Cutting Edge Treasury Technology

2020 Cutting Edge Treasury Technology

With the incorporation of digital technology into treasury processes, organizations and vendors have had to reimagine and reinvent what it means to operate in the world of treasury and finance. The past several years have shown an increased investment into robotic process automation (RPA), artificial intelligence (AI), and blockchain technology. The focus of these digital treasury technologies has centered around automation and enhanced security, eliminating manual tasks and allowing treasury teams to focus exclusively on data analysis and process management.

One of the most utilized and adapted of these new technologies is RPA. Often integrated into Treasury Management Systems (TMSs) and Enterprise Resource Planning (ERP) systems, RPAs aim towards automating treasury processes through a centralized system that can be integrated into all areas of an organization, regardless of its size and reach. They provide organizations with increased productivity, accuracy, cost reduction and scalability, and are vital in helping organizations take control of bank statement retrieval and consolidation, bank reconciliation, invoice processing, and customer service. RPAs map out processes via TMS/ERP pathways and various data repositories that run automatically whenever a recognizable trigger activates. For example, the Accounts Payable process would initiate and run whenever the organization makes a purchase through one of its suppliers, providing a traceability report for treasury teams to analyze.

These RPAs and other technologies utilize Artificial Intelligence to help increase efficiency, reduce errors, and tighten security around treasury processes. AI is a program embedded into these RPAs that emulates human-level decision making by constantly adapting and learning based on past results. It utilizes decision trees and modeling to simplify the real world through algorithms, running processes/programs repeatedly to collect data for analysis. This collected data is then used to reinforce, refine, and develop new algorithms to further improve the process.

As these new technologies continue to be developed and refined, organizations around the globe have been forced to take a step back due to the recent and ongoing events of 2020. Organizations have had to take an introspective look at how they can continue to operate successfully during this unexpected period of uncertainty in the marketplace. They are looking for quick, cost-effective ways that they can improve their working capital management and real-time payments (RTP). Vendors who have been focusing on optimizing AI, RPA and the like, are now taking a deep dive into how they can meet these new demands within their existing technology.

Leading the pack in this sudden refocus is working capital management. Many organizations have found themselves now struggling to adapt to new security regulations in order to meet mandated Covid-19 guidelines, as well as met with an increased or reduced demand for products. Some have faced temporary shut-downs of manufacturing plants and are trying to regain their footing and stay above water. Regardless of whether the effect was positive or negative, every organization’s working capital has been affected and there is now a demand to find a streamlined solution to help mitigate risk and improve working capital management. One of the main ways vendors and organizations are doing so is by analyzing big data and using the results to fine tune their existing treasury technology (TMS, ERP, etc.). Organizations are finding ways to plan for short and long-term financing based on automatic forecasting projections. Instead of manually conducting, assessing, and reporting on payables receivables, they are utilizing automatic processing to manage the bulk of the work. This is allowing treasurers more time to analyze these processes and market trends so they can make necessary adjustments to the process.

Organizations with operations in the United States have been confronted with the national coin shortage. To cope with this shortage and to reduce the spread of Covid-19 through paper money, they have transitioned into digital payment formats, or real-time payments (RTP). Many banks and vendors have been working diligently to create innovative solutions to this problem, which without the pressure of the pandemic they would have had several years to complete. The use of virtual cards and electronic payments (QR codes, ACH, and other contactless payments like Apple Pay) has skyrocketed and taken over the marketplace. The U.S. is planning to launch a new Digital USD currency, and China has a plan for their own known as PBoC, both of which will help facilitate a paperless transaction world. This has prompted the need for an increase in cybersecurity. New guidelines and security standards are starting to develop and roll out in the next several years, including a new ISO 20022 standard, SWIFT GPI initiative, and FedNow Service. For more information on RTP, check out our Payments Transformation blog post.

As the world continues to adapt to the unprecedented changes that the events of 2020 have brought, organizations need to ensure that they are as prepared as possible, and are able to successfully handle fluctuating market conditions. For more information on treasury technology and the future of treasury, check out our library of session recordings and content from this year’s Elire Treasury Experience. Access is password protected. To request access, please reach out to [email protected].