Demystifying New
Technologies in Treasury

Much has been written about how technology is transforming the treasury industry, but the reality is that many corporates and financial institutions alike have yet to fully harness the power of emerging innovations in cash management.

While more organizations are looking to embrace technology to enhance cash management, only a fraction has been successful in reaping the full benefits. The reasons include legacy systems, inertia to change, fear of disruption and complexities in change management.

Challenges are exacerbated in treasury functions, which typically do not get sufficient IT resources and have licensed-based treasury management systems and ERP platforms that are expensive to build and costly to upgrade.

Lack of awareness also plays a part, with many unaware of the myriad emerging technologies available to them.

But in a rapidly changing environment of macro-economic events and regulatory developments, practitioners are recognizing that leveraging technology has become necessary to deliver more with less. With the cost of new technologies falling, it also makes financial sense.

Keep reading to demystify the new technologies that will define the future of treasury management.

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Where we are now, where we are headed

There are three key areas where technology is making a clear difference in the treasury space:

Batch processing to real-time processing

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Currently, the exchange of information – which includes balances, payment status, foreign currency rates – between banks and their clients predominantly takes place in periodic batches. Thanks to application program interfaces (APIs), this process could eventually happen in real time. Blockchain technology, when commercially applicable, will further enhance the flow of information by ensuring that the data shared is immutable and secure.

Task-driven to intelligence-guided activities

Spreadsheets have been a core tool over the past 30 years, used primarily for task-driven activities such as data gathering, processing and reporting. But it is a platform that is largely manual and prone to human error. Enter robotics, which is increasingly being deployed to take on these mundane and repetitive tasks, and doing them faster and more accurately. Adopting sophisticated tools like machine learning adds intelligence to the mix, helping with forecasting, fraud detection and even investment decisions.

Physical systems to virtual platforms

Aside from the challenges of overhauling legacy systems when considering moving to cloud, there are also risks associated with intellectual property theft, privacy and data loss. But better data encryption has gone some way in alleviating these concerns. Together with falling implementation costs, practitioners are warming up to the prospect of using virtual platforms and recognizing the range of benefits they bring, which include lowered costs, improved scalability and business continuity.

New technologies and how they are being deployed

New technologies can be harnessed to achieve operational and strategic objectives such as optimizing capital, increasing operational efficiency and mitigating risk.

Finance and Treasury

CLOUD-BASED ERP AND TREASURY MANAGEMENT SYSTEMS

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Front Office

Machine
Learning

Robotic Process Automation (RPA)

APIs

Cash forecasting

FX execution

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Middle Office

RPA

APIs

Blockchain

Inter-company netting

Treasury accounting

SWIFT GPI

FX confirmation

Information sharing

Trade finance

Payments

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Back Office

Machine
Learning

Robotic Process Automation (RPA)

Fraud/error
detection

Reconciliations

Data retrieval

Reporting

Shape Created with Sketch.

Front Office

Machine
Learning

Robotic Process Automation (RPA)

APIs

Cash forecasting

FX execution

Shape Created with Sketch.

Middle Office

Robotic Process Automation (RPA)

APIs

Blockchain

Intercompany netting

Treasury accounting

SWIFT GPI

FX confirmation

Information sharing

Trade finance

Payments

Shape Created with Sketch.

Back Office

Machine
Learning

Robotic Process Automation (RPA)

Fraud/error
detection

Reconciliations

Data retrieval

Reporting


Five Emerging Technologies

What In a nutshell Deployment method
Robotic Process Automation (RPA) Intelligent tools that automate tasks humans currently perform RPA can be deployed across front, middle and back offices.

It is applicable in obtaining real-time price quotations and executing FX transactions, creating accounting entries for inter-company netting and payments, preparing bank account reconciliations, as well as identifying and verifying information in payment advice emails for cash application.
Cloud Means of storing data and accessing computing services over the Internet Cloud is applicable across the front, middle and back offices, through cloud-based ERP platforms and Treasury Management Systems.
Machine
Learning
Intelligent tools that can learn and make predictions of data Machine learning can be deployed in the front office for forecasting cash receipts / payments and working capital requirements and in the back office to detect payment fraud / anomalies.
Application
Program
Interface (API)
Software programs that transfer data between two applications on demand APIs can be leveraged to streamline FX execution / confirmation and to obtain real-time visibility into payment status and cash balances.
Blockchain A type of shared digital ledger that facilitates secure transactions accurately without a central party Still in the early stages of commercial adoption, blockchain has the potential to make the most impact by delivering efficiencies in information sharing, trade finance and payments. As a transparent system, blockchain can simplify trade finance processes by connecting all parties involved around the clock, as well as enabling settlement of domestic and cross-border payments in real time.

Robotic Process Automation (RPA)

In a nutshell

Intelligent tools that automate tasks that humans currently perform

How it's deployed

RPA can be deployed across treasury’s front, middle and back offices.
It’s applicable in obtaining real-time price quotations and executing FX transactions, creating accounting entries for intercompany netting and treasury payments, preparing bank account reconciliations as well as identifying and verifying information in payment advice emails for cash application.

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Cloud

In a nutshell

Means of storing data and accessing computing services over the Internet

How it's deployed

Cloud is applicable across the front, middle and back offices, through cloud-based ERP platforms and Treasury Management Systems.

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Machine
Learning

In a nutshell

Intelligent tools that can learn and make predictions of data

How it's deployed

Machine learning can be deployed in the front office for forecasting cash receipts / payments and working capital requirements, and in the back office to detect payment fraud / anomalies.

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Application
Program
Interface (API)

In a nutshell

Software programs that transfer data between two applications on demand

How it's deployed

APIs can be leveraged to streamline FX execution / confirmation and to obtain real time visibility into payment status and cash balances.

+

Blockchain

In a nutshell

Shared digital ledger that facilitates secure transactions accurately without a central party

How it's deployed

Still in the early stages of commercial adoption, Blockchain has the potential to make the most impact by delivering efficiencies in information sharing, trade finance and payments. As a transparent system, Blockchain can simplify trade finance processes by connecting all parties involved round the clock, as well as enabling settlement of domestic and cross border payments in real time.

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Myth or Reality? Test your knowledge of new technologies.

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