Treasury Today Country Profiles in association with Citi

Building a digital culture

This issue’s question

“What does it take to build a digital culture within the treasury department and why should senior treasurers be looking to do this?”

Portrait of Rohit Talwar, CEO, Fast Future
Rohit Talwar, CEO, Fast Future:

For treasury today, perhaps the biggest challenges are those of raising the function’s technological literacy and evolving genuinely digital mindsets. As the digital disruption typhoon sweeps across the business landscape, surviving the storm requires senior treasurers to improve the understanding of themselves and their teams of what emerging technologies enable in terms of functionality and new ways of thinking and doing business. Opportunities are arising through new fintech solutions for treasury functions to bypass banks and other providers – but understanding and realising the opportunities requires deep digital literacy. Technology advances enable radically different concepts underpinned by dramatically different ways of looking at treasury activity, hence digital culture needs to encompass both the emerging technology and the associated mindsets.

At its heart, a digital mindset means seeing everything as data rather than physical objects represented by data – and hence something that can be analysed and manipulated in ever more clever and complex ways. For example, automotive industry leaders are starting to see that the biggest value in cars lies in software and the data it generates about every aspect of the car and what the passengers do while travelling – offering constantly updateable revenue streams rather than a single fixed purchase – the car has become a data generation platform. With the rise of Tesla’s autonomous vehicles and similar digitally-minded manufacturers such as Local Motors, who crowdsources their 3D printed car designs, a car is no longer just a means of transportation – it becomes a physical embodiment of digital products and services.

Successful digitally literate business leaders in treasury will need to embrace disruptive technologies such as artificial intelligence (AI), blockchain, cloud computing, hyperconnectivity, and process automation. The tools these technologies enable can help increase efficiency and effectiveness, and create more value for internal customers and others with whom treasury connects. As financial services firms and central banks start adopting blockchain and cryptocurrencies, the pace of change in the marketplace will only accelerate. China is exploring the technology with the intent of transforming its entire finance sector while others are looking at blockchain as a platform for frictionless sale and distribution of equities, currencies, bonds and other assets.

The secure and irrevocable nature of blockchain transactions, coupled with the reduction in transaction fees, make it an attractive proposition for executing direct peer-to-peer transactions between counterparties without the need for intermediaries such as banks. AI offers the potential for smarter analysis and automation of many routine tasks. Positive digital treasury cultures will explore ways of enhancing the role of people in the organisation through AI rather than simply automating the work. Finding deeper, more meaningful ways to connect to employees and encourage their best work, and providing worthwhile experiences for both employees and internal customers – ie building relationships, will be the true hallmarks of the digitally enlightened organisation.

Portrait of Sen Ganesh, Principal, Bain & Company
Sen Ganesh, Principal, Bain & Company:

Corporate treasuries run the risk of being at a competitive disadvantage if they do not accelerate digitisation. But they face the challenge that embedding a new culture and way of working is always a marathon, not a sprint.

Corporate treasuries are increasingly critical to deliver the company’s strategy, drive operational efficiency, manage financial risk and controls, and be adaptable in rapidly changing market conditions and regulatory environment.

Achieving these objectives requires end-to-end digitisation of the treasury function. This entails enhancing technology solutions, building new capabilities and ways of working, and engaging in partnerships with banks and non-banks.

For example, increasing adoption of virtual accounts to rationalise a number of physical accounts provides greater transparency on cash and liquidity positions, and supports reconciliation processes. Leveraging emerging real-time cross-border payment schemes can improve cost efficiency and working capital through just-in-time payments. Additionally, companies can make use of improved cash flow forecasting that leverages market data and scenario planning or third-party platforms to manage supply chain invoice processing and enable financing decisions to maximise working capital.

Corporates face choices on how and where to invest in technology, build the necessary capabilities, and manage partnerships to achieve their goals. Some corporates are focused on working with primary banks to digitise and integrate systems. Others are investing in enhancing in-house treasury management systems and teams especially to re-engineer payments and collections processes. Corporates are also leveraging third parties for specialist capabilities to manage supply chain payments and financing.

Adoption of digital and achieving full potential requires changes in culture. Organisations are in different stages of maturity but typically focus on three key areas:

  1. Digital capabilities.

    Identify capabilities for differential investment to build digital leadership, eg data analytics. Across the organisation the bar will be higher on technical, managerial and behavioural skills impacted by digital. Ensure the right metrics (aligned to business goals) to incentivise new behaviours and remove the risk of failure that often hinders innovation and adoption of new ways of working.

  2. Agile ways of working.

    Culture is the new organisation “king” and can be a source of competitive advantage in the digital age. Rapid adaption, failure recovery, trust and delegate and networked working represent profound shifts from the classic command and control or matrices approaches that typically exist today. Refine governance models to be faster and more responsive, delegating decision rights to teams whilst maintaining the appropriate reporting, financial and risk controls.

  3. Partner engagement.

    Select and manage partnerships with banks and non-banks to accelerate opportunities to digitise and drive to full potential. This typically includes increased data sharing and integration of technology systems through private APIs, jointly exploring new innovative solutions through deep understanding of the corporate’s needs, and leveraging expertise and presence in local markets where corporates have limited footprint.

Another consideration for companies looking to change their ways of working is that leadership role modelling is critical: real change is driven from the top – and for this to happen, the leadership team needs to “live and breathe” the values and behaviours, listen, learn and loop back to understand what is truly important and adapt as necessary.

Portrait of Gulru Atak, Global Innovation Head for Treasury & Trade Solutions, Citi
Gulru Atak, Global Innovation Head for Treasury & Trade Solutions, Citi:

A digital culture is created when everybody within the organisation is thinking about how technology can improve the business. To do this, business leaders must give their workforce the mandate to be curious and explore how existing and emerging technology might solve the challenges that exist within the organisation.

The creation of a digital culture does not just happen overnight. For example, at Citi, it has been a clear focus for us over the past decade to encourage and foster a digital culture across the organisation. To achieve this, we have taken a multifaceted approach that is underpinned by making digital a key part of our mission statement. From this, a digital ethos has been embraced from the top, and filtered down throughout the organisation, so that everybody has the mandate to come up with new ideas that can benefit the business.

To further facilitate digital thinking throughout the organisation, we encourage all employees, no matter who they are, to pitch their ideas. And, perhaps most importantly, the organisation has made a commitment to listen to and test these ideas out. For me, this is crucial when building a digital culture because it gives people confidence to develop new ideas and allows us to learn what does and does not work together.

A type of culture and new way of thinking cannot be created in a silo. Around the world, there are hundreds of innovative companies that are developing new ideas and new ways of operating. It would be remiss of any business not to look at and learn from these organisations.

Just as becoming digital has been a top priority for the bank; I believe that it should be a top priority for corporate treasury departments as well. The role of treasury is undoubtedly growing within organisations. As it does, it will increasingly be looked at to provide technological solutions that facilitate the digital path the business is following.

This does not mean that treasurers need to be experts in blockchain technology, or implementing AI based solutions right now. But it does mean that they need to be thinking digital, by understanding the pain points the business has and what technology or process improvements can solve these.

At Citi, we are helping our clients on this journey by bringing them into our innovation labs to highlight issues and brainstorm solutions. The aim is to co-create and also to further improve the knowledge base of the corporate treasury community so that they can better serve the organisations they work for.

Through this work, and through all the other initiatives happening in the treasury space, I foresee most treasury professionals being digitally native in the next five years. As a result, treasury departments will have a digital culture by default, so it would be prudent for senior treasury leaders to start fostering this culture today.

Next question:

“What challenges have corporate treasurers based in the Middle East been faced with in the last 12 months? What solutions/strategies are they using to overcome these challenges?”

Please send your comments and responses to qa@treasurytoday.com

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