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Fintech innovation must not leave treasurers behind

The fintech revolution has replaced outdated technologies and streamlined antiquated practices across a wider range of industries. However, this wave of innovation seems to have bypassed corporate treasury departments, which have struggled to keep up with the latest developments. Fortunately, that is now changing.

Fintech innovation has transformed financial services at a rapid pace, enhancing customer experiences and accessibility and making services faster and more streamlined. As a result, costs have fallen, barriers to entry have been reduced and new entrants have emerged to take on the incumbents.

Yet, amidst the rise of challenger banks and alternative payments providers, relatively few innovations have found their way into the corporate treasury space.

 

Treasury management has been left behind by fintech

 

In many regards, treasury management remains hindered by increasingly outdated and fragmented processes. This becomes all the more apparent as other areas of finance move ahead in terms of efficiency, customer satisfaction and cost-saving benefits resulting from fintech adoption.

A 2019 Citibank survey echoes this. There’s a clear appetite amongst treasurers to engage with the latest innovations in technology to remedy historical shortfalls. But the technology to-date either hasn’t been sufficiently robust, easy-to-use, cost-effective or addressed the key concerns of treasurers. Of the 400 treasurers surveyed, 54% called for continuous improvement in operational treasury efficiency, with cost and integration of technologies seen as the biggest hurdles to overcome.

Take international payments and bank accounts, for example. In an increasingly globalised world, very few companies operate using a single currency. However, making international payments remains a costly and cumbersome process, and multi-currency accounts remain inaccessible, require manual input to operate and take weeks to open.

This is hard to justify when supply chains and customers span multiple nations, currencies and continents – treasurers need an equally global bank account that is fit for purpose.

To address these issues, treasurers have sought to utilise different platforms and integrated technology systems to ramp up efficiency and automation, while reducing costs. But this has only created layers upon layers of complex technology systems, processes and plugins.

This approach is not sustainable – it increases maintenance costs and hinders operational stability in the long-term. If one cog in the machine breaks down, the knock-on effects could be disastrous.

 

Smarter corporate treasury management  

 

Buying your 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 treasury management system. This has become even more critical as treasurers become accustomed to working remotely.

Put simply, enabling treasurers to perform all of their key functions without having to switch between different platforms and technology providers is crucial. The days of plugin tangles and convoluted processes are over.

In order to fully address the pain points faced by treasurers today, modern systems and platforms must address the lack of availability and high costs associated with multi-currency accounts, payment processing and FX conversion fees.

There is a huge opportunity to streamline existing processes and access all of the key services treasurers need – multi-currency IBANs, automated payments and collections, FX hedging and risk management and enhanced security – from one comprehensive dashboard. With the technology and knowledge available today, such services recognise the digital and global requirements of a modern, global corporate treasury division. 

Another key area of potential is FX execution and hedging, which has been a widely mismanaged feature of SME’s businesses for years. The majority of hedging programmes are limited to providing an analytical outlook, ranging from three to six months, due to their lack of visibility and connectivity. This restricts how easily treasurers can manage and oversee their risk strategies. Corporate treasury should not be left behind in this respect, especially when the technology for this exists, and has been tried, tested and proven to work.

 

Maximising data and analytics

 

However, centralising treasury functions is just the tip of the iceberg. Fintech adoption must do more than automate the odd process or enable a more efficient method of cash management. Creating a one-stop-shop for treasurers also opens the door for leveraging analytics more effectively with enhanced visibility.

Data is increasingly becoming the lifeblood of financial services, and the analytics derived from this data have transformed numerous elements of this market. This presents a unique opportunity for corporate treasury divisions. to improve forecasting, detect patterns and anomalies, and improve financial decision making, risk management and cash flow monitoring.

For example, the increased sophistication of analytics within the trading industry enables users to inform and enhance their payment, hedging and risk management strategies, which in turn, increases profits and attracts more satisfied customers.

An all-in-one solution has the potential to transform treasury management. It overcomes the hassle of multi-layered technology systems and plugins while delivering a more streamlined experience – making it a system fit for purpose and suited to today’s working environment.

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Laurent Descout

Laurent Descout

CEO

NEO Capital Markets

Member since

07 Mar 2019

Location

Barcelona

Blog posts

2

This post is from a series of posts in the group:

Treasury Management

This network brings together treasury and financial professionals who manage treasury functions. Members share a common interest in treasury, cash management, banking, risk management and investments.


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