Money Market Services in person……with François Masquelier, Simply Treasury, ATEL, EACT______

Ed Lopez, Chief Revenue Officer

This month, François Masquelier – Simply Treasury, ATEL, EACT – reflects on how technology is revolutionising the world of the corporate treasurer. We discuss why the pandemic was a catalyst for driving it further up the priorities of treasurers and finance managers and why there is a rising focus on the risks and limitations of manual processes and interactions between systems and counterparties.

Technology is changing many corporate functions, including treasury. But are treasury functions ahead or behind the tech game?

Treasury functions are certainly on the digitization path, but in most cases they are far from being fully digitized. It is a long journey. They have several ‘best of breed’ tools, and these multiple tools may be interfaced in a treasury workstation, but they are still struggling to fix reports and to produce the kind of data that systems still cannot produce.

There is already a lot of technology at work in organisations, yet it is still very difficult to produce something essential like an instant cash-flow forecast. What is really missing right now is the creativity and innovation that will realise the potential of technology.

Will the effects of the Covid-19 pandemic be a catalyst for deeper change?

The immediate post-Covid challenge for treasuries is that it is difficult to secure new investment when companies are already stressed, as they are now. So we have to look at the costs and the benefits of new treasury technology in the context of Covid. And there is no doubt that we can reduce costs by automating what we previously did by hand – for example, it is very clear that your banking costs are going to rise if you don’t automate and integrate your payments systems.

There have also been specific Covid-related costs that treasury technology will help to mitigate – we have seen a considerable increase in fraud and cyber-attacks as Covid has forced companies into remote working and financial technologies are going to be the way to reduce all those costs.

Companies are investing extensively in digitization at the enterprise level. How can treasury get to the front of the technology queue?

You have to make the business case. You have to explain why you should invest. But one big problem treasurers face is that decision-makers such as the chief information officer or the chief technology officer usually assume that a single treasury management solution covers everything you need to do, and this is simply not the case. It can be difficult to explain to IT managers that even ‘best of breed’ solutions have gaps. And I think the other source of resistance is the users themselves. Treasurers are typically very cautious and very conservative – it comes with the job.

When it comes to decisions on implementing specific technologies, is it better to rebuild from the ground up or make adaptations?

The ideal may not be what is practically achievable. For example, managers will usually push to keep some of the legacy systems in place – up to now it has been only the very largest of multinationals who considered implementing a total technology transformation.

But, the reality is that when you look at the way that treasury systems actually operate you will find something that looks like a kind of Lego building – with all sorts of solutions piled one on another, with old-fashioned spreadsheets being used to fill the gaps. A lot of companies have focused on core business digitization and forgotten finance. But Covid has changed things: we have just had a major unexpected crisis and companies are more ready to consider modernising the whole finance function.

I would say treasury is the perfect digital lab to help the finance function digitise further given the high number of IT solutions (e.g. TMS, payment factory, FX platform, Bloomberg, BAM module, etc…) it leverages. I believe firms should have two major objectives – the automation of processes and the automation of internal controls. By testing treasury in this way, CFO’s can measure the benefits of digitisation in a controlled way.

So, what is the post-crisis order of business for treasury tech transformation?

We have an opportunity to enhance internal controls, to mitigate operating risks and frauds and to improve efficiency. We can move on from the old reality where, when it comes to IT investment, finance is the forgotten part of the system and treasury the poor cousin.

We now see more of an expectation for treasury-on-demand and the CFO certainly expects faster and better reporting. Treasury is back in the spotlight and it’s become easier to demonstrate that more digitization will create a virtuous circle with data analytics, robotic process automation and artificial intelligence all likely to make our jobs easier in future. We just need to go on and demonstrate that the best way to become more resilient to crises is to be more digitized.

What is the role of external forces like customers and regulators in driving change?

I think all the stakeholders are driving change. But there is no doubt that regulators and the setters of accounting standards are increasing reporting demands – and that is pushing treasurers to be better equipped and digitized. So, you get the same push externally as internally, because the C-level is certainly demanding more ad hoc and better-quality reporting, and in real time.

Additionally, I think that fintechs will help because they have some of the answers. I believe we need to think in terms of co-creation with partners like fintechs and banks, where we will see micro-solutions emerge and then developed into wider market solutions. But nothing will happen unless management embraces a culture of change. At the end of the day, the major driver should remain yourself. You should be open, curious and ready for change – because the changes we see today are not the end of the story.

Specifically, where will corporate treasuries find the most value from emerging technologies?

You should not limit the potential. You can find value in almost any area. You have to think of payments, trade finance, compliance and know-your-customer registries. You have to think of working capital, cash management, FX automation (something that remains highly manual). There is technology potential in any treasury or risk management field, anywhere we face risks. The list of risks is very long, but the good news is that the list of opportunities is just as long, if we are willing to embrace radical change in the way we manage our businesses.

How do you think these tech transformations will change the role that treasury plays in the organisation?

Technology can free up human time, so people can concentrate on higher-value tasks. This is the very first objective of technology, to get rid of repetitive, high-volume, low-value tasks and reallocate the scarcest resource of all which is time. It means we will play a more productive role in analysing data and in shaping strategies – and remember, almost no one has talked about the productivity of treasury before.

So, I see a future where we reduce risks, reduce costs (at least over the medium term) and increase the robustness and efficiency of all our processes. Ultimately it is a transformation that will make treasury more strategic.

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