Ranging from proof of concepts to pilot tests, new technological initiatives focusing on better treasury management are being promoted by various stakeholders such as banks and payment networks.
Looking to offer treasury professionals better visibility and control over their finances, some established financial institutions are becoming more open to working with third-party providers or financial technology (fintechs) firms to offer companies meaningful solutions using big data analysis or blockchain technology.
While there is an increased drive for digitalization across transaction banking, there is still lingering concern that some of their clientele may not be ready or even aware of the scope of solutions in the marketplace. According to a recent survey conducted by Asset Benchmark Research of Asia-Pacific based CFOs and treasurers, only 1 out of 10 participants felt that 90% or more of their treasury operations were fully digitalized and not relying on physical paperwork.
This highlights that there is still a significant number of companies out there that need to further upgrade their treasury management processes to be less manual. “Traditional companies are currently in the midst of a transformation journey, many of them are looking to engage with their customers in a different manner. The companies that are not ready yet have to be in the future,” shares a transaction banker from an international bank.
The emergence of chief digital officers and innovation units in several traditional organizations have looked to change that narrative in recent years with insurance companies for instance adding digitalization in the claims process as a key part of their KPIs (key performance indicator) when interacting with customers. Similarly, automobile manufacturers are beginning to use technology such as geotagging to gain real-time information on their supply chain and decide in whether certain goods need financing.
While traditional companies are going through a process of transformation, there is also the growing list of “new economy” companies such as ride-hailers and payment wallets, which are in need of professional support when it comes to their own treasury management processes. Already accustomed to working within an ecosystem of partnership through API (application interface programming) connectivity, these companies are in need of better organizational guidance in working with service providers.
“Many of these new economy companies have had their technology first but then the business discipline comes later. So, for a couple of unicorns we have worked with, they were very tech-savvy and able to integrate with us on day one and then as they added more products and services, they independently managed those lines so we had to streamline the processes out,” explains the transaction banker. “They were independently working with us across business lines instead of across the entire organization. For them it was the business readiness, which was an issue.”
Whether you are a traditional or new economy company, there is a need to have consistent evaluations of the requirements of the treasury management unit, whether it is adopting new technology tools or by streamlining interactions between the company and transactional service providers.