Treasurers lean into their digital aspirations

Published: Sep 2023

Treasurers are well placed in their organisations to lead innovation and embark on digitalisation projects. While they agree on the importance of technologies like artificial intelligence and machine learning, bringing their digital vision to fruition is easier said than done.

Evolution of a monarch butterfly from caterpillar to butterfly

Treasurers’ personal lives are digital, and they are used to getting what they want when they want it online. At home, they can ask their smart speakers almost anything; their streaming platforms know what television shows they want to watch next; and they use their smartphones – with their unique combination of apps – as a remote control for their lives.

When it comes to their professional lives, however, the digital experience is somewhat lacking. And while the Covid lockdowns introduced Zoom calls and other digital tools, true digital transformation is still an aspiration for many corporates. Many treasurers who Treasury Today speaks to are still bogged down with manual tasks and processes that are based on Excel spreadsheets.

Meanwhile, the treasurers’ role is becoming increasingly strategic, and many are expected to take on an advisory role to the various stakeholders in their organisations. Whilst over-burdened with manual work and outdated processes, however, they are unable to use their strategic brains to their full potential.

Added to these challenges, treasurers are working in an environment where the pace of innovation is increasing. Blockchain, digital currencies, artificial intelligence (AI), cloud computing – the list goes on – are just some of the topics treasurers need to wrap their heads around.

Amid this, treasurers have the opportunity to be at the leading edge with digital assets, for example. This is the point that Professor Philipp Sandner, an economist and Founder of the Frankfurt School Blockchain Center, makes. With new technologies such as blockchain, treasurers often underestimate the role they can play in innovation in their organisations. “Blockchain is very often related to finance – this makes the CFOs [chief financial officers] and the treasurers the people to drive blockchain adoption in companies,” he said in a previous interview with Treasury Today.

In driving the adoption of new technologies, treasurers need to have good relationships with the key stakeholders in their organisation – something that their roles are already demanding of them. Mark Sutton, Senior Manager at treasury and risk consulting firm Zanders, comments how the role of treasury has expanded significantly in recent years with the “C-suite relying more on the function as a respected voice on a wide range of strategic issues – from climate risk and social issues to the more traditional managing working capital, risk and financial forecasting,” he explains.

In mapping out their digital aspirations for the future – and achieving a vision of a digital treasury – there are some key differences with the current state and what they are aspiring to. “It’s now about elevating the levels of automation through real-time predictive and prescriptive analytics that enable faster and more informed decisions. In simple terms – the rapid evolution of technology is putting more powerful tools into the hands of corporate treasury to optimise performance,” he says.

When asked about what the future of treasury looks like, corporate treasurers often paint a picture that features automation and artificial intelligence in this way. James Zhixin Zhang, Head of Treasury and Corporate Finance, Asia Pacific and China at Siemens Energy, for example, commented in a previous interview how automation, creating more efficiencies and gaining better visibility are major trends in corporate treasury. “These trends will continue into the future,” he says, “but at the same time I think it is important for treasury to be more strategic, to think ahead, to think more broadly and not be reactive.”

Treasurers are agreed on these major trends, but many have different understandings of what a digital treasury actually is. Sutton clarifies what he means by a ‘digital treasury’: “the ideal digital treasury function embraces both new and emerging technologies that go beyond automation and into the realm of predictive and prescriptive analytics to support informed real-time decisions which deliver elevated operational and financial efficiencies combined with an enhanced customer experience and increased shareholder value.”

When asked the same question, Irene Thng, Executive Vice President and Group Treasurer at Toll Group, said: “To me, digital treasury means a robust system – preferably one with data from other systems integrated into it – which portrays accurate and real-time information relating to cash, FX [foreign exchange] and other treasury-related data.”

Meanwhile Alexander Seelmann-Eggebert, Deputy Regional Treasurer, Asia Pacific at Nestlé, comments that the ideal digital treasury has reduced operational workflows and increased efficiency and visibility of data through the use of dashboards that can be easily used and understood to make strategic decisions on a daily basis.

Also, a digital treasury simplifies the front-end usage of treasury management systems and also the interface with other systems such as multi-trading platforms and SWIFT.

And there are other definitions out there for what a digital treasury actually entails. Technology company FIS, for example, defines a digital treasury as “achieving a best-in-class, modernised treasury function through the most secure, technologically advanced and cost-efficient means.” Treasurers will be using more powerful tools to carry out their traditional tasks, they will also have new aspects to their role, such as preventing cyber-fraud and improving security.

Consultancy Deloitte in its ‘Digital Transformation in Corporate Treasury’ report notes that digital transformation will look different for each corporate because of the variety in structures and processes. “However, we can still deduce a common definition, which is the adoption of new and emerging technologies into the business, to produce operational and financial efficiencies, centralise the overall reporting and automate processes,” the authors of the Deloitte report state.

This feeds into the typical complaints that treasurers have. The areas they often most want to improve are related to regulatory reporting and a lack of visibility. Digital transformation, however, is more visionary than merely going through a list of complaints and checking off as each item is improved.

When asked what treasurers should be aspiring to, Sutton at Zanders comments, “there is no one size fits all view of a digital transformation of corporate treasury because each corporate is different and therefore each digital treasury function will look slightly different.” However, having said that, he sets four key pillars that will help each individual corporate treasury function to establish the optimum foundation for a digital treasury. These four pillars are: operational agility and risk resilience; data-driven real-time vision; workforce enablement and elevating the customer experience.

Seelmann-Eggebert at Nestlé comments that the greatest aspirations he has in his role are the automation of front office tasks and data visibility. Also, he’d like to leverage existing solutions – such as Microsoft applications and treasury management systems – but also explore new tools and how they can be implemented in corporate treasury.

Meanwhile Thng at Toll Group’s aspirations are related to the use of AI and what this means for the role of the treasurer. “My greatest digital aspiration is to ‘outsource’ data gathering and compilation to systems, AI and other technological tools. Human brains are reserved for decision-making exercises. At Toll Group, treasury is fulfilling this digital aspiration through a digital transformation journey.”

The application of artificial intelligence poses many challenges for corporate treasurers, and is a topic that Treasury Today has covered previously. AI, however, remains top of the agenda for many treasurers with their digital transformation.

There are also numerous other technologies that are on corporate treasury’s radar and part of the skill of the treasurer is understanding them and knowing where their resources should be invested for the future.

Of the new technologies that are available to treasurers, Sutton at Zanders comments on those that hold the most interest: “artificial intelligence and machine learning are being recognised as a key enabler of strategic priorities, with the potential to deliver both predictive and prescriptive analytics. This technology will be a real game-changer for corporate treasury, effectively re-defining the partnership between man and machine which will push the boundaries on what is possible to create a more integrated, informed and importantly real-time strategic function.”

There are numerous tools and technologies that treasurers have to choose from, and Seelmann-Eggebert comments that it is difficult to name just a few of them. “I see a lot of potential or improvement of existing TMS and data visualisation, which is quite basic. AI of course will also impact treasury, but at this point of time it’s hard to tell where and how it can/will be used. Another big topic will be CBDC’s (central bank digital currencies), however I think there is still a long way to go until multinationals will benefit from those,”he tells Treasury Today.

Seelmann-Eggebert also comments on the most exciting technologies and says he sees a lot of potential for improving existing treasury management systems and data visualisation, which is quite basic at the moment. “AI of course will also impact treasury, but at this point of time it’s hard to tell where and how it can or will be used. Another big topic will be CBDCs – central bank digital currencies. However, I think there is still a long way to go until multinationals will benefit from those.”

It can be challenging, and perhaps even confusing, for treasurers to navigate all the latest technologies and know how to apply them as part of a digital transformation journey. Knowing where to start can be half the battle, and many consultancies and vendors suggest a roadmap, or clear process. FIS, for example, in its e-book entitled ‘8 Steps to a Modernized Digital Treasury’ lays out each of these stages and at each describes what the digital enabler is. The process starts with streamlining bank connectivity, which is enabled by API [application programming interface] technology. The next step is standardising payments, which has the enablers of SWIFT gpi [global payments innovation], blockchain and APIs. Then FIS suggests optimising cash visibility with robotic process optimisation, and also reconciling data with the same technology. The stage after that involves evaluating and managing risk, leveraging artificial intelligence as the digital enabler. Next is optimising bank account administration, then navigating the regulatory landscape and finally, simplifying technology consumption.

These steps above are easier said than done, however. It’s often not about the technology itself, but all the people – the stakeholders that need to be brought on the journey – that need to be involved in any digital transformation project. Sutton at Zanders comments, “a very important point is that digital treasury is not a destination – it’s a journey, that extends beyond the pure adoption of technology. And whilst technology is the enabler, in order to achieve the full benefits of this digital transformation journey, a more holistic view is required, which also embraces the importance of cultural change like the adoption of the ‘fail fast’ philosophy that is based on extensive testing and incremental development to determine whether an idea has value.”

This element of cultural change reflects the importance of remembering that people in an organisation need to be included in any digital transformation. Also, the adoption of technology should not lose the human touch. And in an environment where artificial intelligence will be commonplace, it is essential to remember the importance of the human connection and place value on people skills, as Nishedha Gunawardena, General Manager – Treasury, at Sri Lankan conglomerate Aitken Spence, said in a Corporate View profile for Treasury Today. “Having really good human skills will be helpful – sometimes you cannot totally depend on an algorithm or a trading platform – I do not think that alone will be enough,” he said when commenting on the proliferation of AI.

Remembering the need to bring people along on the digital journey is just one of the obstacles, or challenges, that corporate treasuries can face as they embark on their transformation.

Other obstacles that can appear as roadblocks along the way include resistance to change, a lack of transformation strategy, a lack of agility within an organisation – and ability to change without destablising itself – and new risks that can be incurred with the use of third-party vendors, according to Deloitte.

Sutton also comments on the challenges that organisations face in bringing their digital aspirations to life and focuses on the need for a proper data strategy: “whilst the new and emerging technologies will be supporting critical tasks, assisting with real-time decision-making process, and reducing risk, to truly harness the power of technology, a data strategy will also be foundational. Data is the fuel that powers artificial intelligence. However, most organisations remain heavily siloed, from a system, data and process perspective. Probably the biggest challenge to delivering on the AI promise is access to the right data and format at the right time.”

Seelmann-Eggebert believes that managing cybersecurity risks will remain a key challenge in achieving a digital treasury. Also, he notes that the other challenges include the regulatory environment and the compliance and cost considerations that this entails. Another challenge, he says, is to focus on “a few tools that can offer solutions to several issues, rather than having different tools for each individual challenge.”

Part of navigating the available tools and technology, as well as these challenges, is knowing which organisations to partner with. When it comes to fintech providers, the Deloitte report notes that many fintechs fail to achieve what they set out to because they fail to truly understand what their customers’ needs are.

And this information-gathering process can be difficult on both sides. Thng at Toll Group comments on how she approaches relationships with technology vendors: “when vendors meet us, most of them only showcase the strengths of their systems and reporting capabilities – how powerful they are and why we should use them. I rely on informal discussions with my fellow peers in other companies to understand their experiences with respective systems and if there are any pain points which must be taken into consideration,” she says. “Based on my experience, there is no ‘one size fits all’ and there is no ‘perfect system’ in the market. One solution could be to build one on our own which caters to the specific needs of Toll, but this could be expensive to achieve.”

Such decisions point to the many considerations that go into achieving a digital treasury. And while their personal lives are digital on many levels, treasurers’ professional lives are much more complex, with many systems, tools and technologies to contend with. While treasurers are clear on what their digital aspirations are, achieving them will be easier said than done.

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