What’s Driving the New Era of Treasury?

Published: May 29, 2024

In a payments landscape where change is the only constant, the role of treasurers is shifting away from traditional operational and manual duties and moving towards that of strategic technologists. BNY’s Kelly Wen, Head of Treasury Advisory, and Linda Wang, Senior Vice President, Solutions Consulting, discuss key trends in the first of a two-part series.

Today’s proliferation and adoption of real-time payment schemes, the introduction of new business models driven by open banking and embedded finance, and the increasingly complex regulatory backdrop, are coming together to bring liquidity optimisation and operational efficiency into sharp focus – giving corporate treasurers a strategic edge within their organisations.

With change the only constant, corporate treasurers are uniquely positioned to help shape the transformation of their business. The key to successful execution is a thorough understanding of existing systems and platforms to articulate challenges and outline how emerging technologies can offer support. Technology, through its ability to enable accurate and real-time data decision-making, is empowering corporate treasurers to become more efficient stewards of enterprise-wide cash flows.

Evolving from operational to strategic

Historically, corporate treasury was regarded as a support function, enabling businesses by ensuring funds flowed effortlessly across the organisation to the right place at the right time. This task has certainly evolved over the past decade, further shaped by the Covid-19 pandemic, followed by the perfect storm of rising interest rates, resurgent inflation, geopolitical conflicts, supply chain constraints, increasing payments fraud and cyberattacks; each placing the role of corporate treasury under the spotlight.

Against this backdrop, treasurers have become not just custodians of cash and liquidity but also key risk mitigators in reducing fraud and mitigating risk, as well as adopters of new technologies and faster payment rails. Reflecting this, more than 76% of multinationals with more than $10bn in revenue now have IHB in place and leverage sophisticated cash structures such as payments factories and POBO/ROBO. That is a 10% increase since 2022, as cash centralisation solutions become more mainstream in gaining greater control over working capital.

The strategic voice of the treasurer

To get ahead of the curve – and meet the evolving needs of clients – enterprises are tasking corporate treasurers to invest in new technology stacks and upgrade legacy infrastructures. And increasingly, treasurers are contributing to discussions around cloud transformation, business continuity planning, and cyber resiliency.

They also have an increasingly important role in facilitating the paper-to-digital transformation for their enterprise, spurred by a move closer to a cashless society. Today, customers from industries as diverse as healthcare, energy and real estate demand an Amazon-like experience across all their transactions. To meet this need, corporate treasurers are required to adopt faster payments and digital wallets to capture demand from a sophisticated Millennial and Gen Z market segment – all while phasing out legacy payment methods such as cheques.

The need to respond to this trend is highlighted in recent data from the US Federal Reserve, which shows an average yearly decline in cheque volumes of 7.2%. At BNY, our Treasury Services business was on track for a 7.6% decrease in the number of paper cheques processed for 2023 – and experienced a 16% increase in same-day ACH volumes in 2022.

Designing tomorrow’s treasury

In light of these changes, enterprises now see the need for migrating to more automated, centralised cash management platforms – with API integrations into banking providers. This can deliver a full suite of solutions, from domestic payment execution to rule-based FX payments. To reach the goal, corporate treasurers are being allocated more budget and resources to adopt specialised treasury tools, such as TMSs, and to have real-time visibility over cash and payments, enabling them to effectively provide clients with insights into up-to-date intraday liquidity positions and FX exposure.

With generative AI (GenAI) the new buzzword, treasurers are also being asked how this technology can take their functions to the next level. This translates into leveraging GenAI to reduce manual processing and reconciliation for payables and receivables, identifying risks, and managing exceptions and disputes.

In response, treasurers are increasingly overseeing transformation projects that require them to develop abilities not always utilised in their day-to-day operations. The associated demand for analytical and digital skills in treasury functions such as advanced Excel, SQL, Python, Power BI and Tableau visualisation, along with soft skills such as critical thinking and data story-telling, creates challenges in hiring the right talent for this changing role.

This issue of ‘limited treasury talent’ is becoming increasingly relevant as corporate treasurers think about succession planning and developing a new cohort of treasury leaders. As a result, many corporate treasury departments are turning to internal training to upskill, including sourcing and utilising internal IT talent pools to cross-train treasury experts in becoming well-versed in data and analytics. In this way, treasurers are fast becoming technologists in their own right.

This is the first article in a two-part series. In part two, BNY’s Kelly Wen, Head of Treasury Advisory, and Linda Wang, SVP, Solutions Consulting, explain the steps that are being undertaken to unleash the technologist within treasurers.