The evolution of technology continues to dramatically change the world. With robots advising on investment decisions and automated trading enabling the execution of transactions faster than humanly possible, we are going through an unprecedented upheaval in the way we live and work.
Emerging technology like distributed ledger technology (DLT) and artificial intelligence (AI), coupled with the exponential use of mobile and so-called ‘smart’ technologies, has created a truly digital world. These developments in technology are driving the next generation of financial services infrastructure and solutions.
The combination of these factors has influenced the role of the treasurer and the importance of technology, which has never been more critical to effective treasury management. As the global marketplace changes, business models and operations have to adapt to remain competitive.
This is even more profound in Asia, where the growing middle class, multiple markets, languages and regulatory regimes create a unique set of challenges. The right technology can make navigating these challenges easier. It is vital that corporates have an understanding of the technological solutions available to them and how they can be deployed to assist them to operate, scale and succeed across borders and time zones.
The most important questions you need to answer are what problem are you trying to solve, and what is the right technology solution for your problem? More often than not, treasurers understand the areas requiring improvement across their treasury, but they don’t have the right technology for optimum performance.
Therefore, it’s critical to have a clear strategy so that everyone in the organisation is aligned around what you are trying to achieve. Banks, technology partners and advisors are also important stakeholders in this process and should be engaged.
Never before has so much technology been available to treasury and finance professionals to tackle their challenges. There are so many solutions and options available that treasurers need to consider their needs carefully and find the right mix of solutions that gives them optimum results.
Deploying an enterprise resource planning (ERP) system or treasury management system (TMS) is no longer enough to implement a best-of-breed solution. Treasurers now need to leverage a mix of fintech, bank and third-party applications to create a bespoke treasury solution. This presents a unique set of challenges as treasurers try to determine the best mix of technology for the organisation and how best to integrate it.
Solutions that integrate cash forecasting tools, TMS, SWIFT and fintech solutions are becoming increasingly common. The key for success is to ensure the focus is on people, process, and technology across the organisation. It’s critical that treasury is clear on what the technology must do. In order to define this, treasury will need to:
Address treasury and organisational challenges.
Consider timing and output – does it need to manage liquidity or risk in real-time?
Identify the ‘must-haves’ versus the ‘nice-to-haves.’
Limit the need for customisation.
Make certain that the solution can scale.
Integrate infrastructure into bank and other fintech solutions.
Building an intelligent treasury function takes planning, foresight, and a keen understanding of existing and emerging technologies. As the pace of technological development accelerates, not being in tune with the latest developments can negatively impact a treasurer’s ability to effectively manage risk.
Under this quick win approach, the corporate instructs its banks to send statements to the SWIFT address or BIC of the fintech, which is a SWIFT member as a Supervised Financial Institution. This has the advantage of a rapid return on investment, which leads smoothly to other phases: treasury payments, then bulk payments and cash concentration. This rapid deployment model delivers fast results, while keeping the option for the corporate to join SWIFT at a later date.