Treasury departments 'slow to adopt fintech from non-traditional vendors'

Strategic, cybersecurity and financial risks will dominate the concerns of treasurers over the coming three years, according to a poll of nearly 400 treasury and finance professionals.

The 2019 AFP Risk Survey—The Evolving Treasury Ecosystem, conducted in partnership with Marsh & McLennan, discovered that:

• Strategic risk factors are the most concerning issue facing treasurers according to 60% of respondents
• Cyber security followed next, with 51% of poll respondents saying this is a major concern
• Financial risk took third place with 39% of respondents seeing it as a key challenge over the next three years

The survey report’s authors suggest the results highlight the need for treasury departments to become stronger partners within businesses.

“With the top three risks having a direct link to the treasury department, corporate treasury more than ever needs to become a stronger business partner to management and other business units,” said Jim Kaitz, president and CEO of AFP. “Additionally, the skills within treasury will need to evolve with the increasing use of non-traditional vendors and technologies.”

Fintech opportunities

Much of the survey focused on fintech – and the rise of non-traditional vendors in the space. The survey data suggests despite the growth in fintech, the treasury ecosystem is slow to evolve. Only a third of respondents (34%) foresee using more non-traditional vendors in the future to supplement banks and other ‘entrenched’ vendors.

This is driven by both a degree of risk aversion and limited capacity to identify, evaluate and build relationships with non-traditional vendors of treasury solutions. That said, changes are afoot as one-third of departments, especially in larger organisations, anticipate using more non-traditional vendors.

While treasury departments may be cautious about using non-traditional suppliers, the survey suggests they could offer treasurers credible and effective solutions. Non-traditional vendors have brought innovations to market that are disrupting existing solutions. This data reinforces that the adoption of innovative new technologies and processes can rapidly accelerate once they have demonstrated proven and reliable benefits.

Non-traditional vendors include vendors other than banks that are offering niche services, such as technology providers, payment providers, fintechs and task-oriented contract employees.

The report added that treasury professionals believe they will mostly use non-traditional vendors within treasury services technologies and merchant services technologies to benefit from enhanced flexibility, adaptability and customisation.

“Changes are afoot. Treasury departments may be cautious in using non-traditional vendors, but our survey suggests they could offer treasurers credible and effective solutions. Non-traditional vendors have brought innovations to market that are disrupting existing solutions and relationships,” noted Alex Wittenberg, Executive Director, Marsh & McLennan Insights.

Full report results and commentary can be found at www.afponline.org/risksurvey.