In a payments landscape where change is the only constant, the role of corporate 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 how the central role played by treasurers in overseeing transformation projects requires new skills of corporate treasurers.
Today’s proliferation and adoption of real-time payments, the introduction of new business models driven by open banking and embedded finance and an increasingly complex regulatory backdrop, are coming together to bring liquidity optimization and operational efficiency into focus. As a result, corporate treasurers who are recognizing the shift and acquiring new skills to accommodate such transformations are poised to help their organizations gain a competitive edge.
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 organization to the right place at the right time. But as economic and geopolitical challenges evolve, treasurers not only have to be custodians of cash and liquidity but also key risk managers and technologists, helping to mitigate fraud and adopt real-time payment technologies.
Illustrating this trend, more than 76% of multinationals with more than $10bn in revenue now have in-house bank (IHB) services in place and leverage sophisticated cash structures such as payment factories and payments-on-behalf-of and receivables-on-behalf-of (POBO/ROBO).1 That is a 10% increase since 2021, as cash centralization solutions become more mainstream for gaining greater control over working capital.2
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. As a result, treasurers are increasingly contributing to discussions around cloud transformation, business continuity planning and cyber resiliency.
Today, corporate treasurers also play an important role in facilitating the paper-to-digital transformation for their enterprise, spurred by a move closer to a cashless society. Adoption of faster payments and digital wallets are now essentially required to meet this need, and to capture demand from a sophisticated Millennial and Gen Z market segment – all while phasing out legacy payment methods such as paper checks.
Designing tomorrow's treasury
In light of the payments evolution, enterprises now see the need for migrating to more automated and centralized cash management platforms – using API integrations into banking providers. This approach 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 specialized treasury tools, such as Treasury Management Systems (TMS), and to provide visibility into intraday liquidity positions and FX exposure.
Exploration of Generative AI (GenAI) is also expanding traditional treasury functions as treasurers look to leverage it for reducing manual processing and reconciliation of payables and receivables, identifying risks and managing exceptions and disputes.
In response to having to help manage implementation of new technologies for corporate treasury functions, treasurers are emerging from such projects with broader perspective and, in turn, required to develop capabilities not previously needed for 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 for data visualization, along with soft skills such as critical thinking and data storytelling, also creates challenges in hiring the right talent for this changing role.
This issue of “limited treasury talent” is becoming increasingly relevant as corporate treasurers map out succession planning and develop a new cohort of treasury leaders. As a result, many corporate treasury departments are turning to internal training to upskill talent, including sourcing and utilizing internal IT talent pools to cross-train treasury experts in data and analytics. In this way, treasurers are fast becoming technologists in their own right.
Treasury as partners to IT
As treasury departments look to modernize their functions to meet the needs of an increasingly real-time world, the implementation of new technologies should not reside solely within the IT department. These teams are often structured as a service center that is removed from the core business, which, in turn, often means they lack a detailed understanding of the business strategy and the end-user requirements. This is where the treasurer of today comes in.
Treasury is ideally positioned to function as a conduit between IT teams and the wider business – and there is a clear opportunity for treasurers to take the lead on certain technology topics. For example, when it comes to driving a front-to-back treasury transformation it should be the treasurer’s responsibility to design a target state operating model, with a clear plan in place that articulates the goal and scope of the transformation project, key stakeholders impacted and the expected outcome of the project.
With this point of view, treasurers can partner with IT teams to design the functional and data requirements of the solution, as well as the project’s expected timeline – with the onus on them to fill the knowledge gap and translate business requirements into technology requirements.
Understanding the technology need
Although treasurers are not expected to code in the same way as their IT counterparts, understanding the logic behind the technology will enable them to speak the same language as their colleagues and make more informed decisions on appropriate technologies for future-proofing their treasury operating platform.
Before making decisions on which systems to buy or which vendors to partner with, treasurers should clearly understand the driving need for the new technology. Are legacy systems outdated and no longer adequately supporting the growth of the business? Have vendors or consumers moved to a newer platform? Is there an enterprise-wide push to increase operating efficiency and treasury needs to reduce operational burden by optimizing the treasury ecosystem?
Identifying pain points the business is trying to address with an advanced technology platform will enable treasurers to build a strong business case for the investment.
Buy versus build
With many fintech solutions available, treasurers will need to evaluate whether to purchase an off-the-shelf product from vendors or build a solution in-house (and will have to think like a technologist in their decision making).
The first consideration typically being cost, treasurers will need to assess compatibility of the vendor’s solution with the company’s existing technology ecosystem and determine if there are additional integration or training costs associated with the vendor’s offerings.
When considering an off-the-shelf solution to manage core treasury functions, external solutions, such as Enterprise Resource Planning (ERP) systems and TMS, are tools to which treasurers typically turn. From a functionality perspective, treasurers should ensure the vendor is able to offer solid core treasury functions, including cash and liquidity management, payments, risk management and reporting capabilities. They should also be confident the vendor’s platform can scale to support growth while flexible enough to be customized for specific requirements, compared to the capabilities of a development team to customize a platform built in-house.
If a highly customized solution is required and a platform built in-house is being considered, it’s paramount that treasurers work with IT to assess technical expertise within the organization as well as labor and resource costs. For example, while purchased solutions can typically be installed within weeks, in-house solutions will take significantly longer to construct. In the meantime, the treasury team will continue to rely on its existing solution, which is presumably more manual and less efficient.
A continuous transformation journey
Whether buying a solution or building one in-house, change to the technology environment will impact data and reporting processes within treasury. With this in mind, treasurers need a comprehensive plan for data integration between the old and new system. This includes cleansing and validating data fields to ensure data integrity during the transition, standardizing data formats and managing governance to maintain data security.
All of these factors are not a one-time consideration for corporate treasury departments. Technology transformation is proving to be a continuous journey along with treasurers’ ongoing need to digitally upskill and master technology that can further enhance and streamline processes for collections, payments, cash movement, and reporting.
1 “Global Treasury Survey 2023”, PwC Belgium, PwC, 2023, https://www.pwc.be/en/news-publications/2023/global-treasury-survey-2023.html
2 2023 “Global Treasury Survey 2023”, PwC Belgium, PwC, 2023, https://www.pwc.be/en/news-publications/2023/global-treasury-survey-2023.html
BNY, BNY Mellon and Bank of New York Mellon are corporate brands of The Bank of New York Mellon Corporation and may be used to reference the corporation as a whole and/or its various subsidiaries generally and may include The Bank of New York Mellon, a banking corporation organized and existing pursuant to the laws of the State of New York operating in the United States at 240 Greenwich Street, New York, NY 10286 and operating in England through its branch at 160 Queen Victoria Street, London EC4V 4LA, England. The information contained in this material is for use by wholesale clients only and is not to be relied upon by retail clients. Not all products and services are offered at all locations.
This material, which may be considered advertising, is for general information and reference purposes only and is not intended to provide tax, legal, investment, accounting, financial or other professional advice on any matter, and should not be used or relied upon as such. This material does not constitute a recommendation by BNY of any kind. The views expressed within this material are those of the contributors and not necessarily those of BNY. BNY has not independently verified the information contained in this material and makes no representation as to the accuracy, completeness, timeliness, merchantability or fitness for a specific purpose of the information provided in this material. BNY assumes no direct or consequential liability for any errors in or reliance upon this material.
This material may not be reproduced or disseminated in any form without the express prior written permission of BNY. BNY will not be responsible for updating any information contained within this material and opinions and information contained herein are subject to change without notice. Trademarks, service marks, logos and other intellectual property marks belong to their respective owners.
©2024 The Bank of New York Mellon. All rights reserved. Member FDIC.
