Data-Driven Treasury: Future-Proofing Your European Flows
By Eleanor Hill, Editor
As businesses across Europe accelerate their digital transformations, savvy corporate treasurers have a unique opportunity to secure enriched data insights, says Daniela Eder, Head of Payments & Cash Management Europe, Barclays. In turn, this could enable treasury functions to become fitter, both operationally and financially, assuming technology budgets are deployed strategically and cybersecurity is prioritised.
In recent years, it has often been said that ‘data is the new gold’. But ever since the corporate treasury profession began in the 1970s, data has resided at the heart of the function. And as technology has evolved – and data has become more sophisticated – so too has the role of the treasurer.
Before the advent of online banking in the late 1990s and early 2000s, much of treasury’s time was taken up gathering data through cumbersome channels such as telex and fax. With e-banking now commonplace, data flows freely into treasury functions, through portals and host-to-host connections into treasury management systems (TMSs) and enterprise resource planners (ERPs). And as emerging technologies – such as application programming interfaces (APIs) and artificial intelligence (AI) – take hold, a new breed of treasury function is being born: the data-driven treasury.
Eder explains: “As businesses across Europe, and the globe, embrace digital transformation, huge amounts of data are being generated and stored on servers, often located in the cloud. This proliferation of data represents a significant opportunity for corporate treasurers.” By tapping into these ‘data lakes’, she believes treasury departments can become more efficient, more effective and more profitable – all while operating in real time. “Through data, treasurers can achieve smarter insights, greater transparency, faster decision-making, better use of working capital and more accurate and timely cash flow forecasting. These are just some examples of the potential benefits on offer.”
But which technologies are likely to result in the largest data gains for treasury, and how can treasurers build the business case for them?
“Naturally, it is vital to have a solid digital strategy in place and thoroughly investigate the suitability of technologies before any talk about investment budgets can take place. That said, there are four key technologies that form the foundations of digital transformation and data-driven treasury. These are: cloud computing, APIs, robotic process automation [RPA] and AI – in that order,” comments Eder.
Explaining each technology in turn, she continues: “Cloud computing not only enables the storage of enormous amounts of data, it also facilitates software-as-a-service. This means that treasurers can access the latest digital tools more or less instantly, without the need for lengthy on-site installations, which typically come with a higher budget requirement. Since the cloud speeds up deployment of technology, this also enables treasury to be nimbler in accessing data,” she notes.
Meanwhile, APIs act as a technological ‘glue’ between systems. “While they have been around for a decade or so, APIs are now coming into their own – especially in the treasury sphere,” says Eder. “The power of APIs should not be underestimated. They allow for the seamless connection of systems that might previously have been difficult to interface. APIs also enable the transmission of bulk messages, and higher volumes of data at a much faster rate, and more securely, than we have been used to in the past. As such, they enable the creation of a real-time treasury environment, built upon data.”
It is no surprise then, that 53% of treasurers are either already using APIs or planning to use them within the next 12 months, according to the findings of our recent research report – New Europe: Is Your Treasury Fit for the Challenge? – published by TMI in association with Barclays. RPA was also a popular choice of treasury tool, with 48% of respondents currently using bots, or planning to in the next year.
Fig 1: Which of the following treasury technologies do you currently use or plan to start using in the next 12 months?
Source: TMI and Barclays research report: ‘New Europe: Is Your Treasury Fit for the Challenge?’
“These treasurers understand how RPA can help to minimise or even eliminate manual tasks, which are prone to errors and risks. What’s more, RPA frees up treasury staff to be more strategic. RPA can be used for more or less any well-defined repetitive, manual task within treasury – ranging from reconciliations to exposure capture and reporting,” notes Eder. It can also be used to extract data from multiple systems and consolidate it into a single source of truth.