Challenging Times For Treasurers

Innovation and disruption are now the norm for corporate treasurers.

Every year, new disruptive technologies are wafted, tantalisingly, in front of treasurers at one of the biggest events in the corporate treasury calendar, EuroFinance. For the last couple of years, Innovation Alley and the tech breakout sessions have allowed the normally risk-averse world of treasury to dip their toes in technologies like blockchain, machine-learning and cryptocurrencies. Most treasurers wouldn’t touch cryptocurrencies with a barge pole. As guardians of a company’s cash and liquidity, their job is to preserve capital—not bet it on risky investments in cryptocurrencies or blockchain pilots.

Yet, with a supposed fourth industrial revolution upon us, driven by advances in computing power, robotics and artificial intelligence, companies are increasingly being told they either implement these new technologies—to eke out greater cost savings and efficiencies and better anticipate future cash and liquidity needs—or they are destined to be consigned to the corporate scrapheap unable to disentangle themselves from multi-year ERP implementations that have delivered little, if any, return on the investment.

Treasurers may be right to be skeptical of some of these new ‘shiny toys,’ but for too long they have struggled with manual reporting and cash forecasting, and are still too reliant on Excel spreadsheets. They also lack visibility of and control over their global liquidity across multiple currencies and subsidiaries. Technologies like APIs and blockchain are new ways of addressing legacy problems. But for most treasurers, fintech is daunting, and many finance professionals are looking to their banking partners to help them make sense of what is a confusing technology landscape.

In this year’s supplement we list ways that treasurers can start working with fintechs rather than avoiding them. They can leverage their partner banks’ vetting capabilities or consider factors such as a fintech’s scale and whether they already have live customers.

Technologies like artificial intelligence (AI) are particularly daunting for treasurers. While most industry surveys show that data analytics and AI are on treasury’s radar, AI is an umbrella term used to describe a wide range of technologies (deep learning, machine learning, persona-based AI, robotic process automation). It’s difficult to know where to start, but one way is to trial these technologies in one part of the business (cash forecasting, liquidity management, risk management) where they can deliver greater predictability and a quick return on investment. Then with each success, AI can be rolled out to other parts of the business.

But it’s not just technology that treasurers are concerned about. Regulation and standardisation also impact what they do, day in and day out. In many cases, regulatory compliance is viewed as a box-ticking exercise. But within Europe at least, the current regulatory focus is around consolidating and simplifying the payments and securities settlement market infrastructure, which should help treasurers optimise their liquidity management. Treasurers often complain about the different standards that exist within banks — and different groups within banks. The transition from SWIFT MT messages to richer standards like ISO 20022 XML is underway. But as with most changes of this nature, more standardised financial markets are unlikely to emerge overnight. There has never been a more interesting and challenging time for corporate treasury as they navigate this period of great technological, political and economic disruption.