From AI to APIs, new technology is poised to transform treasury processes. But how can you decide which developments are really relevant for your organisation – and is there still an argument for a spreadsheet-based approach to treasury?
Choosing the right technology has long been part and parcel of the treasurer’s job. But with the technologies available becoming increasingly sophisticated and diverse, some of the developments on the horizon may be more valuable than others. Given the pace of development, how can treasurers best identify which areas of innovation can provide real value for their organisations? And conversely, is there still scope for treasuries to operate effectively without embracing the adoption of sophisticated technology – or even by sticking with the humble spreadsheet?
Rise of technology
Thomas Stahr, Interim Treasurer and Managing Partner of Stahr GmbH – Treasury Consulting, notes that the landscape for treasury technology has evolved considerably in recent years. While the market for ERP is large, he says, “the market for treasury technology was dominated for many years by just a few market players, with solutions for large and very large corporates.” Even today, Stahr says, “there are just about 50-60 vendors of professional treasury software – and just a handful of them are real market players with global distributed customers.”
At the same time, treasurers themselves have become increasingly focused on technology. “Treasury as a whole is facing a revolution in terms of technology,” says Leonardo Orlando, an executive in Accenture’s Finance and Risk practice. He notes that while this applies to both the corporate world and to financial services, the two areas are moving at different speeds, not least because of the regulatory pressure applied to banks. “In the corporate world, the focus is more on how organisations can embed technology to become more efficient,” he adds.
And Erik Åkerlund, Head of Sales at Treasury Systems, argues that there is a bigger emphasis than ever on the role of technology in treasury. “Technology is essentially solving the same kind of problems as 20 years ago, but it’s much more autonomous and easy to use today,” he says.
Areas of opportunity
So where are the most interesting areas of development? Research carried out last year by the Economist Intelligence Unit (EIU) on behalf of Deutsche Bank asked treasurers which technologies they believed would be most beneficial for their organisations moving forward. In first place was big data analytics systems (56%), followed by AI/ML systems (42%) and instant payments (34%). At the other end of the scale, blockchain and open APIs were cited by only 13% and 8% of respondents respectively.
That’s not to say these developments lack promise. Nick Armstrong, CEO of Identitii, outlines some of the benefits arising from developments in blockchain and tokenisation. “The benefits of blockchain have been proven – unalterable, completely auditable and time-stamped,” he says. “What treasurer wouldn’t want a completely auditable record of all activities, payments and documents at the push of a button?”
Armstrong also says that tokenisation – in the form of “unique identifiers that can collect, connect, reconcile and report on payables and receivables” – offers numerous benefits, such as reconciling incoming payments more rapidly and simplifying reporting by providing regulators “with secure access to parts of those records on the blockchain.”
Likewise, Armstrong notes the opportunities arising from open banking. “Platforms that enable settlement data to travel along with clearing, remittance and regulatory reporting data are now able to link into payment engines, banks and networks,” he says, noting that this can “improve data integrity and create direct sharing of information between buyers, sellers, banks, regulators and payment networks.”
What problem are you trying to solve?
Of course, any new technology has to have a purpose. Aurélien Viry, Global Head of Cash Management at Societe Generale, says that when seeking out new technology, treasurers typically focus on achieving specific business objectives. He adds, “Nobody embraces technology for technology’s sake.”
According to Viry, the goals that treasurers are focusing on have evolved considerably in recent years. “At a recent industry event, everyone was talking about change – and treasurers increasingly see change management as the centrepiece of their jobs,” he says.
Consequently, he says that the goals treasurers are looking to meet with new technologies include addressing areas such as fraud and security, which might be tackled using developments in data analytics or biometrics. But he says treasurers are also looking to leverage developments like SWIFT gpi to gain more transparency over their international payments.