Fintech Insights

Digital Treasury Defined

October 04, 2018

The ‘digital treasury’ term has become one of the most-commonly used expressions in financial and business media, but what does it really mean? How will a digital treasury benefit the organization? In this blog series, we explore different aspects of the digital treasury, including transformative technologies, and the benefits treasurers can expect to see.

Virtually every industry is embracing some form of digital to unlock opportunity and growth. Consumer and supplier expectations continue to digitize, and many of the fastest growing companies in the world now have new digital business models and strategies. But, what does digital mean for treasury departments, and how can treasurers take advantage of the digital revolution?

The term ‘digital treasury’ is used to refer to a best-in-class treasury function, using the most secure, advanced and cost-efficient technology and processes. The next generation of treasurers will utilize more powerful, scalable means of accomplishing traditional treasury tasks such as cash management, as well as newer treasury tasks, such as cyber-fraud mitigation and systems security optimization. Digital treasurers will receive information in a way which minimizes manual manipulation, and automates decision making.

The concept of a digital, best-in-class treasury is more important than ever today, because treasurers are struggling to achieve it, and the costs for not achieving it have never been higher. Treasurers remained challenged in optimizing key functions - gaining visibility to global cash, standardizing payment processes, and mitigating risk, to name a few. While solutions are available to address these problems today, many treasurers have been challenged navigating the myriad of new digital developments such as blockchain, artificial intelligence, robotics, and more. Separating hype from reality isn’t easy.

Some digital solutions which are the most beneficial and feasible for treasurers include those in areas robotics, analytics, and global payments. Robotic process automation adoption rates are higher than ever and helping to automate global liquidity management. Application programming interface (API) adoption and the SWIFT GPI initiative are helping to simplify, accelerate, and standardize global payments. More analytics tools are available than ever to help manage all areas of risk, including foreign exchange, interest rate, and cyber-security risk. Cloud computing adoption rates are skyrocketing, helping to deliver all these solutions in a faster, easier, and more affordable way than ever before. Other digital developments, such as blockchain and true artificial intelligence, while highly innovative, are less feasible and beneficial for treasurers in the near term.

The objective of the next generation treasurer will be to better support and enable the business, using the latest treasury software which can have an immediate impact, while staying educated on digital developments. Digital treasury technology, much of which has been viewed as ‘nice to have’ in the past, will soon become critical for treasury departments to achieve stability, efficiency, and security. Those treasurers harnessing technology will have a distinct advantage, helping to support and grow the business through improved decision-making.