Data-driven treasury

The evolution

In recent years, it has often been said that ‘data is the new gold’. But ever since the corporate treasury profession began in the 1970s, data has resided at the heart of the function. And as technology has evolved – and data has become more sophisticated – so too has the role of the treasurer.

Before the advent of online banking in the late 1990s and early 2000s, much of treasury’s time was taken up gathering data through cumbersome channels such as telex and fax. With e-banking now commonplace, data flows freely into treasury functions, through portals and host-to-host connections into treasury management systems (TMSs) and enterprise resource planners (ERPs). And as emerging technologies – such as application programming interfaces (APIs) and artificial intelligence (AI) – take hold, a new breed of treasury function is being born: the data-driven treasury.

Eder explains: “As businesses across Europe, and the globe, embrace digital transformation, huge amounts of data are being generated and stored on servers, often located in the cloud. This proliferation of data represents a significant opportunity for corporate treasurers.” By tapping into these ‘data lakes’, she believes treasury departments can become more efficient, more effective and more profitable – all while operating in real time.

But which technologies are likely to result in the largest data gains for treasury, and how can treasurers build the business case for them?

Channelling data

“Naturally, it is vital to have a solid digital strategy in place and thoroughly investigate the suitability of technologies before any talk about investment budgets can take place. That said, there are four key technologies that form the foundations of digital transformation and data-driven treasury. These are: cloud computing, APIs, robotic process automation [RPA] and AI – in that order,” comments Eder.

Explaining each technology in turn, she continues: “Cloud computing not only enables the storage of enormous amounts of data, it also facilitates software-as-a-service. This means that treasurers can access the latest digital tools more or less instantly, without the need for lengthy on-site site installations, which typically come with a higher budget requirement. Since the cloud speeds up deployment of technology, this also enables treasury to be nimbler in accessing data,” she notes.

Meanwhile, APIs act as a technological ‘glue’ between systems. “While they have been around for a decade or so, APIs are now coming into their own – especially in the treasury sphere,” says Eder. “The power of APIs should not be underestimated. They allow for the seamless connection of systems that might previously have been difficult to interface. APIs also enable the transmission of bulk messages, and higher volumes of data at a much faster rate, and more securely, than we have been used to in the past. As such, they enable the creation of a real-time treasury environment, built upon data.”

It is no surprise then, that 53% of treasurers are either already using APIs or planning to use them within the next 12 months, according to the findings of our recent research report – New Europe: Is Your Treasury Fit for the Challenge? PDF^†– published by TMI in association with Barclays. RPA was also a popular choice of treasury tool, with 48% of respondents currently using bots, or planning to in the next year.

“RPA can be used for more or less any well-defined repetitive, manual task within treasury – ranging from reconciliations to exposure capture and reporting,” notes Eder. It can also be used to extract data from multiple systems and consolidate it into a single source of truth.

“With RPA taking much of the manual burden off treasury teams, they can finally get creative with tools such as AI and machine learning. Often, there is resistance to this kind of technology, since it has a ‘science fiction’ reputation – and this could be why only 10% of survey respondents PDF^† are currently using it. But the reality of AI is a world away from sci-fi: humans remain in control of the machine and it only executes programmed tasks. For example, AI algorithms could be built to enable treasury to analyse data in smarter and faster ways, helping them to make more accurate predictions around cash flows, trade finance costs, and foreign exchange activity.”

Making the case

Although the potential benefits of such technologies are clear, securing the budget for them is not always so straightforward. Indeed, 31% of respondents to the survey PDF^† cited lack of technology budget as the main hurdle holding them back from reaching their treasury goals in the next 12 to 24 months.

“At Barclays, we are well advanced in our digital journey and have made the necessary enhancements to support real-time payments, and therefore, the instant exchange of data. We also offer a range of services and solutions that can help treasurers work towards more data-driven goals. Examples include automated reconciliation tools and various APIs,” says Eder.

There is also ongoing collaboration with Barclays’ corporate clients in Europe to help determine the direction of future digital innovation at the bank, including the switch to the ISO 20022 standard for TARGET2 payments. “Working together with our clients helps us to pinpoint future areas for digital transformation and new ways of using data. It’s very much a joint journey,” Eder insists. She adds that innovation is also ongoing with third parties, such as fintechs, creating an ecosystem of innovation around the corporate treasurer.

Protecting corporate assets

Another area where banks can assist treasury teams in their digital journeys is cybersecurity. “Data is a corporate asset – and must be protected in the same way as financial assets. Installing and maintaining robust protection against cyber and fraud threats is therefore an indispensable part of building a data-driven treasury,” she explains.

To help treasurers stay ahead of these risks, Barclays offers a variety of tools – from a confirmation of payee solution to help beat fraudulent payments, to malware detection software and biometric security. “In an environment where many treasury professionals are working from home, biometrics provide an additional layer of security. Additionally, some of our clients have finger vein readers to access their online banking with enhanced security. Others are protected by our behind-the-scenes use of behavioural biometrics, to help verify that the user is who they purport to be,” Eder adds.

Nevertheless, corporates must still take their own cybersecurity extremely seriously, and invest accordingly. “There is no point having the latest technologies in place and accessing insightful data if the set-up is not secure. As such, budget must always be allocated first and foremost towards security – to protect the organisation and its corporate ecosystem,” she explains.

Reaching the next level

This is not to say that budget can’t be deployed on functionality, of course. And to assist in building a convincing business case for data-driven tools, Eder suggests a four-step approach:

According to Eder, it is also worth taking the time to determine the potential return on investment of a certain technology in a detailed manner, including how many minutes or hours per day it could save treasury employees. “Speak the language of management – cost reduction and efficiency gains,” she quips.

Her final suggestion for treasurers aspiring to a data-driven future is to “remember that this is a continuous journey. This is not a one-off project. Yes, there might be immediate cost control benefits, but there will be incremental gains too, if the technology deployed (and the associated workflows) are consistently tweaked and upgraded where appropriate. Fine-tuning is where the magic happens – and where data could become gold”.

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