Balancing Digital Aspirations While Addressing Risk Management Fundamentals

FX Risk Management Solutions Quarterly | Issue 132 | October 2021 | The Hedger 5 The chart in figure 4 represents both the fundamentals of treasury best practice as measured by the Citi Treasury Diagnostics and the benchmarking companies’ digital aspirations and effectiveness. We find that companies cluster into categories dependent on their current levels of treasury maturity, digital effectiveness, and digital aspirations. Where a company sits provides guidance on how it might progress its digitalization journey. • 74% of respondents are not in a position to embrace the digital opportunity, of which: – 32% need to first focus on the treasury fundamentals before they can consider automating through emerging techniques. – And 42% are of sufficient treasury maturity to now consider process automation and leveraging data to augment decisions. • 25% are in a position of treasury digital maturity to support business growth through data-led initiatives. Playbook one: best practices treasury: strengthening fundamentals At many companies, shoring up fundamentals remains the core focus for treasury — advancing the centralization journey, becoming more effective at managing cash and risk, and extracting operational and financial efficiency. This suggests a play of moving from people-dependent processes and dispersed accountability to centralized remit, process-based function, and core automation deployed. Playbook two: digitalizing treasury: advancing data and digitalization Companies that are advancing the data and digitalization journey tend to be those that have already meaningfully progressed on fundamentals, as that helps provide opportunity, internal credibility, and funding. This suggests best plays like building data and talent core, further digitalizing processes, and transitioning to utilizing data insights to augment decision-making. Playbook three: growth enabling treasury: value-added business partnerships Companies seeking to better understand their future digital destination for treasury and the transition journey must shift their focus away from measuring the past towards deducing what is most likely to happen in the future. This play of seeking to predict future outcomes can enable the provision of business insights to support growth and the creation of value. Figure 4: Framework for clients to help determine their path forward Source: Citi Treasury Diagnostics Data from Jan 2015 — Dec 2020, 476 participants 0 Citi Treasury Diagnostics Index 100 0 100 Citi Digital Treasury Index Playbook 3: Seeking to enable business growth through data led insights. Elevating Treasury to become a value-add treasury partner. Playbook 1: Seeking further process efficiencies, cost saves and constructs to optimize transactional treasury. Playbook 2: Seeking to automate repetitive processes and move beyond reporting to predicting and augmenting human decisions.