Treasury systems at a crossroads
Over recent years, there have certainly been some significant developments in treasury technology. Communication between entities around the world has been improved as systems harness the power of the Internet. At the same time, connectivity with the banks is improving with a number of brand-specific and broader industry-wide initiatives. So treasurers now expect systems to get some form of ‘straight through processing’ from any system.
There also has been a consolidation of supply in the treasury systems market – see the Sungard news item for the latest instance of this. Increasingly, systems all seem to offer the same high level of core services. There are differences around the edges – a few offer very sophisticated asset or risk management modules – but it can be difficult to choose between some of the other systems in terms of functionality.
This means treasurers look to other factors. Cost remains key. Some providers have been imaginative in the use of the Internet to deliver a low cost, high quality ASP service. Another factor is on-going support. Treasurers want to know there is back-up available and that their system will continue to be developed over the years. Here, the larger providers would seem to have an advantage.
So perhaps the real dilemma is beginning to emerge. There are cost barriers to entering the treasury systems market but, at the same time, it is harder for existing providers to identify a sustainable niche. So there is a need for yet more technological improvement. Yet, without new competition, is there enough incentive for the larger providers to continue to develop their offerings?
Perhaps the treasury systems market is at a crossroads. One way is the route to straight through processing and hassle-free automation. The other is the way to complacency and stagnation. It will be interesting to see which way each supplier chooses to go.