Deloitte Treasury Technology Market Intelligence Report 2019
Automation, sophisticated analytics and rich data visualisations are putting powerful new tools in the hands of treasury teams. The treasury function is moving from routine reporting to embracing predictive analysis and fundamental business forecasting. In many businesses this is already a reality and the function has become more strategic. But for most, there are still critical choices to be made. How should a business map out the treasury journey, and what is the chosen destination? Which of many competing treasury applications are relevant to business? How should businesses go about evaluating technology vendors, and implementing their services?
This article outlines the principles of successful future state treasury technology strategy and design and provides a critical review of available technologies and their providers. It is an experience-based and market-based review of current and future treasury technologies, combined with Deloitte’s current thinking on strategy formation and technology implementation for the treasury function.
The treasury technology challenge is an opportunity to deploy creative solutions that deliver simple, transparent, and efficient treasury processes. Internal and external pressures are combining to demand both cost reduction and more financial visibility from the treasury function primarily through automation. To meet these pressures companies need to conceptualise and plan their treasury transformations in three important areas:
1. Understand the technology
Effective technology implementations will enhance controls, harmonise processes, centralise and automate data handling, and extend the reach of treasury talent. Evaluation and selection is critical. Deloitte considers that some digital technology trends will play a central role in the future of treasury system architecture, including advanced analytics, cloud and Software-as-a-Service (SaaS), application programming interfaces (APIs), machine learning, process robotics, and visualisation tools. Other digital technologies (e.g. blockchain applications and virtual assistants) are evolving more slowly and appear less likely to gain traction as quickly.
2. Understand the vendor market
Deloitte tracks Treasury Management System (TMS) vendors, their offerings and their performance. Our data shows that the market is moving from a single-licence model to client-tailored systems, with significant differences in the implementation effort depending on whether services are embedded on-site or delivered remotely. Similarities between vendor offerings are greater than the differences, with exceptions: functionality on financial instruments, market data, valuations and transaction management differs significantly. The TMS market is demand-led with potential for buyers to shape the offer.
3. Set your strategy
Implementing new digital technologies will give treasury more insight into the business, pushing the function towards a more strategic role. This outcome can only be achieved in the context of an explicit technology strategy. Companies should assign values to the different elements of new technology implementations. They should give weight to strategic benefits intended for competitive advantage, core functional benefits intended to achieve industry best practice, and foundational benefits intended to standardise operations at low cost. Companies should make vendor and technology decisions that ‘best fit’ their businesses. This includes a vendor that understands your requirements, has the right deployment model, can integrate the best resources of both teams, and provides an application where the ‘feel and fit’ is in tune with the existing application landscape.
Understanding the technology
The treasury technology landscape
Treasury technology should be simple, transparent, and efficient. These are the principles that should govern the design, implementation and operation of a fit-for-purpose treasury technology landscape. As shown in Figure 1, the aim is to place the TMS as the anchor-point of the treasury landscape, with connections to multiple platforms and data sources embedded in the wider business. The ideal state is intelligent centralisation: the centre must depend on the systems that complete the architecture, with stable and reliable connectivity to make it tick.
Fig 1 - TMS as the anchor point of the treasury landscape
Focusing on these principles allows the treasurer to:
- Define and maintain a target technology strategy
- Identify shortfalls and the right systems for future state requirements
- Maintain a treasury landscape that integrates day-to-day tasks throughout the business, and enables more specific complex activities
- Manage systems centrally, providing access and control throughout the organisation
- Ensure ease of use, by leveraging standardised activities across the group
- Develop an ‘adopt and go’ approach