FinTechAutomationEight Essentials for Next-Generation Treasury Risk Management

Eight Essentials for Next-Generation Treasury Risk Management

The relationship between corporate treasurers and their liquidity services provider is being transformed. While priorities for the required features and services vary from industry to industry, competition will intensify over the coming years in response to corporates aggressively seeking out liquidity options to reduce risk at both capital and transactional levels. This indicates that the eight vital features of next-generation treasury risk management solutions are as follows:

  • Analytics as core: Beyond simple transaction platforms that traditionally include cash management automation, deal automation and compliance reporting, treasurers increasingly demand cash platforms that combine powerful transacting with features such as cross-bank decision tools, enterprise resource planning (ERP)-enabled analysis, multi-entity and real-time reporting and more intuitive information aggregation. Greater use of analytics – in vogue in various functional areas of banking (especially risk and customer marketing) – is also ever-relevant in the corporate space.
  • Tools for improved customer engagement: While treasury offerings mature and become increasingly commoditised, bankers view the corporate client experience as an important differentiator. Banks and service providers will invest in advanced corporate customer-centric functions such as seamless onboarding, single sign-on, and mobile authorisation. In addition, we will see an increase in digital signatures, as well as customised treasury dashboards. This set of tools serves as a counterpart to the user-friendly mandates for retail banking channel initiatives that are actively being delivered to the end customer. Furthermore, to help improve operational turnaround time, there are market data and workflow tools that seamlessly integrate with enterprise platforms and devices.
  • Financial data aggregation: The complexity of the financial performance management for account valuations and performance reporting is fuelled by the challenge of capturing and preserving data at the most fine-grained level, aggregated across multiple sources. Treasury platforms must be capable of acquiring data across internal systems and assets from many financial institutions – some of which are competitors – and providing aggregated data in a consistent and normalised industry format for loading into internal databases and other applications (such as performance and risk) while eliminating inefficiencies of manual data gathering and processing.
  • Information centralisation: In other corporate and transaction banking areas, banks and solution providers will continue to enhance their treasury tools across payments, collections, liquidity management, clearing and settlement. One common characteristic of these enhancements relates to offering corporate clients the ability to centralise information through consolidated account balances across multiple institutions. This aids in cash forecasting, driving inefficiencies out of idle cash and establishing a working capital structure to be used for payables, trade financing, escrow, currency trading and other functions across the liquidity risk supply chain.
  • Support of global and regional hubs: Many large corporates have seen substantial benefits from centralising their payments operations into regional centres. These payment factories give the customer more control, reduce operating costs and strengthen their buying power in negotiating better terms with their banks. When this concept is expanded to include a broader set of treasury functions, treasurers are able to employ techniques such as intercompany netting and virtual accounts to exploit liquidity and reduce treasury risk within the company.
  • Corporate connectivity: After more than a decade of stated demand, corporate connectivity continues to make steady, but slow progress regionally. Using a business process integration approach, it optimises the typically multistep process of service integration for tasks such as digital payment instructions to banks’ core banking systems. This corporate-to-bank integration is potentially a game changer. It serves as a platform for banks to link directly with their clients, extending the financial workflow functionality of ERP all the way to the bank.
  • Four pillar value creation: The emergence of the third platform technologies of cloud, Big Data analytics, mobility, and social will continue to disrupt legacy transaction platforms offered to treasurers. For example, banks can expand on their ability to provide offerings to currently untapped customer segments through cloud-based billing preparation and data aggregation. These services can be presented as bank agnostic. This offers an opportunity for banks to extend initial services and reach to customers who traditionally would not have been in the picture. Data analytics and social collaboration with financial staff will become an increasing important differentiating factor as providers look to surround chief financial officers (CFOs), treasurers and accountants with actionable decision-making information for receivables, payables, FX options, exposure management and a host of transaction-based interactions.
  • Trusted, seamless security: As cybercrime spreads and shifts from consumer to business-to-business (B2B) interactions, new features are essential. They include identity and access management, user and transaction authentication and end-to-end data protection. Each must be delivered seamlessly as a personalised convenience to corporate users and incorporated into all transaction, collaboration and data interactions between the corporate environment and treasury providers. This ‘trusted’ environment, employing strong cryptography, digital signatures, and authentication techniques must also adapt to risk profiles of varying degrees and function across platforms.

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