Financial Technology

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Facilitating Treasury Transformation in 2013 Reval's Chief Executive Officer and Chief Technology Officer discuss the year ahead, looking at what is driving treasury transformation, the demands of new regulations and treasurers' priorities in 2013.

Facilitating Treasury Transformation in 2013

The role and profile of the treasury function have undergone a gradual but distinct transformation in recent years, fuelled by the increased awareness of the need for effective Treasury and Risk Management during the financial crisis. In the first Executive Interview of 2013, we are pleased to feature Jiro Okochi, Chief Executive Officer of Reval, who has long held the reputation as a pioneer in risk management, and Phil Pettinato, Chief Technology Officer, who is driving solutions for Treasury and Risk Management SaaS technology.

What is driving treasury transformation, and what does this mean in practice?

Before the financial crisis, many treasurers lacked real-time visibility over their cash and risk positions. Since 2008-2009, however, credit risk and liquidity management have been at the forefront of corporate financial strategy, leading to a transformation in both the profile of treasury and the role it fulfils, and in the technology that facilitates visibility and control over cash and risk.

Treasury is in transformation at various stages. Many companies have been making do with what they have, but the largest companies – those with more complexities – are leading the way because of the urgency with which they need to change. Companies with manual processes or burgeoning multinational requirements are also transforming, while others are not as far along, despite the alarm. We are starting to see a growing number of companies assessing the skills, policies and technology that underpin their treasury function and seeking to enhance their capabilities. Lack of budget and resourcing are still hurdles to this transformation, however, and many treasurers are finding it difficult to make the transition from operational functions to strategic centres of expertise.

What additional demands is this transformation placing on treasurers?

Transformation is not only an internal phenomenon, but the changing regulatory environment is placing additional and complex demands on treasurers which need to inform their decision-making alongside the internal requirements for effective liquidity and risk management. For example, treasurers are developing a deeper understanding of the implications of Dodd-Frank on areas such as hedging and bank relationships as well as the wider business environment.

Many treasury functions are fulfilling a wider range of responsibilities than in the past, such as commodities risk management, which places additional pressures in terms of policies, skills and technology. Furthermore, as existing areas of responsibility have become higher priorities, such as credit risk management, cash flow forecasting and liquidity risk management, treasurers are centralising systems and automating processes to achieve the degree of visibility, accuracy and control that are required.

What new demands are treasurers making on their technology?

The technology is now expected to handle the requirements across more of the enterprise and address the deeper complexities that treasury is now facing as a strategic partner in the global business. For example, there is greater enterprise alignment and integration of systems and decision-making than in the past, such as between commodity hedging in treasury and procurement or between sales, FP&A and treasury. Even within treasury, cash and risk now have to better aligned, as cash flow forecasting is as much a risk management tool as a device for cash and liquidity management; similarly, risk data is being fed into liquidity forecasts.

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