“The role of treasury functions continues to evolve towards that of a strategic business partner helping their organizations create sustainable value”, according to PwC’s 2023 Global Treasury Survey report.

The survey reflects the views of 375 treasury department respondents based in over 32 countries across 23 industries and in companies with median annual revenue of US$3.9 billion.

“Leading treasury organizations have evolved from adding value exclusively within treasury to also driving excellence outside of the function. This includes optimizing cash efficiency, strengthening the balance sheet, generating business insights to drive forecasts, improving cash flow and providing decision support for business units to manage financial and commercial risks, all while continuing to safeguard company assets”, observed the survey report titled The New Equation: Treasury’s role in driving sustainable value.

Some of the key findings of the survey include the following:

Growing focus on increasing treasury centralisation

Increased centralisation within treasury is a key focal point for corporate treasuries as a part of improving cash operations. “Specifically, very large multinational corporations have realized the benefits they can generate through scale and have moved significantly toward further cash management centralization”, the PwC survey report noted.

Source: PwC’s 2023 Global Treasury Survey report (June 2023)

Among respondents from very large multinationals (with revenues of $10 billion or more), 73% have established an in-house bank, 55% have a payment factory, and 42% employ payment-on-behalf-of (POBO) solutions.

Leading treasury organizations are actively seeking sustainable ways to significantly augment their cash operations by enabling central control over global payment transactions for all their companies and adopting modernised solutions, including in-house banks, payment factories, and POBO solutions.

Corporations considering rationalising banking partners and accounts

A noteworthy finding from the survey is that over 40% of corporations are actively contemplating the initiation of a bank rationalisation effort in terms of reducing banking partners and the number of bank accounts used by them within the next two years.

Source: PwC’s 2023 Global Treasury Survey report (June 2023)

This number holds particular significance when one considers that these responses were gathered prior to recent bank stress events.

Although bank capabilities and participation in long-term funding continue to remain as the primary selection criteria, mentioned by 72% and 56% of respondents, respectively, the PwC report expects counterparty risk to play a more prominent role in the banking selection process compared to what was mentioned by the survey participants (counterparty risk is the sixth ranked criteria with 24% of the respondents).

Additionally, treasury respondents foresee the ongoing expansion of market share by large global banks, with the expectation that their corporations will likely persist with diversifying their bank groups and relationships to mitigate risk.

Digital enablement of treasury gaining momentum

“Amid all the disruption of the last few years, the trend of digitization of treasury functions has continued to accelerate, as respondents indicated their focus on data analytics and visualization and application programming interfaces (APIs) as the most relevant technologies for the next two to three years”, as per the PwC survey report.

Source: PwC’s 2023 Global Treasury Survey report (June 2023)

The optimisation of analytics and visualisation is pivotal for treasury professionals in effectively managing critical data, thus advancing the organization's value-added and strategic partnership spectrum. While dashboarding and strategic analysis in cash and liquidity management and financial risk reporting should be the initial impactful areas to concentrate on, the survey advocates that treasurers should adopt a broader perspective, utilizing enterprise-wide data to drive improvements in working capital and strategic risk decisions, and more.

Furthermore, “Obtaining data faster, more frequently (i.e. in real-time) and more seamlessly is a critical priority for respondents, with API connectivity with both external providers (such as banking partners) and between internal systems continuing to be considered significantly relevant in the next two-to-three years by an overwhelming number of our respondents”, the survey added.

With global economic uncertainty likely to remain elevated, corporate treasury is expected to speed up their digitisation and automation efforts, spurring the momentum towards a data-driven treasury.

Enhancing digital capabilities will not only help leverage data and analytics to improve cash flow visibility and liquidity forecasting for greater efficiency, risk mitigation and cyber security, but also in harnessing the benefits of treasury centralisation and cash flow optimisation.

To conclude, strengthening cash and liquidity management in a sustainable way and creating enterprise-wide value remain the top priorities among corporate treasurers. Supporting this aspect is the increased focus on treasury centralisation, initiation of bank rationalization, and more importantly the expected march of digitisation into corporations over the next 12 months.

This digital enablement is expected to present a tremendous opportunity for the treasury function due to the enormous amounts of data that is likely to be generated in their systems. After all, data has now become a vital business asset for every organization.

Moreover, PwC’s 2023 Global Treasury Survey report recommends that leading companies must continue to upskill and acquire digital savvy treasury talent. They should also partner with the wider organization to bolster technical experience, particularly in areas such as data science.