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5 technologies transforming corporate treasury

Over the past decade, new and emerging technologies have accelerated the pace of change in corporate treasury and created a more informed strategic function that has assisted in real-time decision making and automated key processes.

The pandemic-induced global supply chain disruptions and the Russian invasion of Ukraine have ushered in treasury technology advances and investments to improve cash flow visibility and liquidity forecasting for greater efficiency and to measure and mitigate risks, including cyber security threats.

Here’s a look at the key technologies that are redefining corporate treasury, helping them confront challenges and seize opportunities.

Blockchain

“The potential for greater operational efficiencies, capturing real-time reference data, better data security, and greater profits,” are four of the leading factors cited for adoption of blockchain solutions by corporate treasurers as per The Corporate Treasury Shift, a PYMNTS report (sponsored by Circle) published a few months ago.

The additional benefits offered by blockchain include that it helps record transactions with multiple counterparties in a verifiable, tamperproof way and also reduces the time and costs associated with investments. This ensures that investments are made when and where desired with minimal human intervention (lower risk of errors). This year, we will continue to see advances in blockchain technology.

Open banking and APIs

Corporate treasurers are leveraging open banking to access multiple bank accounts with one platform, using application programming interfaces (APIs), which pull in data from various sources.

Treasury benefits from open banking and APIs through real-time data access. By integrating this information directly into the corporate enterprise resource planning (ERP) or treasury management system (TMS), treasurers can connect to various banking portals and a range of accounts simultaneously. This allows them to gain complete visibility into the status of transactions, prudently manage liquidity demands, facilitate real-time payments and reporting processes, and simplify supply chain finance and working capital management.

Cloud-based TMS

A TMS is becoming the key to automating the monitoring and handling of treasury’s core functions pertaining to cash and liquidity management, risk management, payments and bank communications, as well as delivering compliance and overseeing investments, debt and intercompany loans.

Cloud and SaaS TMS deployments are simpler and more secure, resulting in increased scalability and popularity. They are also more customizable. This makes it easier for any organization to configure the system to meet their specific requirements. Furthermore, cloud-based TMSs provide real-time data updates, which ensures that treasurers have access to the most up-to-date information.

AI, ML and big data analytics

Corporate treasurers are asking important questions such as how artificial intelligence (AI) and machine learning (ML) will promote and reinforce treasury as a strategic partner, and how big data can be harnessed to deliver smarter treasury insights, achieve operational and liquidity effectiveness, and make informed decisions.

As digitalization marches into corporations, enormous amounts of data generated in their systems present a tremendous opportunity for the treasury function, as data has now become the number one business asset for every organization. The pandemic has provided new impetus for adoption of big data analytics and other emerging technologies such as AI and ML for cash forecasting, commodity and credit risk management, hedging, cash flow planning, fraud detection and prevention, regulatory compliance, variance analysis and scenario modelling.

Robotic process automation

Robotic process automation (RPA) uses a software robot that replicates, mimics or emulates human actions to interact with digital systems and software. It is being used in finance and treasury to automate tedious, high-volume and repetitive tasks and processes (which reduce the efficiency and productivity of teams), thereby freeing treasury professionals to focus on more strategic work.

According to the Association for Financial Professionals (AFP) 2019 conference speaker Laurens Tijdhof, Managing Partner at Zanders, while there are many new technologies that will ultimately be adopted by treasury, RPA is one that is already having an impact. “The quick wins are typically in RPA,” he said. “This is something that is available today; you can really start implementing it now.”

RPA bots are primarily being used for standard, replicable and simple tasks in cash positioning and cash flow forecasts, including bank reconciliation, to cut costs and streamline the process.

Conclusion

We are now on the cusp of colossal technological innovations – blockchain, open banking and APIs, AI, ML and big data analytics, TMS, RPA and other breakthrough technologies. All of these will have a significant impact on the treasury function and its future.

Visionary treasury leaders will leverage the best of new technologies to make treasury a strategic profit centre, with every major aspect of treasury in the future managed through technology.

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