“How might technology impact your work and treasurers generally over the next few years?”
It is obvious that the continued advance of technological innovation is enabling the treasury function to capitalise on operational efficiencies when it comes down to the day-to-day risk management activities and ancillary operations. Time currently dedicated to more menial tasks like the various data reconciliation processes will be cut down further, decreasing costs and allowing for more added-value engagements to support the company’s core business objectives.
In particular, savings can be expected concerning the payment process, starting from the typically painful KYC-process related to the opening of a bank account (or the establishment of any product relationship for that matter), to the vetting of payment details, as the liquidity associated with the cash management process itself. This will undoubtedly have a positive impact on the financial expenses as liquidity-utilisation should be more efficient and the need for buffers lower. I believe we are bound to see even more tangible improvements as to security as well as a reduction of the impact of sanction-related regulatory checks.
Furthermore, improvements across the financial supply chain (for instance with respect to the processing of accounts receivables and accounts payables as well as the customer credit control activities), will also support the effectiveness of supply chain financing structures, receivable and inventory monetisation programmes. Especially in the food and agricultural industry, I am hopeful that sustainability efforts, and also sustainability-linked financing as a corollary, will be better supported, as technology helps to achieve the necessary transparency and creates seamless links between the various players along the value chain, starting from the smallholder producer of raw materials all the way down to the consumer. While this visibility enables efficient financing along the chain, it can also reward the companies focusing on sustainable practices by exposing these efforts to an ever more value-conscious consumer.
As a result, all of these developments should assist in a company’s funding sources to become increasingly diverse, which again should have a positive effect on financial expenses.
Finally, further centralisation within, but also across, regions can be expected, as transparency takes leaps forward and tools reduce the need for an expansive local footprint as to treasury staff. Then again, complete automation of the function is unlikely, as market imperfections (for instance created by the various local regulations) as well as the translation, and interpretation, of the commercial business requirements into fitting risk management strategies, will continue to necessitate a human touch.
There is, however, one element which is not unequivocally positive. As these technological advances require huge capital investments by the financial services sector, further consolidation in this space is likely. While scale has its advantage as to cost efficiencies, which can further trickle down in the so-called real economy, the well-known risks of too-big-to-fail and concentration could be a negative force, ultimately leading to monopolies and hence stymie further innovation.
If technology has been the handmaiden of progress throughout human history then it is clear it is poised to force through another radical shift in commerce, culture and society. As treasurers we will not be immune to the rise nor the attractions of new generation technologies like AI, big data and blockchain. Such new technologies may have had a limited or indeed no discernible impact on many treasurers so far but sooner or later they will, and in so doing demand we elevate our profession to another, different level.
That technology will have such a profound impact on treasurers is certainly nothing to fear. After all, the success of treasurers has always been linked to and fast tracked by technology, and today’s new generation offerings will help us eradicate a number of stubborn, persistent bottlenecks that have conspired to make our lives.
The future will see us using less and less paper, the white material that haunts us from time immemorial. The classic combo of ‘Excel’ and ‘email’ that many of us have relied on for so long will hold fewer attractions going forwards. The growing availability of increasingly sophisticated, large cloud and AI driven CRMs and other such solutions will make managing customer relations far more efficient and effective.
Domestic and day transaction banking, viewing and reconciling will continue to become more and more transparent and efficient. Already SWIFT, one of the most robust platforms globally, has integration capabilities where a single integration can automate payments, collections, reconciling and trade transactions while also giving a single sign-on to view all transactions as well as account balances at one go. The solution is currency and geography agnostic.
Anything which is routine and repetitive is nothing more than a cinch for our robot colleagues, specifically robotic process automation systems, which allow treasurers to conserve precious time and put it to more productive use and thus focus on core treasury aspects.
Technology is also coming to the rescue in risk management and compliance – there are now several tools which give out alerts (on credit downgrades and other relevant news) as well as help track remittances from a compliance perspective. Such developments make technology a trusted risk and compliance partner and that is a big relief for today’s treasurers as they increasingly take on the responsibility of being a risk manager as well.
Linking vendor financing with (investment) yield management and cash flows is proving another area where technology holds considerable potential. Today, quite a lot of vendor financing solutions help to deploy the surplus funds to enhance yields while keeping the risks at bay. These solutions are also emerging as powerful cash flow management tools.
With time becoming the rarest of commodities for treasurers, it is essential that technology comes to the rescue and acts as a partner in their working life. In any case, going forwards, the treasurer will have to decide whether he or she wants to emerge as a successful tech savvy treasurer or take the risk of persisting with legacy tools and techniques and so perish under the burdens of inefficiently managed workloads.
By and large, the growing momentum behind the treasurer’s digital technology agenda is being driven by increasing consumer power as the wider demand for tech-driven solutions in all spheres of life impacts the corporate treasury space directly or indirectly. As a result, much of what the treasury function has aspired to over the past few years, specifically the need for a holistic and integrated approach to how treasury functions and delivers beyond operational requirements, looks now to be achievable.
As has been pointed out in research by Deloitte and PwC, treasury teams are collaborating more with other business functions, increasingly taking on strategic roles, and using automation, offshoring, and treasury centres to consolidate and standardise tactical areas. More than just the excitement of having or implementing the latest digital tools, this shift is about how treasury centres embed digital technology into their core – to be ready for partnering with businesses and meeting customer needs in an era of rapid digitalisation.
Traditionally, treasury organisations have been process-driven, with high reliance on data. With greater visibility around cash, and tools enabling forecasts, the funding and investment processes will become more efficient. The quality of real-time decision making will improve as organisations become more data driven. The planning processes around strategic financing and investment will improve, giving treasurers greater confidence as they fulfil their investment, liquidity and funding requirements.
Better transparency in the banking and financial industry landscape is also taking place, with regulations introduced by country governments as they plan ahead with digitalisation in mind. Such moves will enable treasury centres to deal with the markets with greater trust and better risk management.
Efficiencies will also improve treasury processes in the near term, as exciting digital suite applications such as blockchain, API and SWIFT GPI are taking shape. Open banking holds considerable potential, especially for the smaller treasury departments and firms, as it promises to provide them with capabilities previously affordable only by larger, better resourced corporates. Its use of APIs will enable faster fulfilment of transactions and generate enhanced customer experience and relationships. Such developments in turn with help ensure better controls and transparency for treasurers.
While it is becoming increasingly clear that technology will help treasurers to play a more strategic role within their companies, there will be limits to this. Technology in itself cannot replace strategic thinking, policy and procedure design, which are primarily the responsibility of corporate treasury departments but must be undertaken in consultation with colleagues and other departments. A careful blending of technology and human intelligence will therefore be critical in helping corporations remain on the front as the role of the corporate treasurer continues to evolve even further.
Overall, digitalisation should enable the treasury function to better align with organisational objectives. Organisations that have not yet made this push should begin, sooner rather than later. The trends that we are seeing now are just the tip of the iceberg, with much more to come.
“In these volatile, uncertain times how can treasurers become more entrepreneurial and help firms explore and capture new growth and investment opportunities?”
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