FinTechAutomation and data insights to drive treasury digitization in Asia

Automation and data insights to drive treasury digitization in Asia

It is crucial for corporate treasuries to stay connected with evolving digitization and have an aerial view of the trends in this space, report says.

A new report has revealed a major shift in focus towards digitization for corporate treasuries in Asia.

Asian Corporate Finance: The Treasury Digitization Drive, found that 20% of the Asia-based corporate treasury officials surveyed have put digitization as a top priority – a figure that has nearly doubled from a year ago. What’s more, nearly half of large corporate respondents sited digital capabilities as a key selection criteria for their cash management provider/s.

The report, based on interviews with over 1,700 finance and treasury professionals across Asia, found four interrelated and sometimes overlapping themes:

  1. Automation
  2. Digitization of payments and receivables
  3. Seamless integration of information flows
  4. Data and insights

Top priority

Greenwich Associates Head of Asia Pacific, Gaurav Arora, the report’s co-author said: “Digitizing treasury operations has become one of the biggest goals for corporate treasury departments across Asia in 2019. The share of senior Asian corporate treasury officials citing “digitization” as a top priority for their companies in the year ahead nearly doubled to 22% in Q4 2018 from 12% in Q4 2017. It now ranks behind only core treasury functions like funding and liquidity management.”

Digitization priorities

Interestingly, the report highlighted that innovation most important to Asian CFOs and treasury professionals now has less to do with financial products and more to do with digital solutions that make treasury and banking operations better, cheaper, faster, and more transparent.

Finding the right partner is also a priority, according to the report. Key to the digitization process is treasurers’ embrace of FinTech partners, analysts noted.

The report says: “When it comes to digitizing corporate treasury functions, Asian companies today enjoy a host of external solutions in areas ranging from payments, FX, trade, liquidity, and cash management to full treasury management systems. Many of those alternatives come from new fintech providers that have carved out a presence by offering cutting-edge technology while often being nimbler, and as a result, easier to work with.

“As such, where banks are able to provide digital solutions comparable to those offered by FinTechs, they continue to be favored as the key partners for corporate treasurers today. However, this advantage is unlikely to last for long. Multiple FinTech players, including established payment providers, continue to get bigger, gain scale and improve their capabilities and security. At this juncture, there are unique opportunities for banks and FinTechs to partner and leverage each other’s strengths to provide targeted solutions for corporates that will help fulfill their digitization goals for efficiency and distinctive value-add.”

Strong IT systems

Another report by the Boston Consulting Group, states that treasurers in Asia-Pacific were more likely to favor transaction banks that had strong IT systems. The priority elsewhere is on service, and those in Europe and the Middle East wanted greater personalization.

Since countries in Asia have different levels of digital sophistication, this affects the digital journey. Countries like Myanmar will leapfrog other countries that have more legacy payment and banking issues. Although Hong Kong is very advanced in many ways, the use of cheques is still common. Myanmar is moving quickly towards mobile collections. While countries may have different levels of digital sophistication, they are also moving at different speeds.

Globally, the adoption of FinTech from non-traditional vendors continues will be slow. The 2019 AFP Risk Survey—The Evolving Treasury Ecosystem highlighted that despite the growth in FinTech offerings, the treasury ecosystem is slow to evolve.

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