipt in the system, reducing time spent and increasing efficiency. This can also increase the chances of successfully spotting, stopping and recalling an erroneous or fraudulent payment.

Using APIs to link a variety of applications and services could eventually enable your banking partners to offer real-time cash management guidance, such as where to invest excess cash today or what your company’s near-term cash needs may be.

2. Robotics

Robotic technology is most relevant in automating high-volume, repetitive tasks and processes. When applied appropriately, this solution can increase accuracy, synchronize data across multiple platforms and compress reporting time.

When it comes to treasury functions, robotic technology frees up skilled professionals to focus on other activities. For instance, it can help to automate the posting and reconciliation of accounts receivable payments. Currently, robotic technology is being adopted in manual cash pooling and the identification and preparation of foreign exchange (FX) exposures.

3. Artificial Intelligence (AI)

With AI, or machine learning, a computer program uses algorithms to process large amounts of data. It then starts to develop new rules for performing tasks or fixing problems based on what has worked in the past.

AI is expected to have a big impact on liquidity management and payments processing. This technology could learn from payment histories, using counterparty and value data to improve the identification of potential fraud, or to identify opportunities for lower-cost channels and payment types. Liquidity management, specifically cash forecasting, can benefit from AI’s ability to process huge quantities of historical data to predict future cash flows.

4. Cloud Systems

Third-party cloud computing systems centralize data and are relatively new technologies you may already be using or thinking about adding. They’re especially effective at managing FX exposures and forecasting cash needs—time-intensive operations that are inherently prone to human error. These technologies include:

  • Enterprise resource planning (ERP) software, which supports processes like accounting and accounts payable.
  • Treasury workstation or management systems (TWS or TMS), which consolidate financial information from various sources to help with cash positioning, cash forecasting, bank account management and payments.
  • FX trading platforms, which can open, close and manage market positions. Most contain real-time quotes, news feeds, charting tools and live trade capabilities.

The latest versions of these systems can boost efficiency while offering potential time and cost savings. Because they’re cloud-based, they should require fewer hardware upgrades in the future.

When determining whether it’s time to introduce or upgrade cloud technology, it’s important to understand what issue you’re trying to solve. For example, with ERPs, consider whether the software you’re currently using is the problem and needs replacing or if it’s merely a symptom of your processes, which could be reconfigured. With FX trading platforms, focus on the efficiencies you could most benefit from, such as robust reporting capabilities or the ability to obtain price quotes from multiple banks before executing a trade.

Establishing a Management Strategy

To decide which of these technologies is right for your treasury operation, first assess the critical operational gaps you’d like to eliminate and the growth goals you’ll need to support in the future. With your organization’s own needs front and center, you can then develop a tech strategy that includes these key activities:

  • Continually assess the gap between where your business is today and where it’s headed—in one, two and five years.
  • Track the technology in use on an ongoing basis; when upgrading, choose innovations that can grow with your business.
  • Cultivate upper management and departmental support through regular reporting, but have a backup plan for making do with less.
  • Make sure new technologies meet internal security protocols and will be accessible to all employees before committing.
  • Advocate for your treasury team to play a major role in choosing which systems to deploy rather than leaving the decision to your technology department alone.

Regardless of the type of technology you implement, be sure to engage your financial service providers to see how their offerings can help your organization achieve its goals. You’ll want to verify that their platforms are flexible enough to support any technology you’re considering. Working with a bank that’s already adopted new technologies and continues to plan for their clients’ future needs can help you plan, implement, justify and evolve your own strategy.

Completing the Transformation

In the next and final article in this series, we’ll look at how your newfound understanding of both internal and external agents of change drives your strategy. The result will be a road map to the future state of your treasury’s operation.

Treasury Treasury Consulting Liquidity

Get in Touch and Stay Informed

icon
Loading...