As in years past, technology remains a key tool for CFOs and treasurers in improving their operations. This has been further catalyzed by the pandemic, which has seen organizations forgoing the use of physical cash in favour of nimbler applications to facilitate settlement and reconciliation work, for example.
This is something that the Treasury Review series of Asset Benchmark Research (ABR) has observed over the past several editions. This year’s Treasury Review survey provides more insights into the thinking of treasury management professionals when it comes to technology adoption.
Around 38% of respondents in the latest survey consider payments and collections as the task that would benefit the most from greater application of technology. This is followed by aspirational technology applications in customer and receivables management processes (14%) and liquidity management (12%).
Although these were the same top three choices in the Treasury Review 2021, this year’s survey finds less emphasis on using technology for liquidity management processes and more focus on payments/collections processes.
A factor contributing to this shift could be the surge in e-commerce activities in Asia. With lockdowns and remote working becoming the norm across the region in 2021, many businesses that used to rely on foot traffic had to pivot their businesses to allow for online transactions to stay afloat.
According to the Treasury Review 2022, as many as 73% of respondents feel that e-commerce transactions are important to their day-to-day business. One in four large corporates believe that e-commerce is very important to their business today. Most participants based in Malaysia, India and the Philippines, in fact, consider e-commerce as critical to their business operations.
Despite this universal perception of the importance of e-commerce, however, only 11% of the ABR respondents say their treasury functions utilize digital wallets for payments and collection processes, with the vast majority (73%) expressing no plans to explore the digital tool. Only Philippines-based respondents voice interest in using digital wallets, with several of them not currently using the technology but planning to do so in the short term.
Other new forms of payments/collection technology are still being tentatively explored. When asked if they are preparing for the emergence of central bank digital currencies (CBDCs), 77% of respondents say they have no immediate interest to address the development of CBDCs.
The main reason given for their lack of current interest in CBDCs is that the concept is still in its infancy, followed by the fact that their customers are not requesting for CBDCs to be considered as a payment format.
On the other hand, this is the most compelling reason cited by respondents in Indonesia and Hong Kong for looking into CBDCs. Interestingly, 14% of respondents say they are working closely with their service providers on the possibility of accepting CBDCs as a form of payment, with the most positive responses coming from treasury management professionals based in mainland China.
China boasts one of the world’s most advanced CBDC research programmes, having conducted several test cases during the 2022 Winter Olympics and in several major cities including Guangzhou, Tianjin and Xiamen. Worlwide, about 100 countries from Australia to Nigeria are actively exploring CBDCs.
As part of The Asset’s mission of promoting best practices in the Asia-Pacific financial industry, the ABR team has been engaging with over 500 CFOs, treasurers and treasury management professionals in the region to gain a better understanding of how they choose and work with their banking partners in their business operations.
In the first half of 2022 this engagement with industry practitioners included a series of one-on-one interviews and an online survey.
For more information about the Treasury Review please go here.