TechnologyTreasury’s digital future: How far have we come?

Treasury’s digital future: How far have we come?

The past two years prompted a rethink of treasury operations, with treasurers having to accelerate their adoption of digital treasury management systems to take on a more strategic role – but new research shows limited progress

The 2021 Citi Treasury Diagnostics survey found that 74 percent of treasurers are not yet in a position to fully embrace the digital treasury management systems (TMS). In 2019, 63 percent said their TMS operations were completely unconnected or only somewhat connected to their ERP tools –that number rose to 64 percent this year. In 2019, the same survey also showed that only 54 percent of treasury professionals were using application programming interfaces (APIs) to assist with their treasury functions.

Treasury teams worldwide have had to pivot quickly in difficult circumstances and many successfully embraced more digital practices. However, this legacy and widespread lack of integration persists and continues to hinder treasurers, leaving them reliant on multiple disparate systems to manage payments, transactions and currency risk. This becomes a bigger challenge considering the shift in priorities, with cash flow taking centre stage.

A recent European Association of Corporate Treasurers survey found that over 60 percent of treasurers saw cash flow forecasting as a top priority. However, cash flow forecasting has been a long-standing challenge and, according to the 2021 McKinsey Global Payments report, it is now considered the least efficient financial workflow.

Achieving the right level of insight into an organisation’s finances is difficult for many businesses – particularly with different currencies typically stored in siloed accounts with limited overall visibility.

A step change in adoption

Despite notable progress and considerable efforts, the treasury sector has arrived at an important juncture. We’ve seen that, as priorities changed, treasurers had to review their working practices and accelerate the pace at which they adopt digital a TMS. But a step change in gear is now imperative for wider uptake and this means breaking down the barriers to adoption for those left behind the curve.

What needs to change? Importantly, treasurers are finding they need to do more than automate the odd process. Simply buying a way out of a problem that has hampered corporate treasurers for decades is not the answer – it’s not the number of plugins, add-ons and systems that will bring corporate treasury into the twenty-first century, but the functionality, interoperability, security, and ease of use of a TMS.

Any modern alternative TMS must be fit for purpose, easy to access and use, deliver a diverse range of functionality, and ultimately ensure corporate treasurers can do their jobs as normal with no disruption.

The levels of security are also a key consideration. Many incumbent systems were built to be accessed primarily on-site, so their security systems are geared accordingly. But those working remotely from an individual or company-issued electronic device have different challenges to consider. The risks from hacking, malware and fraud are exacerbated as firms’ cyber perimeters grow. With multiple points of entry, as opposed to one, any weakness can be a gateway for unauthorised access to a company’s entire network.

Integration is the key, removing the need for piecemeal approaches and putting the functionality to address all treasury needs in one place. Not only does this reduce duplication and the number of systems and accounts being accessed at any time, but it means being able to access a full suite of payments, cash flow, FX hedging and risk tools in single digital location – whether working remotely or on-premises.

Having this ability to work from one system, one account and monitor all operations from one screen greatly improves visibility, security and interoperability while standardising treasury operations.

This is especially important when making payments in multiple currencies. Very few treasury teams are limited to one currency in their day-to-day operations. As a result, they require multiple accounts to manage their international payment needs. Centralising these accounts can greatly improve both security and efficiency.

Unlocking new levels of insight

This rapid adoption of digital technologies is opening numerous opportunities for treasurers – one being improved insights. Prior to the advanced technology we have now, analysts would spend hours trying to collect and find meaning in data. Digitisation is changing this process. Treasurers can go one step further and used tailored data and analytics from the company’s history of trading, payments and cash flow. This enables them to have a complete view and understanding of their corporate behaviour, backed by unique data and intelligence.

Data can answer the questions that too many businesses struggle to answer: Are all payments made on time, or even too early? What percentage of customers’ payments are delayed and by how much? How can temporary cash shortfalls be addressed? These scenarios are unique to each business and knowing the detail can dramatically improve forecasting and financial decision-making. Crucially, having this level of data analytics is fundamental in addressing the cash flow issue.

Greater digitalisation is also creating new opportunities by generating unique insights into how the market is evolving and how to deal with these and handle upcoming challenges. By allowing controlled access to information, it can also be effective in improving cybersecurity, with senior managers able to manage which features each team member can utilises.

The road ahead

If treasurers can implement new and modern digital treasury systems in a secure way that is fit for purpose, they will unlock numerous benefits. A reduced reliance on manual intervention improves productivity and having understandable and actionable data means more informed decision-making. This all helps with better forecasting, cash flow management and enhanced customer experience.

The reality is treasury teams can no longer rely on old traditional systems, which are quickly becoming outdated and are simply not suited to today’s treasury workflows. Put simply, enabling treasurers to perform all their key functions without having to switch between different platforms and technology providers is now crucial. As such, the sector is poised to enter a new phase, with treasury teams better equipped to not only embrace but also thrive within the digital era.


Laurent Descout, co-founder and CEO, Neo

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