North American treasurers are adapting to the rapid pace of technological change, as new real-time payment systems and greater digitization and centralization of treasury operations take hold.
With J.P. Morgan unifying its payments and treasury operations and Goldman Sachs preparing to launch cash-management services in 2020, handling cash is back on the agenda for major North American banks.
Coincidently, both the US and Canada are backing real-time payment schemes. The Clearing House in the US is working with providers of core processing and payment services—banks and corporate credit unions—to ensure that every financial institution in the US has access to the Real-Time Payments network by 2020. North of the border, a payments modernization program led by Payments Canada, in collaboration with over 100 financial industry players, is looking to build a real-time payments rail as part of broader modernization efforts.
A recent CGI Client Global Insights report revealed that “while European executives are focused on operationalizing new regulatory schemes by, for example, implementing open and real-time platforms, North American executives are in a more anticipatory mode, waiting to see the full impact of the shift to open banking and real-time everything.” However, banks in North America “fully expect to invest in payments modernization over the next three years,” according to the report.
Ron Chakravarti, managing director, global head of Treasury Advisory and Market Management at Citi, says investors expect corporates to deliver top-line growth, but the global business cycle is slowing, and there are added uncertainties due to trade tensions and the potential for market volatility. “Treasurers need to ensure balance sheets are strong and the company’s organic liquidity is deployed most efficiently to support growth,” he says.
With the digitization of business, many industries are undergoing accelerated change, and even disruption, leading to new business models and new ways of producing and distributing products and services. “Treasurers need to adapt how they do their payments and collections and efficiently finance the cash-conversion cycle to create value for their firms at a time of great change,” says Chakravarti.
He says treasurers are largely focused on three broadly linked themes: First is the need to digitize and further streamline treasury processes and automate cash management, which frees up resources to focus on the challenges and address opportunities.
Second is the process of centralization of treasury and banking—a task that many companies have only partially completed—and delivering greater visibility over deployment of balance-sheet resources, including liquidity and control over inflows and outflows, to protect the company at a time of rising cybersecurity risk.
Third is the need for adaptation in talent and resources. “At a time of rapid change, the talent required is shifting toward skill sets that have not previously been emphasized in traditional treasury,” says Chakravarti. “Skills in data and analytics, e-commerce, in architecting treasury technology to take advantage of new propositions, including fintech—this adaptation will take time, but is crucial to progress on this journey.”
Once completed, the deployment of artificial intelligence, robotics, APIs and cloud services will enable treasuries to behave in more strategic ways. One thing is for certain: Treasurers and their banking partners look set to enjoy an easier ride on new, faster payment rails.
NORTH AMERICA WINNERS
|Best Overall Bank for Cash Management||CIBC|
|Best Bank for Liquidity Management||Bank of America Merrill Lynch|
|Best Bank for Payments and Collections||Citi|
|Best Provider of Short-Term Investments/Money Market Funds||Fidelity Investments|