Treasury in 2025: What it Could Look Like
In the coming years, a day in the life of a treasurer is expected to dramatically change due to a combination of factors including the rapid pace of technological evolution, macro shifts impacting business models and regulatory pressures. We examine how the cash management industry is transforming and what the treasury of tomorrow might look like.
Driving Forces Behind the Treasury Evolution
When the landline telephone was first introduced, it took 75 years for it to reach 50 million users. Electricity took 46 years to achieve the same milestone. Twitter hit the 50-million-user milestone in under two years, while the mobile game Angry Birds took just 35 days1.
This progression of mass adoption illustrates just how exponential the pace of technological change is today. Across the treasure function, there has been a deluge of payment innovations in the last few years alone, leveraging new technologies like robotics, artificial intelligence and blockchain. Virtual accounts and real-time payments have been successful in creating efficiencies by streamlining account structures and delivering straight-through transactions, while automation and data analytics are helping to improve speed, accuracy and forecasting.
The explosive growth of mobile commerce is also rapidly changing business models. The global cash management industry is expected to grow significantly over the next five due to the rise in e-wallets and super-apps, together with the continuing surge in smartphone penetration particularly in developing markets. This means it’s becoming inevitable for companies with traditional payment methods to migrate to online payment platforms to adapt to the unique demands of mobile consumers.
With cross-border transaction flows expected to continue increasing, the management of different and dynamic regulatory environments is becoming more complex especially for treasurers operating in multinational firms. Anti-money laundering and know-your-clients disciplines continue to be a focus for regulators, and treasurers are increasingly being asked to provide information about creditors, beneficiaries, and the purpose for which money is moving between countries. Ensuring data privacy is also front and center today, with personal data being used to facilitate online transactions.
Rise of the Self-Driving & Strategic Treasurer
To adapt to the fast-changing industry, treasurers are gravitating towards being increasingly self-driving through automation and becoming more centrally strategic to the company's growth goals. According to the 2017 AFP Strategic Role of Treasury Survey reported by Marsh & McLennan, 80 percent of finance professionals said treasury has played a more strategic role at their organizations and another 80 percent believe the role of the treasury function will continue to grow and become even more strategic.
WE EXPECT TO SEE A GROWING BIFURICATION
Operational treasury tasks automated
Recommended actions proposed by sophisticated AI
Exceptional management vs preparation and initiation
Thought Leadership & Tools
- Treasury Operations
- Governance & Controls
- Test & Learn
Internal consultant to the business
Support the business to achieve its growth goals
Leverage the power of financial flows of data to provide unique insights
Thought Leadership & Tools
- Strategic Thinking
- Business Development
- Relationship Management
- Data Analysis
Currently, the role of treasurers in many large multinationals is still centered on the manual tasks of reconciling daily positions, across numerous account structures in multiple markets. With technological innovation however, the treasury function is evolving. For example, solutions like Just-in-Time Funding will eventually render the role of funding accounts to bots, while open banking will provide easy access to financial data from different banks, freeing up the treasurer to deliver more value-add.
With sophisticated insights on payments provided by virtual assistants and data analytics, treasurers will be able to optimize liquidity, increase efficiencies and improve risk management, ultimately taking on a more strategic role to the business.
Get Ready for Real-Time Treasury
The key to the future state of cash management is the concept of real-time treasury in which time is no longer a barrier for transactions. Cash is being sent and received 24/7, automatically reconciled and posted into accounts. Movement of funds is completely transparent across related entities and surplus cash can be automatically invested, all while keeping FX exposures in check.
The good news is, real-time treasury is no longer fictional but a mere few years from becoming a reality. Some industries and companies will get there faster than others, but there are three essential components to this journey for treasurers:
Day in the Life of a Digital Treasurer in 2025
To learn more, please contact your J.P. Morgan Treasury Services representative.
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* according to the Wall Street Journal.