FinTechFinTech-Banking PartnershipsDigitisation and technology upgrades are top treasury priorities

Digitisation and technology upgrades are top treasury priorities

Survey of Indian treasurers highlights clear focus on technology by treasury - and need for leading banks to invest in latest digital tools if they are to maintain market share.

Digitization and technology upgrades are the top priorities for corporate treasurers in India – and digital prowess will separate the winners and losers in the corporate banking world, according to the results of a recent study.

The survey of 149 large corporates and 408 middle market businesses in India by Greenwich Associates found that technology – including goals like automation, seamless integration of systems/information flows and payments, was very much a key priority outside of core day-to-day functions like managing liquidity and securing adequate funding. The findings were consistent across the largest Indian companies and mid-sized corporates.

The study highlights that India’s corporate treasurers, while selecting banks, focus on the bank’s ability to develop and deploy digital solutions that ease immediate difficulties in banking activities, difficulties like manual collection/reporting/reconciliation/KYC-related processes and mitigating fraud and human errors. Alternately, they are looking out for customized solutions that can be created along with the specific requirements by use of agile technologies such as APIs to integrate internal systems with bank platforms for enhanced connectivity and security. Digitization of payments also remains a critical and ongoing priority for them.

Digital applications to be the default mechanism

However, as is so often the case with treasury, even though 60% of corporate treasurers see the opportunities of developing internal and banking processes with emerging technologies like AI and Blockchain, less than five percent have adopted and implemented emerging technologies.

Despite this, the study predicts that digital applications will be the default mechanism for most banking functions. Technology’s impact on the banking sector will warrant for huge investments to minimize the arduous compliance demands. However, in the long-term, mobile and online applications are expected to dramatically reduce cost to serve, the study predicts.

As a result, India’s public sector (PSU) banks are likely to lose corporate banking relationships and market share if they are unable to make sizable investments in technology.

Banks will have to act on it quickly, or else there remains the threat of playing catch-up since a new research last month has revealed that the market dominance of banks in the delivery of corporate treasury services is under threat from non-bank market entrants.

A report by Asset Benchmark Research Data suggests that the application of fintech will be central to the broadening of the treasurer’s role.

Not to be held back by security issues

Gaurav Arora, Greenwich Associates Head of Asia Pacific & Middle East and author of the report analysed: “In the new era, wholesale banking is a scale business. Now is the time to put in place the technology infrastructure that will enable scale; banks that fail to do so will be at risk of being left behind.

“While security is, of course, a legitimate and important concern, companies should speak to their banks about the platforms they have built and the robust security measures they have in place. Given the recent progress in this area, it’s critical that companies not allow themselves to be held back by security issues that may already have been addressed.”

From September 2018 to March 2019, Greenwich Associates asked the corporate treasurers in India to name the banks they use for a variety of services, including corporate lending, cash management, trade services and finance, foreign exchange, structured finance, interest-rate derivatives, and investment banking.

The report can be downloaded in full here.

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