Integrated treasury management systems help banks streamline compliance and bolster capabilities

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Integrated treasury management systems enable a competitive advantage driven by strong organizational synergies

Banking regulations spawned as a result of the global financial crisis form a post-recession framework aimed at protecting investors while making financial firms more efficient, resilient, and transparent. The Dodd-Frank Act in the United States, Europe’s MiFID ll/MiFIR, and EMIR, as well as countless other regulations are driving banks to explore a range of leading-edge technologies as they strive to meet compliance mandates.

Regulators often seek information that is risk-based and predictive, which poses a challenge for banks that rely on cobbled-together legacy systems. Aging infrastructure is not equipped to deliver real-time decision-support capabilities banks need to monitor and control risk – particularly for fast-paced national and international transactions.

To keep pace with today’s regulations, market dynamics, and customer expectations such as real-time access and personalization, banks are turning to integrated treasury management system (TMS) solutions.

Up for adoption

Integrated TMS can help banks to automate basic tasks such as recording and reconciliation, which can free up corporate treasurers to focus more on value-adding contributions as the treasurer role strategically evolves to include critical enterprise-wide risk functions such as funding, liquidity, portfolio and asset liability management (ALM), as well as new asset classes. Now, more than ever, corporate treasurers require immediate access to their firms’ fiscal status through centralized and automated systems to more accurately predict long-term cash and liquidity needs, and to better manage unforeseen risks.

For example, late last year, Myanmar-based Kanbawza Bank partnered with London FinTech firm Finastra to seek a solution that would reduce manual treasury processing operations and grow the bank’s transaction volumes and revenue. The goal was to implement a treasury management system that would enable straight-through-processing and reduce operational risk with greater return on investment (RoI).[1]

Through automation, integrated treasury management systems can also enable better data storage and management that can further provide valuable insights for other areas of the business such as financial planning or supply chain management.[2]

TMS solutions will also play an important role as banks expand their global footprint and require more seamless operations. To streamline cross-border payments services for corporate treasurers and CFOs, SAP and Thomson Reuters introduced a feature that allows all cross-border transactions to be viewed in a single currency.[3] The solution integrates Thomson Reuters FX and money market data to price global transactions and present that cost in the currency of the user’s choice.

Innovative treasury management systems can also incorporate robotic process automation (RPA), machine learning, data analytics, and cloud technologies to enable seamless delivery of complex functions such as forecasting and advanced reporting.

For instance, Bank of America Merrill Lynch’s intelligent receivables solution uses artificial intelligence (AI) and optical character recognition to help companies reconcile incoming payments more quickly.[4] AI can automate repairs for poorly formatted payment instructions and boost straight-through processing to deliver more certain and quicker final payments.

As banks enhance treasury function capabilities in the future, FinTechs firms may hold the key to innovations. Through its global program, BNP Paribas has identified 250 FinTechs working in cash management and is engaged in active projects with 14 of them, with an eye on integrating them into the treasury value chain.[5]

In short, integrated treasury management systems will benefit banks by providing:

  • Single point of access: A single sign-on versus multiple logins to enable automation of reconciliations and payments
  • Cost savings: Fewer cross-bank transactions mean fewer related fees
  • Less human-error: Complete automation of standard treasury processes will reduce human error
  • Data integration: Amalgamated handling of extensive data and analysis will foster better decisions and forecasts

While integrated TMS offers numerous benefits, careful selection and development of the right system are critical to suit an organization’s unique needs.

Points to consider

Before we conclude, here are a few points to consider when implementing an integrated treasury management system:

  • Determine the goals and the value expected from the TMS solution to ensure its design can meet those objectives
  • Understand the interdependencies of the treasury management system with other systems and create the necessary interfaces
  • Ensure that data is captured and managed efficiently and centrally to make it truly useful
  • Choose functionalities and a level of complexity that match the organization’s need to maximize RoI
  • Build security into the TMS. For example, Paris-based FinTech DataLog Finance offers the CashPooler web-based platform that centralizes a corporation’s financial transactions, so that intra-group transfers can be rationalized, controlled, and secured. Security features include advanced user management, digital audit trails, encryption, and secure protocols.[6]

Banks that are quick to explore the new horizons opened by advanced treasury management systems can benefit from a competitive advantage driven by strong organizational synergies. To learn more on the topic, feel free to get in touch with me on social media.

The author would like to thank Ayush Poddar, Krithika Venkataraman, and Tamara Berry for their contributions to this article.

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[1] IBS Intelligence, “Myanmar’s KBZ Bank selects Finastra for treasury management solution,” December 18, 2018, https://ibsintelligence.com/ibs-journal/ibs-news/kbz-bank-finastra

[2] Treasury & Risk, “Machine Learning & Treasury: A Bright Future Emerges,” Russ Banham, November 26, 2018, https://www.treasuryandrisk.com/2018/11/26/machine-learning-treasury-a-bright-future-emerges/

[3] PYMNTS.com, “SAP Integrates Thomson Reuters FX Data For Treasurers,” July 11, 2018, https://www.pymnts.com/news/b2b-payments/2018/thomson-reuters-sap-fx/

[4] Global Finance, “Building The Next-Generation Treasury,” Anita Hawser, September 1, 2018, https://www.gfmag.com/magazine/september-2018/building-next-generation-treasury

[5] Euromoney, “Future-proof treasury: How to get the best out of the changing payments ecosystem,” Bruno Mellado, May 2018, https://www.euromoney.com/article/b18dsd9r7spcm5/future-proof-treasury-how-to-get-the-best-out-of-the-changing-payments-ecosystem

[6] DataLog Finance website, “Payments Factory: CashPooler,” https://www.datalog-finance.com/en/cashsolutions-range/payment-cashpooler, Accessed January 2019

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