Which treasury function can benefit the most from technology?
In a world of constantly-evolving technology, analysts suggest prioritize what problems can be solved with new solutions rather than simply implementing technology per se
From blockchain to big data, technology buzzwords have in recent years been the focus of the treasury management around world. However, instead of being caught up in the technology trend itself, treasury professionals should start evaluating which part of their mandate could benefit the most from technology.
"We try and shy away from starting with the technology, as it may or may not be relevant. We start with the client, the problem, then we will apply whatever technology is relevant. The technology comes on the back of what we are trying to solve," shares Alex Manson, global head at SC Ventures, the fintech-investment unit of Standard Chartered which evaluates which new technologies would be best suited for corporate clients.
According to Asset Benchmark Research's (ABR) data, most treasury professionals in Asia believe that liquidity management could benefit the most from technology adaptation. ABR between February to April 2018 interviewed and surveyed close to 1,200 Asian-based treasury professionals on trends shaping treasury management in Asia-Pacific and the Middle East.
Within that survey interest was expressed from several interviewees on having a single point of access to view all funds across the group. DBS attempted to address those concerns last year when it developed an online simulation tool to help treasury professionals craft optimal cross-border liquidity structures.
Aside from liquidity management, treasury professionals surveyed by ABR also shared that customer and receivables management, borrowing and payments are top candidates for increased technology adaptation.
The need for instant payments, for example, has received considerable support from financial regulators such as the Hong Kong Monetary Authority (HKMA). Indeed, this month, the HKMA is on the verge of launching its Faster Payments System that allows for free and immediate transfer and clearing between several banks and e-wallet operators. This comes off the back of similar payment initiatives in Malaysia, Thailand and India over the past couple of years.
Creation of payment infrastructure for retail transfers has the potential to be used for corporate payments as well. In Malaysia, for example, treasury professionals typically use JomPAY, a centralized online bill system to collect payment from customers.
Whether it is trade finance or cash management, there is clearly a need for treasury professionals to be beware of new technology solutions available to them. According to an industry survey conducted by AFP (Association for Financial Professionals), only 53% of treasury leaders felt that their treasury department was making very effective use of technology.
"Our clients are being disrupted just as much as financial services. They are under a lot of pressure and urgency to reinvent themselves. For example, as time moves on the treasury of tomorrow will look very different from the treasury of today, especially in a world of 24/7, high-volume low-value payments where you are having to reconcile continuously," says Manson.
21 Sep 2018