Treasury Today Country Profiles in association with Citi

Entering the future: technology trends in 2011

From clouds and apps to mobile risk management and e-invoicing, Treasury Today looks at the latest technology in the treasury space.

Direction of travel

Treasury technology continues to develop rapidly. Significant advances in mobile communication capabilities and ‘app’ designs are impacting on treasurers. Labour intensive administrative processes are coming in for an overhaul. Developments like electronic bank account management are coming of age and are set to grow in popularity in the next year, and boom in 2012.

On the move: advances in mobile access

WAP phones came into treasury use a decade ago now, allowing some online access and mobile access to treasury data. So what’s new now?

Smartphones and ‘tablet’ devices have opened up a huge range of possibilities for the treasurer on the move – not least the ability to monitor treasury operations more closely than ever, at all times. And devices like the iPad add much needed functionality that simply cannot be provided by a telephone handset, thanks in part to their physical size.

“The ‘on the move’ mentality is already well established,” says Mark Lewis, Director, Corporate Treasury at Wall Street Systems. “Basic reporting, for example, was already covered. Now we offer a ‘Dashboard’ service for treasurers travelling and wanting to keep abreast of current risks, liquidity, credit limits. A quick check at the airport before they fly, for example, can tell them what they need to know.

“With tablet computers, you have further advantages over smartphones, starting just from the larger area of the screen. But tablet devices take this much further, offering fuller treasury management facilities, like comprehensive risk reporting, or facilitating co-operation between subsidiary and group treasuries.”

This technology is in its early stages. Apple will release an improved iPad in 2011, and other technology companies including Android, Nokia, Microsoft and Blackberry’s RIM are all investing in the market.

It is not just treasurers who are using mobile devices in new ways. Mobile payments are benefiting from recent innovations at the consumer level. For example, US iPhone users can take a photograph of a cheque and pay it into an account through PayPal or SWIFT, as well as some banks; Visa is testing a smartphone payment system for public transport in New York; coffee chain Starbucks is trialling a barcode-based system for payment via smartphone; and even small retailers, down to market stall holders or street entertainers, can accept payments through a smartphone. These should increase payment speed and visibility – and enable the transmission of the essential data needed to record and reconcile receipts.


One particular development which offers enormous flexibility and makes many of these mobile advances possible is that of ‘apps’ – applications designed for use on mobile devices.

Though the most well-known apps may be frivolous consumer and entertainment applications, others can have useful business functions. The potential now exists for bespoke applications to be designed for smartphones and tablet devices to fulfil specific treasury requirements, at a lower cost than traditional software development – though this type of development is very much in its early stages.

“The beauty of the smartphone space is that they provide a platform for app development at a sustainable cost, even for very small groups of users,” says technology pundit Jonny Evans. “As long as you’ve got the data there, apps can provide sophisticated delivery systems to access that data.”

Out of the office

The outsourcing of certain types of technology is a growing field, set to expand rapidly through 2011. In ‘cloud computing’, a set of services is available via the internet. The provider of a ‘cloud’ builds a given application – ERP treasury software is available through a ‘cloud’, for example – delivered to meet the treasurer’s specifications. The treasury then effectively pays for the service provided by that equipment, rather than buying the hardware and software. As well as cost benefits in terms of initial outlay – the service is ‘rented’ rather than bought outright – the infrastructure and IT support is all provided by the vendor.

As the system is outside of the treasury’s direct control, customers have needed reassurance that clouds are safe to use. As well as being a customer worry, regulations are in place to ensure that data privacy measures are taken, such as the Payment Card Industry Data Security Standards (PCI DSS), which require data to be encrypted both when it is stored and when it is being transferred.

Conducting audits as required by regulations like PCI DSS has also caused concern for cloud developers and their customers. Outsourcing major functions can make it difficult to package up information in the necessary way. Similarly, it needs to be very clear which personnel have access to the secure data, and it is important that the company can trust the cloud’s host to keep the relevant access records.

Those security and regulatory problems do appear to have been overcome, however. Ben Frenkel, Principal of Cloud Computing at technology specialist Pegasystems, says his company is expecting four-fold growth in numbers of customers over the next year. “I think we’re going to see this sort of technology becoming increasingly mainstream. That means it’s really important for us to develop a very user-friendly system where someone can just sit down and use it. Through next year and into 2012 the industry will move in a direction where people will use clouds for small functions as well as major systems.”

Providers of cloud services are also keen to stress there is almost no ‘downtime’ on their networks – treasurers can now access the services as reliably as if they were on-site.

Which of the following systems do you currently use or plan to use in the next 12-18 months?
Diagram 1: Which of the following systems do you currently use or plan to use in the next 12-18 months?

Source: European Corporate Treasury Benchmarking Study 2010 in association with J.P. Morgan

A similar service, with some important differences, is vendor hosting. Under this system, specific hardware is allocated to the treasury purchasing the service – something not provided by a ‘cloud’. That equipment is kept off-site, and the maintenance is carried out by the vendor. “In some organisations, the internal IT can actually be a bottleneck for a project. We can bypass internal IT and get the system up and running for the client very quickly,” explains IT2’s Chief Technology Officer, Paul Higdon. “We are seeing a steady increase in the number of hosted solutions.”

Wall Street Systems’ Mark Lewis has also seen the importance of taking IT concerns away from treasurers: “When treasurers regularly upgrade their software in a way that does not affect the company’s overall IT strategy, the IT department will not always get involved. That can mean a disconnected, incompatible mix of systems is built up as treasurers buy individual solutions to individual problems. At times – particularly when the treasury is looking to expand – that can prove a real barrier to operations, as well as tying up the treasurers’ time in IT, rather than in treasury management. Vendor hosting means we become almost like their IT department, providing fully integrated solutions and giving treasury back to the treasurer.”

Hosted solutions are not suitable for everyone, though. “Although it is a growing trend, vendor hosted solutions are by no means used by the majority of treasuries,” comments Higdon. “Quite a few companies like the knowledge they have full control over the application and the data and the environment in which it’s running, and keep it well within their firewalls.”

Paper is in the past

Bank account management has been relatively slow to move into electronic form – but treasurers are certainly making up for lost time. According to Treasury Today’s European Corporate Treasury Benchmarking Study 2010 in association with J.P. Morgan, 84% of treasuries will be using electronic bank account management (eBAM) systems within the next 18 months. Currently, 22% of treasuries use eBAM, according to the study.

Mark Lewis, from Wall Street Systems, says this major shift is in part down to improvements in the straight through processing capabilities of the eBAM systems: “Until it really was an end-to-end process, it wasn’t going to be enthusiastically embraced.”

The benefits of eBAM are clear for companies dealing with large numbers of banks and huge numbers of accounts:

  • Savings are made in terms of admin costs and time, without the need for manual processing.

  • The time-consuming irritations surrounding signatories and signature cards are no longer so problematic.

  • Setting up a bank account, which can take weeks with a paper system, is hugely simplified.

  • Cash visibility and tracking are boosted substantially, making the job of treasurers and auditors much easier.

There are some limits, though. Not all countries permit companies to send legal documents with the required XML format, for example. That means the documents have to be attached to messages and locked with a digital signature, which is not ideal.

Another factor holding back eBAM migration is that not all banks have suitable facilities. “We need a lot more banks to get on board if we’re going to see a mass take-up,” says Paul Higdon of IT2. “We expect many more banks to join up over 2011, alongside a steady increase in treasuries using eBAM. Once enough banks have joined up, there should be a real take off in eBAM use, probably in 2012.”

E-invoicing is similarly expanding, though from a slightly higher base level. 70% of treasurers plan to update their invoicing systems, whereas just 46% currently use an electronic version.

Automating the processes of sending and receiving invoices cuts down enormously on time and resources expended, and can enhance liquidity through the system’s speed. Adoption of e-invoicing enhances working capital management in the same fashion as eBAM. As invoices can be sent out more quickly, payment can become more prompt. When receiving invoices, visibility of cash owed is improved, and the company’s position can be assessed more quickly and easily.

In the past, there have been problems with compatibility of systems. Suppliers, purchasers and banks have used differing systems, creating problems in sending invoices electronically. While innovation and standardisation have removed some of the difficulties, there is still progress to be made, as not all banks either use e-invoicing or are associated with e-invoicing providers.


Digital identity will be a key focus in 2011 for SWIFT. The idea of their new Secure Signature Key – the ‘3SKey’ – is that each individual within a treasury can use a single identity across its dealings with multiple financial institutions. This is designed to reduce the current complexity, which sees treasurers using a myriad of tokens and passwords across their bank accounts and their partner institutions.

Luc Belpaire, Product Director Payments at SunGard, says the scheme’s introduction should make a real difference to treasurers. “It is a really important initiative that is about standardisation, simplifying the work flow related to signing and approving payments. Instead of having to deal with 25 different tokens issued by 25 banks, you have only one token that is working with all of the 25 banks.”

Of course, there will be a cost involved. “That is something the banks will decide on,” Belpaire continues. “But even so, it will be an appealing proposition for corporates – they can get rid of something that costs a lot of money in terms of maintenance and administration due to the lack of standardisation. There is a clear business case for adopting this technology, and we expect it to become a trend over the next years.”

The scheme is expected to work well in conjunction with other growing technologies, including eBAM, where it is expected to improve efficiency in areas like opening accounts and mandate management.

The 3SKey has been trialled in France. Banks including Société Générale, BNP Paribas, Crédit Agricole CIB, and HSBC were involved, as were companies including Danone, France Télécom and Airbus.

France Télécom’s Head of Group Cash Management and Treasury IT, Raffi Basmadjian, is enthusiastic: “We will adopt the 3SKey personal signature so we will reinforce our operations security,” he told Treasury Today.

SWIFT’s targets are particularly ambitious for corporate adoption in coming years – they are hoping for the current tally of 750 corporate members to rise to 5000 by 2015. In part, this is because of standardisation – the more companies that use the system, the more firms each company will be able to contact through it. However, the target will only be met if banks appreciate the benefits and successfully communicate those advantages to the treasurers they work with.

Though advances in SWIFT’s services present an opportunity, certain challenges also need to be considered.

Brian Wedge, Executive Director at J.P. Morgan Treasury Services warns: “I think that the two main difficulties which corporates face are first having to learn the language of SWIFT, and second to assimilate the different ways in which banks have implemented the “Standard” SWIFT messages.

“On the language issue, SWIFT do have a large lexicon of terms which reflect their historical development and make little sense to an outsider. A trivial example – when testing FIN messages we use the “Test and Training mode”, but when testing FileAct we use the ‘Pilot Service.’

“The bank implementation issue arises because the message ‘standards’ allow for many different options which are valid on the SWIFT network but which banks do not have to support in a business context. An example of this is the ‘additional information’ about a transaction which banks can send in a statement, but which is an optional field.”

New technology, new problems

Though new technology will undoubtedly help treasurers in a wide range of areas, challenges as well as benefits will need to be considered. Moves to boost straight through processing, working capital management and the ability of treasurers to access all the relevant information on the move could be enormously beneficial, particularly in helping keep track of cash and risks.

However, the accompanying danger is one of information overload. As Jean-Marc Servat, Director of Treasury EMEA Asia Pacific at Cisco Systems explains, “In the field of treasury, speed and reactions are increasingly important – treasurers need to know exposures, they need to have good online communications. But to do that, we need to clear out the white noise. It is about the quality of information we receive, not the quantity.”

How will this problem be solved? “I don’t know”, warns technology pundit Jonny Evans. “We’re in a situation where you will be gathering more information than ever, and the big challenge is, how are you going to control and manage that information? It will be the problem that people at senior levels of business are going to have to deal with.”

The other key concern is one of security. “It’s a never ending question” says Jean-Marc Servat.

Jonny Evans agrees: “Technology will stand or fail on security.” Although it will always be important for new communication and finance technologies to be secure, corporate cards, mobile payments, 3SKey and on-the-move treasury systems all claim to have robust security features.

However, as Servat points out, the issue of security is an “endless race between offence and defence” which “can’t be solved by a magic bullet.”

While the early adoption of cutting edge technology should always be approached with caution, the many new products and initiatives on the horizon will ensure that treasurers have access to a richer pool of technology than ever in the coming year.