Treasury 4.0: How the Fourth Industrial Revolution is Reshaping Treasury

You could be forgiven for thinking that The Fourth Industrial Revolution, or Industry 4.0, is a pure manufacturing play – and has nothing to do with treasury. After all, the First Industrial Revolution involved the use of water and steam power to mechanise production. The Second leveraged electric power to create mass production. And the Third deployed electronics and information technology to automate production through digitisation.

But Industry 4.0 is different. It is bringing the digital and physical worlds together, combining the skills of machines and humans, and altering the way we work and interact.

This applies to treasury too. Treasury 4.0 is coming. Next generation treasury functions will work in real-time, with highly integrated, automated systems. They will leverage intelligent tools that can teach themselves how to perform treasury tasks better and better. Data will drive forward-looking decision-making, replacing the hazards of using only the ‘rear view mirror’. And treasury teams will have the opportunity to exchange legwork for strategic thinking, adding greater value to the business in the process.

Of course, theory is never the same as practice. And reaching Treasury 4.0 will not be a walk in the park. But some treasurers are starting to investigate and deploy practical, real-world applications of disruptive technologies within the treasury function. As we found out from Pearson recently, artificial intelligence (AI) is already being used by some treasuries for cash flow forecasting. Among other efficiency benefits, the technology is enabling treasurers to compute hundreds more variables than they could manually, resulting in more robust forecasts.

Another Treasury 4.0 tool that is growing in popularity is auto investment solutions. As the name suggests, these automatically invest surplus cash according to parameters that have been pre-set by the treasurer. In the era of real-time treasury, when monies can potentially be received by treasury 24/7/365, this kind of tool will lessen the need for treasury departments to be staffed all hours of the day and night, every day of the week.

Treasury 4.0 could also see treasurers leveraging open application programming interfaces (APIs) to build their own dashboards, plugging in data and services from their providers of choice – whether that be banks, vendors, fintechs, or another business partner entirely. In fact, once you scratch the surface of Treasury 4.0, there are myriad possibilities for creating a smart treasury function.

To help treasurers look beyond the hype, TMI will be collaborating with HSBC’s Global Liquidity & Cash Management business over the coming months, highlighting concrete applications of Industry 4.0 technology within treasury. We will bring you insights from Treasury 4.0 champions, including Lance Kawaguchi, Managing Director, Global Head – Corporates, Global Liquidity & Cash Management and some of HSBC’s key clients across a variety of regions.

We will also help you to weigh up the potential risks associated with Treasury 4.0, and outline practical ways to move towards a 4.0 environment, including upskilling the treasury team. Watch this space.