Treasury Today Country Profiles in association with Citi

Welcome to the future of treasury

Hand drawn paper globe sitting on iPad

In the past few decades, the role of the treasury department has transformed exponentially from a fairly unknown function to that of a vitally important strategic business partner. To support this, the environment that treasury works in has also transformed, thanks in large part to the advent of the digital age.

Fourteen years ago, Treasury Today produced a technology article entitled ‘Employee use of the Internet and e-mail’. The article, written in response to the growing use of the internet in corporations, offered a guide to understanding the risks that are involved with the medium and how to develop a policy for staff to adhere to. Fast forward to 2015 and e-mail is simply part of day-to-day business communication.

Moreover, treasurers need to understand and embrace far more e-developments than ever before, from e-banking and e-invoicing to the evolving world of e-trade finance. And in some instances, ‘e’ is now becoming somewhat antiquated, with the rise of mobile devices and ‘m’ solutions. Against this backdrop, it is fair to say that we have entered the world of digital treasury.

How is digitisation changing the role of the treasurer?

In many ways, the increasing focus on digitisation (or, as some say, digitalisation) directly correlates with the ever-expanding role of the corporate treasurer, something that arguably began at the turn of the century, but which has rapidly accelerated post-crisis. Where traditionally, the treasurer’s primary focus was in transactional matters – bank relationship management, funds procurement (mainly short-term) and the investment of surplus cash; the remit of treasury is now much wider. Activities such as risk management, corporate finance and financial control are all now commonly found in treasury functions. But more vitally, the treasurer is expected be a strategic business partner – constructing and co-ordinating a coherent treasury policy to make best possible use of a company’s assets and the latest treasury products, services and trends and then communicating this to the board.

In order to meet the demands of this new role, treasury has had to look at its processes and use digitisation to drive efficiency and automation. So whilst digitisation hasn’t necessarily been the main driver in changing the role of the treasurer, it has helped treasury leaders to be more effective gatekeepers and strategic business partners.

There are many examples of this. For instance, by leveraging technology companies are now able to readily expand into new markets virtuallyswithout the need to spend resources on a bricks and mortar presence – and often without hiring new treasury staff. Moreover, taking paper out of processes has allowed treasurers to not only expand their remit with (more) ease, but also to streamline and drive straight through processing (STP), allowing treasury to focus less on manual tasks and more on becoming a strategic business partner.

The expanding role of the treasurer, and the increasingly international nature of business, has also meant that those at a senior level are travelling a lot more than before. Again digitisation has provided a solution, or at least an enabler, to this. “Tablet devices have proved very popular with our clients,” explains Munir Nanji, Managing Director APAC Sales Head at Citi. “They have provided treasurers with the mobility they require and also allowed them to digest information quickly and efficiently.” As a result, treasurers are now able to treasury teams to be able to work on the go and on a multitude of devices, seamlessly giving them access to the information they need, when they need it.

Technology for all?

The rise of digital treasury solutions, most notably the cloud, has also lowered the cost of treasury technology, making treasury management systems (TMSs) accessible to more-and-more companies around the world. This is a far cry from when TMSs) were first launched and they were installed on premise. Whilst this allowed the solution to be built to fit, it required significant investment in the technology, its updates and the servers.

There was also a high resource cost that was required from the company’s treasury and IT teams. “Today, however the rise of cloud technology has been a game changer, as it has removed hardware costs and provided a much more cost-effective way for a business to obtain the technology it needs,” says Citi Nanji. “It is also flexible and allows corporates to easily scale both up and down.”

The inexpensive, or at least less expensive, nature of most cloud solutions has, therefore, helped to level the playing field in the treasury technology space. Once there used to be a huge gap between what the biggest, most sophisticated companies could achieve with their treasury technology and those at the other end of the scale. Now, thanks to the cloud, capabilities are starting to become more equal.

The second stage of digitisation

Innovation and digitisation however doesn’t stand still and as a result of this treasurers must always be looking to the future. “We are beginning to enter the second stage of digitisation,” says Enrico Camerinelli, Senior Analyst EMEA at the Aite Group. Companies already understand that they can move from paper to digital and from unstructured data towards more constructed data. What they are now beginning to explore is how this gives them the power to understand the past in order to predict the future.”

To read more about how digitisation is helping treasury to predict the future, and to understand technology’s impact on treasury more broadly, look out for The Treasurer’s Guide to Digitisation, a new Handbook due to be published by Treasury Today in September.