Cash & Liquidity ManagementFXTreasurers “unprepared for pandemic volatility”

Treasurers “unprepared for pandemic volatility”

Technology and tools at treasurers’ disposal not good enough to deal with consequences of coronavirus crisis

Outdated technology has left treasurers unprepared to react effectively to the volatility affecting the market caused by the coronavirus pandemic, says Steve Wiley, vice president of treasury solutions, treasury SaaS at FIS.

Wiley says there were similar problems at the onset of the 2008 global financial crisis, but there has been a failure to address those issues meaning companies are expected to invest more in technology in 2021.

“Treasurers realise that they just weren’t prepared for the level of volatility that we saw here in the Spring,” Wiley says. “The same thing happened in 2008 after the financial crisis, you had the same levels of volatility… [and] treasurers have realised they’re just not prepared to manage these things with the tools they have today.”

Wiley adds that the pandemic has left many corporates exposed to their lack of treasury technology investment over the years, with some even persisting with 1990s era systems, leaving many scrambling to manage issues like remote working.

“There is a huge segment of corporates out there who are using either ERP or treasury technology or receivables or payments technology, who just have out of date deployments. You have companies who are still operating on-premise deployments, in an environment where they should be on SaaS technology, they should be using technology that is totally web-based and can be accessed securely, remotely from home.”

The cost of not having modern, digital technology has been made painfully obvious by the pandemic, says Wiley, particularly as on-premises solutions make it much more difficult to use systems efficiently and securely from home. Reflecting Wiley’s sentiments, a report by FIS found that 64 percent of treasurers saw cybersecurity as a major challenge due to the increase in remote working.

The report also found that two thirds of treasury executives plan to increase their investment in digital treasury technology in 2021 as many firms felt the acute pains of not having up to date technology during the first wave of the pandemic.

Wiley believes the pandemic has been responsible for forcing a “rapid” change of mindset towards treasury technology investment.

“A few years ago, in terms of deployment, on-prem or private cloud hosted would have been the dominant deployment,” he says. “By the end of 2021, we’ll probably be 80 percent SaaS. So, we’ve seen a huge and very rapid shift in the deployment of technology.”

Managing FX and interest rate risk was also a major issue for treasurers, with 65 percent of respondents citing each as a top challenge. For Wiley, successfully managing this again came down to the technology treasurers had available.

“The number one indicator for whether or not a corporate is going to be able to do that [forecast and manage risk], is going to have to do with technology. Those corporates who have processes, systems policies, greater degrees of centralisation in place are going to be less impacted by the FX issue than those corporates who have fragmented technology, don’t have specialised systems to manage cash forecasts and FX forecasts, and are more decentralised,” he adds.

 

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