Cutting-Edge Treasurer Part 2: AI, RPA, and Blockchain

Emerging Treasury Technology

If you’ve read the first part of our Treasury Series, Cutting-Edge Treasurer Part 1: Treasury Technology Trends, you now have a general understanding of three essential pieces to the modern Treasury puzzle. In this part 2 of the 4-part Cutting Edge Treasurer Series, we’ll dive deeper into the first piece of the puzzle: Emerging Technology. 

We’ll discuss what emerging treasury trends mean for your organization, and how your organization can begin to leverage these technologies in treasury management to optimize treasury functions. Below, we’ll discuss use cases and tips for implementing emerging treasury technology like Artificial Intelligence (AI), Robotic Process Automation (RPA), and Blockchain. 

Artificial Intelligence 

It’s no surprise that treasury departments around the world are now turning to AI. Not only can AI enhance efficiency of functional treasury tasks and mitigate risk, but it also provides the opportunity for Treasury to gain competitive advantages that lead to company growth. Treasury departments will see the benefits of AI for the automation of tasks, cash forecasting, improved decision-making, fraud detection, asset and cash management, and expense reporting.  

Now, one of the most important elements of AI in treasury is its ability to mitigate risk. Data shows a 100x increase in security-related events for organizations. In 2019, 74% of organizations experienced check fraud and 54% experienced financial loss due to Business Email Compromise (BEC). The use of AI to minimize losses is now critical.  

AI uses historic data to learn from past cases without explicit programming, leveraging data to reinforce, refine, and develop new algorithms that can better detect cases of payment fraud. To leverage AI and allow it to learn from past cases, it’s important that your IT environment is modernized and capable of consolidating and evaluating robust amounts of data. Cloud-based applications optimize AI efficiency, so if your organization has yet to make the move to cloud but wants to take advantage of AI, transitioning to the cloud could be a valuable decision.  

Your organization will also want to be sure to unlock data silos. AI technology requires robust amounts of data, and if functional silos or disconnected technologies disrupt the flow of data, AI won’t be optimized.  

From a business process standpoint, using AI will require organizations to take a change management approach to communicate the changes to come for employees. Because AI automates tasks previously done by employees, it will be important to communicate how roles and responsibilities will shift. These shifts also bring the need to train employees for new strategic roles, like evaluating the real-time insights that come from AI and identifying new, exciting opportunities to optimize strategies. 

Robotic Process Automation (RPA) 

In the part-1 Cutting Edge Treasury series, we discussed RPA technology and how it can help reduce costs, enhance productivity, scalability, and the transformation of processes. But, how does the tech work, and how do you begin implementing it?  

An RPA tool operates by mapping a process for the “robot” to follow via Treasury Management System (TMS) or Enterprise Resource Planning (ERP) pathways and various data repositories. In this context, the “robot” refers to the software that can replace or mimic human actions.  

Benefits of RPA in treasury management can be used for bank statement retrieval, consolidation & reporting, bank reconciliations, invoice processing, and customer service & CRM. The technology is best suited to take over manual, repetitive tasks, allowing Treasury departments to focus their time on more valuable, strategic tasks.  

Learn more about the basics and use cases for applying RPA and Chatbots in Elire’s webinar “Automating Processess with RPA Chatbots.” 

Implementation: 

Although treasury departments are increasingly turning to RPA, many attempt to do so without proper awareness of the complexities of implementation. 40% of first time RPA projects fail, and 60% of firms don’t meet their RPA deadlines. To effectively implement RPA and begin leveraging its benefits, your organization should start with an assessment of automation opportunities. In this stage, you’ll prioritize the most critical opportunities to avoid selecting wrong targets. 

Next, treasury should develop a business case for RPA, educating stakeholders on the value and ROI. Once your stakeholders have understood its value, you can begin selecting the right automation tool based on your identified and unique business needs. Once you’re ready to start the process of implementation, you’ll begin by building the bots. Here, you’ll test the automation on a small scale through pilot projects, targeting low-hanging fruit that requires minimal investment to reduce risk.  

Once you’ve seen success in testing and are ready to move on, it’s important to utilize an RPA governance approach to help consolidate a high-level plan that will define overarching objectives and capture milestones of the enterprise-wide strategy.  

Following these steps of an RPA roadmap will ultimately allow your Treasury to effectively begin implementing RPA. As you begin implementing RPA, your organization should include an iterative and gradual approach, adding error handling and fringe cases throughout the process to avoid facing common failure of RPA implementation. 

Blockchain 

As discussed in part-1 of the Cutting Edge Treasury Series, a blockchain is a decentralized, public digital ledger that is duplicated and distributed across a network. Not only does blockchain improve security, privacy, and speed, but it also can reduce costs by eliminating the need for an intermediary. Businesses and governments around the world have started to use blockchain technology for a decentralized system of data management, and banks and financial institutions are using blockchain for trade finance, capital markets, payments, fraud reduction, and more.  

For treasury teams that spend many hours with manual data entry and reconciliation of international payments, blockchain is a viable solution. Currently, there are four ways that corporate treasury can use blockchain: 

1. In-house Banking Using a Distributed Ledger 

Cutting-edge treasurers are turning to the use of a distributed ledger for in-house banking. Blockchain allows corporate treasury to manage their own private permissioned distributed ledger. This means treasury can control which internal corporate entities and third parties have access to the network, ultimately enhancing governance and creating a more standardized data sharing and collaboration process.  

For example, distributed ledgers have the potential to decrease operational costs and increase transparency of real-time transactions between financial institutions. By consolidating physical bank accounts into virtual blockchain, treasury can leverage the in-house banking technology to decrease costs and improve visibility of transactions.  

2. Oracle Distributed Ledger for Supply Chain 

Oracle Distributed Ledger for Supply Chain is an application that those interested in blockchain are looking towards. This blockchain application allows companies to track products through the supply chain on a distributed ledger which ultimately increases trust in business transactions, provides greater visibility, and improves customer satisfaction.  

Utilizing this solution, supply chain documentation is digitized, and auto-verification using rule-based monitoring efficiently handles product quality attributes. The application ultimately enhances supply chain for companies but adds value to treasury when it comes to payments and settlement automation. With blockchain applications like Oracle’s Distributed Ledger, payments for goods and services are completed without bank or clearing house intermediaries and currency exchange risk is reduced. 

3. Use Excess Liquidity to Invest in Blockchain 

Another potential way to leverage the value of blockchain is to invest excess liquidity in blockchain instead of other traditional investments. Many are considering adding Bitcoin to diversify traditional portfolios and gain the potential high returns associated. Bitcoin is digital currency within blockchain, meaning that every coin that transfers from address to address is completely transparent and secure. MicroStrategy, a business intelligence software company, saw the potential in using excess liquidity to invest in bitcoin and currently holds nearly $6B in market value (129,000 coins) as of March 31st. The currently volatility of bitcoin–having dropped 36% this year—could have a material impact on stock price depending on the view of investors.  

4. Payments in Developing Economies 

Treasury departments who face international payments to developing countries are also currently looking to blockchain. Blockchain can improve B2B payments in developing countries by making them simpler and less costly. Cross-border payments with the use of blockchain avoid the high foreign exchange fees incurred with the use of traditional transaction services.  This is an especially viable solution for companies contributing microloans to small businesses in lesser developed countries, as it modernizes payments and allows small businesses to enter new markets and enhance productivity.  

Considering any of these emerging technologies is essential for treasurers, but you’ll need help to make sure that they’ll meet your KPI goals and strategic initiatives. Using an advisory partner like Elire can help your organization evaluate whether these technologies will be a good fit for your organization. Learn more about Elire’s expertise in emerging technology by visiting our Management Advisory Services page, and reach out to [email protected] to speak with our experts. 

  • Ms. Ericson serves as Elire's Marketing Associate, supporting Elire’s digital marketing efforts. Summer collaborates with the Elire Marketing Team to develop engaging and educational content that delivers value to the lifecycle of Elire partners and their applications.

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