Next Generation Treasury E2E Product Strategy and Solutions - Part1

Contributor Khushi Arora Debasis Chakraborty

Cash and liquidity have always been a key driver of any business organisation. However, thanks to the pandemic and increased investor scrutiny, these two metrics have now taken the driver seat. Combining this with the increasing growth in technology and AI, we now see Treasury management transition into a more strategic role.

Started off as a system to manage the financial resources in order to achieve both short-term and long-term goals, it has recently grown to encompass automation, forecasting, and even risk assessment. While traditionally the system functioned as a bank-provided platform focused on core transactions, modern-day Treasury management includes liquidity management tools, cash forecasting analytics, and supply chain financing—all with the Treasury Management System (TMS) at the forefront.

As the needs of the financial officers continue to become more ‘forward-looking’, their requirements from the Treasury Management product have taken on a more expansive approach. As per the recent 2024 Global Corporate Treasury Survey by Deloitte, liquidity risk management continued to be a top pain point for officers across industries, accentuated by global high interest rates and bank vulnerabilities in some countries. Other pain points included cash forecasting and currency risk, invoice processing, and payment reconciliation. As per another survey of C-suite executives and finance professionals by Trivota, 62% of executives and financial professionals said real-time visibility into cash flow is a “must-have” for their businesses’

To address the above-mentioned bottlenecks and provide internal systems integration, flexibility, increased visibility, and predictive forecasting, specifically for invoice discounting and factoring, the main solutions rising within the industry include:

Apart from the same, the upcoming solutions also include features for convergence of financial solutions whereby Treasury, Accounting, and Financial Planning and Analysis (FP&A) teams all feed into one another, becoming more closely aligned to make better informed executive decisions.

In the light of these various solutions, majorly provided by key players such as SAP Treasury, FIS, and ION solutions, there has been a steady increase in the system usage for treasury management. As per the survey, while technology adoption has been on the rise, there are still major challenges that fall in the path of this migration from traditional treasury systems. Below data, as per the 2024 Survey (Deloitte) from 213 respondents across various countries and industries, showcases the ways of treasury management currently in place within the businesses as well as major technological problems faced by them.

Thus, while treasuries face the daunting task of navigating through the complexities of a digitalised financial environment, which carries risks of cybersecurity threats and regulatory changes, on the other hand, these challenges are counterbalanced by significant opportunities. The adoption of advanced technologies such as AI, machine learning, and predictive analytics opens new avenues for enhancing forecast accuracy, optimising liquidity management, and improving decision-making processes.

The organisations must look at adopting a multifaceted strategy that embraces innovation while mitigating risks. This includes education and training of the staff, collaboration with IT departments and technology providers, and undertaking the technological adoption in a phased manner to manage the transition for Treasury management smoothly, with internal testing done along the way.

With the industry being on the brink of transition by embracing technologies such as APIs and embedded banking, treasurers will need to balance the demands of a dynamic environment while ensuring the resilience and efficiency of their financial operations.