Advent of the Digital Treasury

Consecration of the digital age of treasury

If there is one positive consequence to the health crisis we experienced in 2020, it is the emergence and consecration of the digital age and the passage into another dimension, as if the world had suddenly accelerated and everything became possible (faster than initially thought and expected). Modern treasurers in 2020 and beyond want to have greater visibility on cash flow and flexible means of working. They would love and therefore seek for the ultimate level of their department evolution: the “treasury-on-demand”. All CFO’s dream to get access to treasury data and reports or dashboards in real-time and upon demand. A wishful thinking or a possible reality for treasurers? COVID-19 was certainly the biggest disruption treasurers have seen in last years. No one could contest it has impacted every corporate treasurer across the world. It has changed the way to work We now work partly from home, alone and far from the rest of the team. It has changed the interaction and coordination between teammates. It also imposed to revisit some of our processes and procedure to remain efficient and safe.

Need for increased efficiency

While we had to work separately, individually, in a complexified environment, treasurers had to produce more detailed financial statements, reports, simulations and other stress tests. Paradoxically, one had to be more proactive and efficient given the focus on liquidity, the scrutiny on working capital which one wanted to optimize and the need for refined and more accurate future flow forecasts. We had to ensure treasury business continuity while automating further activities. More than simply further digitization, treasurers had to ensure a maximum coordination to smooth processes and sustain cash management quality. As a result of the pandemic, banks have seen an increasing number of corporate clients and funds transacting (more) via digital channels. Whether it be online, mobile, or even web-based, digital channels have helped heads of treasury to do business more efficiently. The treasury mindset has changed significantly. For those who were still highly manually organized, they had to find ways of carrying out trade without physical documents. Transaction banking has gone through major changes Banks have adjusted to a “new normal”. All actors have continued or accelerated their investment in infrastructure and IT solutions. As liquidity and working capital management remains the top concern for corporate treasurers, CFO’s are checking how they can ensure that their (finance) supply chain will not be disrupted and that they ensure enough cash reserves for the gong concern. What is key today? Obviously receiving timely payments (the faster the better), managing cash flows more efficiently, getting accurate data on (real-)time, and being more agile are the essential attributes of today.

Time becomes essential

Treasurers are not only using digital channels for payments, but also for opening accounts digitally, sending self service requests on trade documents and using digital route to deal and trade products. We have noticed a change in mindset. They have increased efficiency in leaving more manual processes behind. Some more sophisticated treasurers have even looked for new tools such as API’s, BI and AI to enhance real-time decision making, new products like GPI or KYCR, blockchain solutions for example for trade finance, liquidity management, reporting and dashboarding. They have tried to enhance current IT architecture by adding missing layers. The objectives are multiple: to enhance internal controls, increase efficiency, reduce costs (when possible), fasten processes, and get a more immediate and comprehensive view on their treasury situation.

2020 EACT survey confirmed search for more digitization

In short, please note that treasurers at:

·    62% use, or plan to use, data analytics

·    35% use, or plan to use application programming interfaces (APIs) to facilitate integration for on-demand or real-time exchange of transactions or data.

·    Over half (52%) of treasurers are interested in the opportunities to exchange information in real-time information, and 47% in real-time liquidity and real-time payments and collections.

Treasurers have always been engaged by the opportunities to leverage innovative technologies to solve problems and add value to the business in new ways. But there has been a significant jump in treasurers’ current or planned use of new technology capabilities, a trend that seems likely to have accelerated since the start of the health crisis. The need for analytics to understand and respond to fast-changing, exceptional market and economic conditions has also been amplified since March 2020. Likewise, treasurers are increasingly recognising the potential of robotic process automation (RPA) to replace high volume manual input and enrich the data on which analytics can be performed. However, the biggest change in treasurers’ planned use of innovation is AI, which capabilities are increasingly part of banks’ and IT vendors’ solutions such as predictive analytics, cash flow forecasting, bank account reconciliation and fraud prevention tools. And Data Analytics has been identified as the main priority in coming 12 months for 2/3 of treasurers in Europe.

“Treasury-On-Demand” and the trend towards ‘real time’ has become more apparent this year. In reality, these themes, as well as APIs (for real-time integration) and 24/7 availability, are closely related, and will create new demands on banks and technology vendors to offer real-time solutions, such as for liquidity and risk, and the ability to handle real-time data. There are also procedural implications as treasurers need to consider how they will adapt their processes and decision-making to reflect the availability of real-time data.

“Harder, better, faster, stronger” (Daft Punk)

Treasurers need to look ahead, and digitization is leading to more real-time management, with quicker decision-making. This trend is accelerating, so treasurers need to make full use of technology and digital solutions to optimally take advantage of the vast amount of data flowing through a treasury department. Automation, robotization, business intelligence and artificial intelligence will help our members to take faster decisions. I am convinced technology will remove number of borders. Centralization and automation are the two best responses to the current crisis. We need to continue upskilling our teams as the IT technology used evolves and understand digital solutions and channels better. It will be a long journey…

Fran?ois Masquelier, Chairman of ATEL