Treasury as a Service (TaaS), or the “Amazonization” of treasury managed services

Treasury as a Service (TaaS), or the “Amazonization” of treasury managed services

The "Amazonization" of financial services, through dedicated online platforms, could change the way financial management (in general) and treasury (specifically) are managed, for smaller companies or service activities that do not require a dedicated internal team and tools. The concept of “Treasury as a Service” may be a perfect answer to certain types of entities, which cannot afford a full-time treasurer, or in transition phase, after a spin-off.

“Amazonization” of treasury services

The "Amazonization" of financial services, through dedicated online platforms, could change the way financial management (in general) and treasury (specifically) are managed, for smaller companies or service activities that do not require a dedicated internal team and tools. The concept of “Treasury as a Service” may be a perfect answer to certain types of entities, which cannot afford a full-time treasurer, or in transition phase, after a spin-off.

The idea is not new and quite logical, although not yet developed on a large scale. However, it has a lot of advantages and in its version (Platform + subcontracted treasury team) would allow a professionalized and up-to-date cash management. Smaller entities suffer from the lack of internal resources, budget, size to justify a full-time position and expertise to complement a state-of-the-art treasury solution.

Need a car but don’t have a driving license, take a UBER!

These new online platforms (not only for treasury of course) will become the dominant customer interface for the financial services industry (i.e., banks) and other players in Europe. As on the giant online shopping platform, customers will soon be able to inform themselves, compare and choose the financial products that best fit their needs on real marketplaces that will gather as many products as possible. But for the subject at hand, outsourced treasury activities, it could also be "Amazonized". The idea is to provide the client of the bank, the consulting firm, the fund service provider, etc. with a cash management / treasury platform, a sort of library of apps tailored to their needs, with the minimum functionalities and, in addition, the service of a specialist to manage or train them if the entity does not have the means or resources. Today, it makes sense to rent a vehicle, sometimes with a driver, like UBER. Today, we no longer buy a vacation villa, we "RB&Bise" it. So, when you can't justify the management of an expert treasurer, rent it with the ad hoc tool. This is the principle of the “Amazonization” or “Uberization” of treasury that will emerge in Europe.

Required evolution to keep being onboarded by banks

Banks regret that their customers are not sufficiently "digitalized" in terms of cash and payment. This is problematic in terms of costs for the bank, the numerous resources required for manual operations, the enormous risk of errors and the risk of fraud. Efficiency is required on both sides and is virtuous for both the bank and the company. The emergence of more and more complex regulations, the need for compliance, KYCs, legal and market requirements impose the "professionalization" of cash management for entities that were not or did not have the need for it. Things are changing and the need for it is becoming clear.

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An interesting study by “Luxembourg For Finance” (LFF) therefore notes that European banks will have to evolve quickly into full-service solution providers and one-stop shops addressing the specific financial needs of their customers. They will also have to accept to offer competitors' products alongside their own to capture the customer. The demand is concurrent and two-way. The bank must or should offer this new type of service to help its customers become more professional and the customers should become more professional given the growing importance of cash. The facts are there, clear, obvious, and undeniable. It is time for solutions to emerge, with real specialists and Simply Treasury is working on it with partners.?

Finance world is changing with technology and PSD2

Thanks to the various precepts of Banking-as-a-Platform (i.e., an open platform composed, based on a microservices approach) and Open “APIsation”, a digital bank or a neo-bank will be able to benefit from all the innovation capacity of the players in the marketplace to adapt its offer and deliver new functionalities quickly. Banking as a marketplace, or the "Amazonization" of financial services, is in the air today. But in parallel, the "Treasury as a Service" will emerge rapidly. Marketplaces are not new to the financial sector, but we must admit that they are developing more and more. More than a simple platform, the marketplace is above all a business model driven by open innovation, digital and data. It brings together several parties with different needs by connecting several producers of a product or service with an end consumer. Its role is to remove market friction while generating added value. This cash-based marketplace business model would aim to give choice and control to end consumers (i.e., corporate customers or "fund service providers") since it is about the user discovering a wide range of services and tools.

COVID crisis, as a catalyst for changes

The COVID crisis has only accentuated the need to digitalize, outsource, solidify the organization, and professionalize it. Treasury has come back to the forefront and, as always during financial crises, we are reminded of its major usefulness. But wanting to strengthen cash management without having the means or resources can be complicated. So, a platform can be the revolutionary idea. The Marketplace is where banks or other players create solutions where they integrate services from Fintechs or techs to offer customers a variety of offers by type of service or product. The marketplace generates value by facilitating transactions between third parties and not by participating in the transactions themselves. The offers of the Fintechs and the service provider(s) are fully integrated into the user interface of the application via an API. As a result of the European regulation (DSP2), Open Banking will allow companies registered with the regulator and respecting a set of security procedures to access (with customer consent) bank account data and initiate payments. Third-Party Providers (TPPs) are connected to the banks' IT system via an API to retrieve data. Often, an API layer (provided by a banking API platform) exists between the bank and the TPPs.

We believe that this type of platform has a definite future in the current context. These Marketplaces (thanks to an open and modular architecture facilitating the integration of many offers and applications or functionalities).?


Fran?ois Masquelier – CEO of Simply Treasury – Luxembourg August 2021

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OLIVIER DONON

Digital Transformation Manager

3 年

Thanks Fran?ois. Fully aligned with your statement

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Joep Backx

Sales Director @ Storfund - Providing cashflow to e-commerce businesses

3 年

Thank you Francois. Interesting read!

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