The Future of Corporate Treasury

4 Treasury and Trade Solutions The Transformation of Treasury Treasury has always managed cyclically-driven changes in the economy, interest and foreign exchange rates, and equity and debt market access. It also has to address frequent changes in global tax and cross-border regulations. Evaluating and responding to such challenges and managing capital, liquidity, and risk — especially when the economic environment becomes more stressed — is a core role for treasury teams. The most efficient constructs to deliver these objectives, which have been the focus of many corporate treasuries for decades, remain the concentration of cash and risk centrally and regionally through the establishment of in-house banks to automatically fund and defund subsidiaries as needed. In many cases then, both the core objectives of treasury and the means by which it achieves them are the same as they have been for decades. The pace of change is rapidly reshaping treasury However, this overlooks the fact that the pace and agility required of treasury is changing dramatically. Today, the business world is experiencing several distinct secular shifts. Many industries are being disrupted as corporate business models change and value chains are digitized. In response, treasury teams must gain control and visibility across cash flows, funding needs, and risk profiles as new business revenue streams emerge and others retrench. Treasury is becoming more deeply involved in enabling the digitization and e-commerce strategy that will be at the heart of all enterprises in the future. Financial services are also changing. The advent of instant payments in numerous markets is a portent of the development of real-time financial services and peer-to-peer exchange of value. As this new era emerges, there will be profound implications. For corporate treasury, these will have both direct and indirect impacts, as banks change how they assemble, deliver, and price financial services. Another secular change is an emerging set of technologies relevant to corporate treasury — whether provided by banks, new fintechs and service partners, or treasury teams themselves. As innovations such as robotic process automation and cloud computing are adopted and applied to treasury, new technology ecosystems will be created. Trends such as centralization of liquidity and risk are likely to continue. But new technologies could see treasury reinvent how to manage capital, liquidity, and risk and become a more effective partner to the business, with value- added insights supporting core business decisions. Treasury will also need capacity to address increasing cyber threats and protect their businesses. New technology ecosystem offers enormous opportunities Many companies are already investing in new technologies to facilitate this changing role for treasury. Others are not ready for substantial change and are still focused on deploying their target treasury operating model. Their typical objectives include creating a global policy and clear ownership, standardized processes, fully centralized decisions (even when locally-executed for regulatory or time zone reasons), and integrated treasury technology that is connected to an ERP and financial services providers. These companies need to accelerate their progress and start preparing for the emerging new technology ecosystem, which offers enormous opportunities for their businesses. Corporates need to recognize the risks of treasury being left behind given its role as the effective guardian of the firm’s financial resources.