The time is right to integrate treasury IT systems______

Ed Lopez, President – Global Money Market Services

Post AFP 2022 and our recently released Global Liquidity Barometer, it’s clear that connectivity, especially APIs, has never been more relevant to treasurers. Yet few, if any, treasury departments are able to use APIs in the short-term investment space. Instead they continue to accept time-consuming manual processes as the norm – just when they need speed and efficiency, writes Ed Lopez, President – Global Money Market Services, Calastone.

We’ve entered a new economic cycle. Rising interest rates and inflation are here for the foreseeable future, creating a very different environment in which corporate treasurers must do their job of managing short-term investment for maximum return. The impact is clearly reflected in the Calastone/TMI Global Liquidity Barometer, our annual global survey of corporate treasuries and short-term investing.

A rallying cry for better systems integration came through loud and clear to help treasury departments be more efficient and effective. The survey found that their biggest challenges when it comes to integration and automation were also the most basic – access to sufficient real-time data, fund selection and real-time connectivity across systems. In each case, connectivity technology, such as APIs, would help them better navigate the rapidly changing markets and optimise their positions.

Indeed, some 77 per cent of respondents want to access and manage their short-term investments via their treasury system. In short, they are held back by the lack of system connectivity between providers. And, while 53 per cent currently use at least one portal – provided by a trading partner – to access and manage investments, just 13 per cent said they wanted to continue to do so.

While portals provide a degree of operational efficiency by automating certain tasks, particularly analytics, they are still sending and receiving money market information via secure file format with their fund providers. And, they are providing the information with treasurers in a similar way to manually upload into their preferred treasury system. This means treasurers have to swap in and out of systems and manually input data across them. In addition, one-in-five has at least two portals and 4 per cent have at least four. Clearly, portal technology is not yet achieved ‘single window’ nirvana.

Interestingly, using a company’s enterprise resource planning (ERP) system is not seen as a viable alternative to portals or a full integrated TMS. Just 4 per cent of our respondents put them as their system of choice for accessing and managing investments. This could reflect a growing sense in the industry that ERPs are often complex and appear clunky in a world of increasingly seamless technology.

But the survey also threw up interesting – and encouraging – findings. While it appears that the level of automation in investment processes varies enormously, a handful do have highly automated workflows. These can and should be seen as trailblazers for the rest of the industry. This is particularly true for those still relying heavily on manual process, which are time-consuming, error-prone and contribute to a lack of transparency.

Fund selection has the most automation – 64 per cent – while trade confirmation is the least automated process at just 33 per cent.

But, the survey didn’t just ask about current technology. We also sought to find out what else treasurers would like to see automated. Forty-six per cent said they would like access to real-time information on fund performance, composition and yield reporting. They also put gaining a consolidated, real-time view of money market fund (MMF) investments and the fees charged on their tech wish lists.

Specifically, 37 per cent said they wanted real-time access to detailed fund information including prospectuses, fact sheets, investment approach and philosophy. Currently, this data is usually pulled manually from multiple sources, taking up significant amounts of time. Coming in second, with 22 per cent, was the ability to set criteria to create automated comparisons of MMF options to reduce errors and increase efficiency.

Third was the ability to directly feed transaction information into the firm’s preferred treasury systems – 16 per cent of respondents wanted this function in an automated TMS. This highlights the current situation where treasurers often need to access multiple systems and re-key information.

These are all issues that can be solved in today’s API world. By leveraging such technology treasurers can enter a real time world where all their short term investment trading and fund information is sent and received via their preferred treasurer system. Not only does this save time, but it can create certainty – a major plus given the size of the trades taking place.

Knowing that such capabilities can make the day-to-day life of a treasurer more comfortable it is perhaps surprising that inconsistent or non-standardised data, along with managing MMFs across multiple time zones, were not seen as challenges. Given the significant negative impact the former can have and the time pressures created by the latter, I do wonder if these are real challenges that are simply dwarfed by those already mentioned.

We all know automation is slowly creeping into treasury functions. What we see in our survey results is that it has yet to really permeate the short term investment / money market fund space even though the technology already exists.

Indeed, treasurers wanting to push forward so they too can reduce risk and gain the efficiencies their often under-resourced departments need would do well to look at their more advanced peers. They will see that automation doesn’t demand long, expensive IT transformation projects. In fact, many are using APIs to integrate their different systems quickly and at low cost.

Given the current potentially hostile and certainly volatile economic environment, there has never been a better time for treasury departments to push for the right technology to help them do their job.

Ed Lopez, President, Global Money Market Services

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