Published: 25 July 2023
Evolving technologies will produce ever-increasing efficiency gains and cost savings in treasury operations. Leading treasurers are embracing the opportunities and managing the risks to their organisations. Lagging is not an option.
Can’t I leave technology to my IT colleagues?
No. Technology is a core technical competency for treasurers. Technology can improve the accuracy and security of your treasury transactions. It can also deliver solutions to manage payments infrastructures, disaster recovery and automation. Technology in treasury is continually evolving. As the business landscape changes and new technologies emerge, treasurers need to stay informed and adapt their strategies to leverage these advances effectively.
Technology is a critical enabler for all activities undertaken by treasury. The wide range of solutions available are evolving rapidly and treasury needs to proactively identify solutions aligned to the organisation’s current and future requirements.
What are the most important current technology trends?
Key technology trends in treasury include artificial intelligence, robotic process automation (RPA), cloud computing, open banking and Treasury-as-a-Service (TaaS). Artificial intelligence (AI) is the robotic technology that enables computer systems to perform tasks that previously required human intelligence. Examples include making decisions and recognising speech.
Machine learning (ML) is a branch of artificial intelligence. It is the study and application of computer algorithms that allow computer programs to automatically improve through experience. AI and ML can analyse vast amounts of treasury data at greater speed. They can assist in cash forecasting, risk management, fraud detection, and investment optimisation.
In the shorter term, according to treasury and technology expert Rahul Daswani FCT what will mostly likely happen is that you’ll be able to set up your treasury operating system and your own enterprise resource planning (ERP) system in a manner where you could have an AI application that provides template-based answers. Then a human would have to apply some degree of judgement and analysis before it’s published.
Robotic process automation (RPA) technologies streamlines tasks such as cash management, payment processing, and reconciliation. RPA can mimic human interactions with various systems, reducing errors and improving efficiency.
Cloud-based treasury management systems (TMS) are becoming increasingly popular. Cloud computing is the delivery of computer resources by a hosted self-service over a network, typically the internet, on a subscription or pay-per-use basis. They provide treasurers with flexibility, scalability, and accessibility to critical financial data remotely in real time. Cloud-based solutions also offer enhanced security measures and seamless integration with other applications.
Open banking enables treasurers to access banking services and data through standardised application programming interfaces (APIs.) An API is a set of commands, functions, protocols, and objects that programmers can use to create software or interact with an external system.
As a machine-readable interface, an API facilitates machine-to-machine communication. It provides developers with standard commands for performing common operations so they do not have to write the related code from scratch. This integration simplifies connectivity between the TMS and banking platforms, facilitating real-time data flows, payment initiation, and cash management activities.
Laurent Descout, CEO of Neo Capital Markets advises, “Having your banking, accounting and TMS suppliers offering very simple API layers puts this technology within reach of almost anyone. That democratises the ability of treasury teams to schedule actions and boost efficiency.”
Some organisations are opting for Treasury-as-a-Service (TaaS) solutions, which provide fully outsourced treasury operations and technology platforms. TaaS providers offer scalable and cost-effective solutions, allowing companies to leverage specialised treasury expertise and modern technology without heavy upfront investments.
Balancing costs and risk
Carl Sharman FCT, head of treasury technology advisory at Deloitte notes that most corporates face constant challenges to deliver year-on-year cost savings. This can only be achieved by looking at new and more effective ways of doing things. This is one of the best outcomes of new technology trends. Not only can they help you do what you currently do better, but they can also enable you to expand in new directions.
“The risks in not making the technology investment can overshadow financial cost savings. Making suboptimal financing decisions or not being able to provide timely financial reports could cost your organisation more than the cost of the capital investment in technology.”
How can I choose and implement new technology?
There is a wide and expanding range of systems available. We need to evaluate them in detail and with care to ensure they meet our organisation’s requirements. New systems must be aligned with our treasury's delegated powers, policies, procedures and audit requirements to be secure and fully effective.
Evolving technologies are an ever more powerful tool in the hands of cybercriminals.
Access to sensitive financial information and systems makes treasurers a particularly attractive target for criminals. Accordingly, we need to be fully versed in our organisation’s risk management strategy. Treasurers need to be aware of the latest risks and understand the very high likelihood that we will be the target of a cyber attack at some point. Implementing robust security measures, such as multi-factor authentication, encryption, and real-time monitoring, helps protect against cyber threats and fraud attempts.
Up our technology game
Treasurers need to think more about technology implementations urges Anu Mensah FCT, Head of treasury UK at EY, together with any skills gaps in their teams. For smaller teams, the recruitment policy will necessarily be quite broad. Group treasurers and heads of treasury will look for treasury, financial knowledge and accounting skills. For the future, though, as a profession, we will need to be much more rigorous and look for candidates to fulfil not just the treasury aspects of a role, but the technology aspects as well.
“Fintechs, treasury technology providers and banks in combination offer treasurers a considerable amount of promise on the technology front. If we want to see that potential realised and those technologies implemented, we will need a greater willingness to up our game on this front.”
An increasing pace of change is inevitable. Welcoming and getting ahead of technology developments will hugely enhance your treasury career prospects and job satisfaction.
Author: Doug Williamson, FCT
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