In this referenced blog post at Finextra, the author (a senior at a global tech and consultancy firm) discusses the differences between and growing automation of cash and treasury management, which are generally interconnected and critical financial processes at corporates across the globe, pretty much regardless of size.
We have been covering this general area of impact in ongoing member research and actually called it out as a key theme in our 2021 Outlook, indicating that digitalization of financial operations has accelerated in 2020 and will continue as corporate inertia around such investments has been greatly challenged
‘As treasury gains strategic mileage with tectonic shifts in banking architecture and digital embodiment of access and privileges, it becomes imperative for the treasury teams to retain control and ensure round the clock visibility across cash flows, fund requirements, risk scenarios, business disruptions. Organizations are becoming increasingly agile and resilient to contain the impact of external shocks amidst a complex intertwining of supply chains and payment systems. Cash management awaits a significant performance overhaul in areas such as cash forecasting, forex (FX) payments, liquidity risk management and receivables processing with accuracy concerns at the helm.’
The author goes on to point out all the areas being impacted by technology, including the most basic friction point, which is corporate onboarding. As various points in the chain of events become digitized, the result is more useful data, which can then be converted into straight-through processes and actionable insights for improved decision making.
The use of AI (in the form of machine learning) is a quickly growing technology and becoming core assets in product offerings from some of the largest corporate banks. Other tech areas include cloud and APIs, each of which is also in our Outlook. Worth a quick read.
‘Application Program Interfaces (APIs) are working their way up in the treasury environment through significant use cases in client communications as well as batch processing of payments. APIs render the use of legacy SWIFT MT940 communications redundant by providing real-time access to instant payments, debit notifications to treasury management systems. APIs also help reconcile payments by generating cash receipts in the system for better monitoring and error-tracking, which in turn lead to revamped liquidity management as well as efficiency in accounts receivables….Leading banks have also been implementing cloud-based data centralization through treasury management systems, FX trading platforms and ERP software. The benefits include lesser dependence on hardware, elimination of manual errors and agility all leading to cost optimization and efficiency.’
Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group