The importance of technology in treasury

The pace of change

While technology has been one of the drivers in the evolution of treasury over recent years, the pace of change appears to be picking up in the aftermath of the COVID-19 pandemic. Many organisations that were spurred into accelerating digital change are continuing to pursue the potential benefits of digital transformation, with finance functions such as treasury having a key interest in managing, and adapting to this change.

Technological evolution is also having an impact on the way the treasurer’s role is being elevated internally, with treasury becoming more involved in the shaping of strategy around the customer journey.

Srini Kasturi, Global Head of Digital and Platforms at Barclays, is responsible for the digital propositions supporting corporates to make their banking simpler and more efficient. As he explains: “We see clients on a journey, and in different parts of that journey there are different challenges. It’s a wide spectrum of development, all the way from automation, and deployment of treasury management systems (TMS) and retail payment systems, through to the creation of in-house banks.”

Changes in regulatory and financial market infrastructure that allow for better reporting have improved this, Kasturi says, while the new payment standard ISO 20022 is likely to enhance this even further.

Visibility

“Visibility and accuracy of data is everything,” says James Marshall, Head of Treasury at Virgin Media and O2. The establishment of the joint venture (the two brands merged in June 2021) during the pandemic was the catalyst for the organisation’s ongoing Accelerate Programme, its large-scale business integration project. “Digitalisation is one of the key fundamental growth pillars we have for the business going forwards,” Marshall says. “To bring different parts of the business, with different billing systems and so on, together, we needed to establish a new pattern to allow us to share information, work together and move out of our silos, to form a wider group of treasury people. There is an awful lot of information we need to exchange, both within the joint venture and with our parent companies [Liberty Global and Telefónica] – and without digitalisation we can’t do that.”

Anglian Water’s implementation of a new technology programme in 2019 also delivered important new visibility and control into the firm’s treasury operations, explains Assistant Treasurer Andrew Griffiths. The timing, too, was fortunate, being completed just before the challenges of lockdown. “It enhanced visibility; it enabled the treasury team to execute approvals and money-flow transmissions, and get remote payment processing set up and implemented,” Griffiths says. “As well as allowing the team to operate more flexibly, it provided crucial insights that enabled the business to operate more efficiently. We gained the ability to have same-day visibility of all our cash balances.”

In a very large, multi-faceted organisation such as Anglian Water, having this level of control and visibility is vital – and the challenges of the remote-working environment only emphasised the value this technology delivered. “We have a complex governance structure, and we were focused very much on where the cash was, our covenant limits, and what could potentially happen with customer payments. It was great from a treasury management perspective, having that visibility of the cash instantly.” It enabled the team to focus on forward-looking discussions, managing the business rather than spending time and resources exploring questions about the cash itself, he says.

Fresh perspectives

It’s not only within treasury that the value of this technological evolution is being appreciated. It appears that the role of the treasurer is also being further elevated, with recognition of the vital perspectives and timely insights the treasurer’s role can now bring to an organisation.

Marshall says digitalisation and the need for more information exchange has given treasury a growing voice and interaction at C-suite level. Reflecting on the turbulence in the banking sector in March 2023 as an example, he says: “If you don’t have information around issues such as security, liquidity, yield and the real risks that face us, you can’t, as an organisation, see through that lens clearly.”

“It very much changes the profile of what we’re looking for. We’re lucky to have a very experienced team,” says Marshall. “But we’re also very fortunate that our company [and parent companies] have brilliant graduate training schemes that have been established for some time. We get great people in, who always seem to leave their mark. Their learning programme is flooded with information about digitisation and data, so they constantly bring new ideas and insights about how we can develop processes.”

Strategy

Technological innovation has also seen treasury involved more in the shaping of strategy, and particularly the customer journey. The result is a more collaborative approach to how treasury interacts with the organisation. Griffiths says: “In terms of the customer, one of the things we always try to do from a cash management perspective – but also now from a technology perspective – is to make sure we are engaging with our colleagues, across the business, who are responsible for billing collections. The customer journey and their perception of us from every touchpoint, including the way they make payments, is absolutely key. In terms of managing cashflow and that relationship with the business, we make sure they are key stakeholders. A change in banking partner, for example, is no longer just a treasury matter – it has to be a matter for all of those people in the business who rely on those services.”

For Marshall, it was imperative that treasury was engaged fully at the start in helping to shape Virgin Media and O2’s digitalisation programme. “Our securitisation programmes, which are a major part of our financing, have to be hand in glove with the reporting that we can get from this new billing system. So, we've got to be on the front foot just to ensure that it is integrated properly, and, at the same time, prioritise the customer experience.”

Similarly, when deploying APIs in treasury operations, Griffiths says changes must be customer-driven. “There may be a clear case for APIs for moving money quicker, but it can’t be done in isolation – we must make sure that the solution is integrated and part of the bigger technology move forward.”

Technological change means treasury is now more involved in the commercial end of the journey, says Kasturi. “That’s picked up a lot of momentum over the past few years and it has to do with the whole tech transformation of the consumer experience. The way new experiences can be subscribed to has exploded, and that puts a lot of pressure on the business models of incumbent firms, as well as creating new business models with start-ups and technology companies. All of that requires the movement of funds, and we’ve been engaging more with clients to architect some of that flow and to define some of those experiences. A key development has been the approach we have taken to getting the right solutions in place for customers, sitting down with them and, where possible, creating them together.”

Transformation journey

Bringing other parts of the business with you on the technology transformation journey is vital. Ensuring the business recognises the importance of treasury requirements while implementing technological change is an important part of this – and one where treasury can play a key role in fostering that understanding.

“Collaboration is key across the business,” says Griffiths. “That means treasury isn't an island – and we can work with and utilise other parts of the business more effectively.” Collaboration doesn’t need to be limited to within a company, either. With the greater use of APIs and data-aggregation tools, it is possible for businesses to collaborate across their supply chain with the help of banks and other technology providers.

As Kasturi concludes: “Treasurers are generally time poor and most organisations are scarce of resources. The right technology coupled with effective collaboration are essential tools to help treasurers navigate an increasingly complex landscape.”

Your next step