This is the fourth of a four-part article series

In the concluding part of this four-part article series, we summarise two more areas of importance that will likely remain as priorities for corporate finance and treasury professionals over 2024.

1. Emerging technologies to gain traction in the treasury space

Amidst the prevailing global economic uncertainty and heightened geopolitical risks, corporate treasuries are expected to expedite their pace of digitization and automation by embracing emerging technologies to improve cash flow visibility and liquidity forecasting to achieve greater efficiency and mitigate risks, including cyber security threats.

Over the next 12 months, emerging technologies such as application programming interfaces (APIs), artificial intelligence (AI) and machine learning (ML) are poised to make a substantial impact on the treasury function.

“In the corporate treasury space, APIs allow treasury technology users to access bank data at the click of a button and power more efficient integration between internal systems”, according to Strategic Treasurer’s latest Treasury Technology Analyst Report.*      

The analyst report reveals that 37% of respondents are currently using APIs in treasury, with an additional 35% of the survey report participants interested in adopting APIs within the next two years.

The increasing use of APIs is expected to continue, driven by their dual role in ensuring corporate treasuries have consistent access to high-quality and reliable financial data and facilitating instant and secure flows of banking transaction and account data. This enables corporate treasurers to have complete visibility into the global cash position, thereby enhancing their ability to forecast and manage cash flows with greater precision and speed.  

In this context, more treasurers are likely to turn to API technology to facilitate integration between internal systems such as treasury management systems (TMSs), enterprise resource planning (ERP) systems and more, as per the analyst report.

Furthermore, the widespread global acceptance of APIs for bank connectivity is likely to cause a significant increase in their adoption by corporate treasury (via their TMS and treasury and risk management system vendor or provider), primarily for the purpose of connecting to banks for information reporting and payments.

Of all the emerging technologies, artificial intelligence (AI) and machine learning (ML) made the headlines in 2023, and for good reason, as they are “Expanding the list of tasks computers can adequately perform”, observed Strategic Treasurer’s analyst report.

Even though AI was big news last year, treasury professionals didn’t extensively adopt it in 2023, with only 14% of respondents surveyed in the analyst report incorporating AI in their treasury operations. According to the analyst report, the primary areas where AI and ML impacted the TMSs were cash forecasting and anomaly detection.

 “Cash forecasting is an area that treasury professionals consistently report spending much of their time on, and yet many also report the time they do spend on it is insufficient. Once made, the forecasts are also often inaccurate. Some vendors have been finding good success in applying machine learning to the task of forecasting. With adequate historical data, these applications are proving accurate and efficient at predicting cashflow. While ML-powered forecasting is fairly new and not built into all TMSs, it is likely to become more widespread”, the Strategic Treasurer report explains.

As emerging technologies gain traction in the treasury space in 2024, particularly with the integration of AI and ML into TMSs, it will lead to more accurate cash forecasting, enabling corporate treasury to make more informed decisions that ultimately reduce costs, increase profits and make their firms more competitive.

Another area where AI and ML have demonstrated substantial value within the TMS is anomaly detection.

“Fraudulent activity tends to break the normal pattern of system usage, such as an unusually large transaction being initiated after normal working hours, or an unusual number of files being accessed in a short amount of time. AI and ML excel at pattern recognition and, therefore, recognizing when activities fall outside the normal range. The TMS can then flag the suspicious activity and, in some cases, hold payments until they are released by an analyst”, the analyst report noted.

Given the pivotal role that AI and ML technologies play in fraud detection, coupled with the fact that cyber criminals are leveraging the advanced capabilities of these breakthrough technologies for malicious purposes, corporate treasury is expected to harness the power of these innovative technologies in 2024. This utilisation aims to identify intricate fraud patterns and anomalies, compare inconsistencies, and highlight potential red flags.

While API, AI and ML have so far emerged as the most compelling use cases for treasury departments thus far, it is equally important for treasurers to understand other types of technology that could contribute to driving business growth within their organizations.

To assist treasury practitioners in exploring how treasury technology meets treasury needs, we recommend treasury executives download, review and benefit from Strategic Treasurer’s latest Treasury Technology Analyst Report.

2. Leadership will be the most important skill for the treasurer in 2024

An array of challenges awaits corporate treasuries this year, including a series of high-profile global elections, rise in regulatory scrutiny, geopolitical conflicts, climate vulnerabilities, high borrowing costs, a probable surge in payments fraud, and the potential threat of artificial intelligence to treasury and finance careers. Navigating these complexities necessitates the demonstration of extraordinary leadership skills.

This fact is corroborated by the latest Citi Global Perspectives & Solutions (GPS) study report titled Treasury Leadership: Does it Matter? which states that organizations that nurture treasury leadership enjoy better financial performance. Citi estimates the “Top 40 performing treasuries, as measured by this study, generated $44 billion of additional earnings over the last five years attributable to their better treasury performance.”

“High-performing treasuries ensure efficient funding of working capital, proactively identify and mitigate financial risks, and deploy liquidity to fund the company's growth,” said Shahmir Khaliq, Global Head of Services, Citi, adding “Companies can use the learnings to leapfrog what can be a lengthy process of becoming treasury leaders. And by doing so, accelerate their ability to increase company returns.” 

While effective treasury decision-making is bolstered by proficient cash and liquidity management, the strategic use of emerging technology, and the infusion of intellectual curiosity and analytical rigor, to evolve into exceptional leaders, treasurers must embody a commitment to continual learning and upskilling, while also fostering teamwork and creativity. Additionally, they should maintain a flexible culture that can rapidly adapt plans to unexpected situations or new circumstances as they arise over the year ahead.

In light of the myriad challenges that corporate treasury is expected to confront this year, leadership stands out as the most important skill for treasurers in 2024. Cultivating a culture of leadership excellence becomes imperative, prompting corporate treasury to attract, develop, and retain outstanding leaders by emphasising greater compassion in the workplace. Compassionate leadership ensures that as treasurers hone their expertise to thrive in the contemporary work environment, their teams also grow and flourish.

Furthermore, recognizing the significance of leadership for treasurers in the current year, capitalising on the collective strengths of their employees will create a powerful synergy that enhances the effectiveness of treasury leaders. As Kenichi Ohmae, former partner at McKinsey & Company, articulates in his book, The Mind of the Strategist, “Strategic thinking and strategy formulation is about achieving competitive advantage.”

Treasurers who tap into or integrate their teams’ strategic insights and leverage their collective strength as a business strategy will position themselves for a leadership advantage in the competitive landscape.

To conclude, corporate treasury faces the challenge of balancing focus between internal and external factors that influence a business financially, especially in today’s unpredictable and uncertain business environment. Treasurers will need to embrace emerging technologies and demonstrate astute leadership to help their businesses chart a path to success, even in the face of adversity and economic uncertainty.

We trust that this four-part article series and ongoing engagement with CTMfile content, including tuning into the OpenTreasury Podcast throughout 2024, will assist corporate treasurers in adopting a more strategic and forward-looking approach, transforming intricate business challenges into a source of competitive edge.

⃰ Disclosure: Strategic Treasurer owns CTMfile.

Read more from this series:

To read the first part of this article series, click here

To read the second part of this article series, click here

To read the third part of this article series, click here