Report from Eurofinance's 27th annual treasury management conference.
Robotics, artificial intelligence and application programming interfaces (APIs) are increasingly playing a role in the digital treasury, as corporate treasurers seek better data insights and analysis and look to improve transparency, improve efficiency and free up resources according to the "Journeys to Treasury" report published by BNP Paribas, PwC, SAP and the European Association of Corporate Treasurers (EACT).
The report surveyed senior corporate treasurers and was launched at the annual EuroFinance International Treasury Management conference in Geneva from 26-28 September.
Optimising liquidity management remains a priority for many treasurers, according to the report. It says treasurers are looking to leverage new and emerging technology solutions to create operational and strategic advantage. Treasurers interviewed for the report say these new solutions are also forcing treasurers to rethink how they manage their company’s operations.
One of these solutions is virtual accounts, which the report describes as a way for companies to “reduce the number of external accounts, whilst maintaining a high level of data for each flow to enhance reporting and process automation, such as reconciliation.”
Treasurers can set up an unlimited number of virtual accounts with account numbers, which can be used to more easily reconcile incoming payments. One treasurer interviewed in the report says they used virtual accounts to replace real bank accounts in response to a partner bank exiting certain markets in the Baltics.
Another technology trend highlighted by the report that is likely to reshape how treasuries operate is the global move towards real-time payment systems. “Real-time and instant domestic payment schemes are proliferating around the globe,” said Bruno Mellado, head of International Collections & Payments, BNP Paribas, who is quoted in the report. While these schemes enable corporations to manage time-sensitive outgoing payments more precisely, the bigger impact for many treasurers is on collections, in that a company could see incoming flows credited to their account on a 24/7 basis. This creates very different liquidity dynamics to today.
Mellado said treasurers need to consider the implications of “round-the-clock flows” from an operational, cash and liquidity management perspective, and work with their banks to manage the need for “on-demand or real-time reporting.”
“What is not yet clear at a corporate level is whether the benefits of real-time or instant payments will outweigh the costs; however, treasurers need to be prepared, particularly for incoming flows,” stated Mellado.
As a result of open-banking APIs, treasurers in the future will be able to more easily access banking services from third-party providers instead of their banks. However, treasurers quoted in the report said these services will need to replicate what they already get in terms of standardized reporting of bank information.
The report points out that it is still early days for APIs in treasury operations, with specific use cases amongst a relatively small group of corporations in the business-to-consumer space. Some of the independent streams at EuroFinance in Geneva highlighted the lack of awareness amongst treasurers of what open banking under PSD2 really means for them. However, treasury management software providers at EuroFinance believe in the future, APIs will be the way that systems are integrated and that they could be used to access information in real time, instead of relying on banking networks like SWIFT. “[APIs] could make systems more intelligent as you can grab information when you need it,” said the CTO of one treasury management software provider Global Finance interviewed at EuroFinance.