TechnologyHow technology will change treasury – FIS Q&A: Part two

How technology will change treasury – FIS Q&A: Part two

From cyber security and AI to blockchain and cloud, Andrew Bateman, EVP, Group President, Capital Market Solutions – Buy-Side at FIS, explains how technology is changing treasury.

We know that technology is important, but is adoption and modernization increasing? 

There is a push to adopt the latest technology, because you need to be adapting to the pace of change. The regulatory changes coming in, you’ve got the LIBOR changes, general accounting changes like IFRS nine, you’ve got greater uncertainty around the world generally, which drives more volatility. So, you need to improve the risk management type of controls.  

Because treasurers are becoming more strategic and have more of an influence on the business and the CFO has a much greater focus on them, you’re seeing at this point in time, a greater level of investment in treasury generally. 

And I think the majority, about threequarters, of treasuries are doing something, whether that’s a new system, or they’re enhancing what they have, there’s a greater emphasis on their part of the business to be strategic. 

What is the cost of not adopting new technology? 

One thing is greater risk, and that’s something that’s always an area with treasury that can put the business in jeopardy, if the treasury department doesn’t have strong and tight controls. Whether that’s controls around the payment processes and fraud, whether that’s controls around managing interest rates and foreign exchange risk, if you don’t do that properly you can cause big P&L hits to the business as a whole. 

There’s always a great emphasis on the need to have controls, and if you’re not keeping up with the latest technology that makes it harder. I think the biggest area there is probably cyber risk and cyber type issues around data security, around vulnerability.  

If you have old legacy technology, you’re not keeping up with the latest versions of the software, or you’re not keeping up with the latest operating systems, which often only support the latest versions of the software. You open up and expose yourself to a lot of risk. 

Why are cloud and AI technologies becoming so important to treasurers? 

It’s the simplification and it’s the lower total cost of ownership if you can adopt a cloudbased solution.  

Whether that’s a more standardised multitenant software as a service type solution, where there are very quick implementations and the system is continually being upgraded. Because you’re always on the latest version, it minimises any risk you might have of security. It provides a lot of tools that you can use very quickly, and if there’s any changes to regulation, you’re not having to go through an upgrade to do that. So, it’s certainly a lower cost of ownership with greater ease of use. 

For those that have more sophisticated operations, what they want to be able to do is to leverage and use technology. But, putting their software into the cloud, having a vendor host that provides all the managed services around it, all the application management, allows them as a treasury to focus on using the software and driving their business. They’re not worried about upgrades because it has been taken care of by the vendor. To have someone managing these things for you just allows you to focus on the value of it. 

With artificial intelligence, that’s again, how will the vendors be embedding that sort of technology into their software?’ If you think about that from a treasury perspective, AI would be very useful in payment and fraud detection.  

So, by analysing the flow to see when something looks a bit odd and thus might be a fraud and being able to flag that. That’s something that we’ve seen built into payments systems around fraud, around any sort of decision making 

Not so long ago blockchain was the tech on everybody’s minds, why is that no longer the case? 

That’s the shift, isn’t it? With blockchain, it was a big thing, it was certainly what everyone thought was the future for everything. From a technology perspective, it has some good applications, you’re starting to see that in any contractsbased process, for example. Whether that’s on trade finance, or insurance contracts, or other contractbased processes in the capital market space, I think you’ll see that evolve over time 

Here in treasury itself, they’ll be engaged in that in some way, at some point. But certainly, the amount of chatter about it has definitely shifted less.  

The area that is interesting in that same vein though, is tokenization. I think that’s what the next evolution of it is. You’ve had the crypto currencies, you’ve had distributed ledgers for contracts. But if you look at it, how do we take assets and tokenize assets, break them into smaller parts and track that using the distributed ledger technology – that’s where you will see the next evolution. Maybe the future chatter will be around tokenization. 

Catch up on part one of the interview with Andrew Bateman by clicking here.

Andrew Bateman is EVP, Group President, Capital Market Solutions – Buy-Side at FIS. 

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