Treasury is developing at a rapid pace and like in other industries, the names of new emerging technologies are popping up here and there. It’s only natural though – for the last decade, we have been talking about digital transformation and treasury has truly embraced the idea of digitalizing and automating processes. Still today, the evolution of treasury continues. If someone was not yet sold on the idea of digitalization five years ago, now the development is happening at an accelerated pace: now, treasury teams are considering what processes need improvements.
While some companies are just starting to implement treasury management systems to improve the ways of working, others are always frontrunners in adapting exciting new technologies and they are paving the way for others. While working with clients, we often come across treasury teams that are ready to provide us with new ideas to develop our solution further so they could be among the first to implement something new that would benefit them, but also benefit the rest of the treasury community. A while back, our clients helped us to develop a rule-based fraud detection engine to catch anomalies in outgoing payments – while today, we hear from clients that some of them are developing business cases for using AI in cash flow forecasting.
But before going through the trending technologies like APIs, RPA, or AI, we’ll take a look at how treasury management systems have developed over the years and where they are today.
Treasury today: moving from on-premise solutions to the cloud
One of the most significant developments of the last decade has been that solution providers have started to move from providing on-premise solutions to hosting everything on cloud platforms (like Microsoft Azure or AWS), offering their services as Software-as-a-Service.
The change has been massive: it meant that solutions could be taken into use much more rapidly than before with less support from IT, the solutions were more secure and highly available, and monthly updates and major releases were available for all users once published.
Cloud-based TMS solutions have enabled treasury teams to build their roadmaps differently
As vendors have started to offer cloud-based treasury management software, treasury teams had more opportunities: they could plan the treasury roadmap using a best-of-breed approach. The best-of-breed approach means that it’s possible to implement solutions at one’s own pace or even take solutions from several vendors. Earlier, a company could have implemented the best TMS on the market, yet, the TMS could have lacked certain functionalities that they needed. With a modular approach, it’s still common that the treasury team implements a robust TMS, but at the same time the team could find a solution from another vendor that would have better possibilities and functionalities and it could be integrated with the TMS, ERP, and banks to ensure that the processes work seamlessly. This has been a huge step forward as treasury teams could start selecting the solutions that best fit their challenges and needs, instead of settling for a single solution that may not fully satisfy all their requirements.
Integration, bank connectivity, and process automation are essential in treasury
Integrations have also played an important role in how treasury teams have developed their technology stack. Building integrations between different cash and treasury system solutions become the new norm. Perhaps, still, the biggest priority is setting up the integration with the primary and secondary ERP systems as the reliance on real-time information is even more important when multiple solutions are relying on accurate data.
Bank connectivity is also a solution that treasury teams are seeking especially when the business is starting to grow: one can manage one or two connections internally, but the moment treasury needs to handle global operations, investing in a bank connectivity solution is a must.
Now, after we have gone through the basics that have been shaping the treasury of today – it’s time to look at what are the technologies that could shape the treasury in the upcoming decade.
Trending technologies shaping the future of treasury
APIs, AI, RPA, ML, Blockchain, Big Data, Data Analytics… you have been hearing these terms all over the internet in different contexts. Consultants and analysts are pushing these topics daily as the next big thing. We’ll take a look at how API, RPA, and AI could be shaping how you work daily in treasury and finance.
APIs will change how we connect systems
APIs (application programming interfaces) are a set of definitions and protocols for integrating software solutions. With the help of APIs, the products you are using can communicate with each other. Usually, APIs are implemented in a way that they are simple to connect, they are flexible and therefore they are a good starting point for innovation – whether you want to automate processes or get real-time information from a certain source.
Perhaps one of the biggest use cases is to connect different treasury and financial software using APIs. Modern SaaS solutions usually offer built-in API connections and the faster you can connect your technology stack, the faster you will be able to automate different tasks or obtain data from various sources.
Banks have been investing heavily in API development over the years and most banks offer Premium APIs for treasury and finance teams to facilitate automation between your banks and your financial systems. We recommend that you familiarize yourself with the different offerings of your banks to know what’s possible with APIs and how you could utilize them in your daily work.
Robotic Process Automation (RPA) could be the answer to repetitive tasks
Robotic process automation (RPA) is a technology solution that relies on using robots or “bots” to automate simple, repetitive, or rule-based business processes. The tasks are often manual, time-consuming, and error-prone. The robots are mimicking human interactions with a software, system, or application and they perform tasks such as data entry, data extraction, calculations, or other similar routine operations. RPA relies on pre-defined workflows, data manipulations, and solution-making decisions based on pre-defined rules. Typically, implementing an RPA solution does not require major changes in the IT environment, therefore it is a cost-effective solution for automating simple tasks and is often less complex than traditional data integration.
Treasury and finance departments have been showing interest in adopting RPA solutions to streamline and automate various financial and administrative processes to minimize the need for error-prone manual work.
Some of the typical tasks that treasury and finance could automate using RPA are account reconciliation, invoice processing, payment processing, collecting data from various sources for cash flow forecasting, data entry, and data migration tasks, processing bank statements, calculating interest, or sending automated notifications regarding certain processes.
To start with RPA in treasury, the team should always identify whether there are processes that are repetitive and rule-based that would be suitable for automation. Once the processes are identified, with an RPA consultant, it’s time to outline how the workflow would look like, what inputs are required, and how to set up the integration with the existing systems. Once the solution is designed, it’s time to implement the solution after testing and validation. Depending on your organization, you may have internal resources for creating RPA workflows or there are managed service providers, you will have to make sure that you monitor and maintain the solution considering any future changes and how it could be scaled.
To use Artificial Intelligence (AI), treasury must understand its business processes well
In 2024, artificial intelligence needs no introduction – all of us have been testing out ChatGPT and various other tools. As the hype is so huge around the technology – for a good reason – treasury experts are also weighing in on how AI could change the workflow of treasury and finance teams. You can read articles on how AI is going to revolutionize cash forecasting, risk management, fraud detection, automation, and even optimize day-to-day activities. While the opportunities are endless, treasury needs to ensure security and compliance, therefore, there is still a long way to go before treasury teams adopt AI.
The U.S. Bank has published an interesting article on the relationship between AI and treasury. Experts at the bank understood that before a treasury department can think of how to utilize AI, they need to understand their business processes and how their team works. Based on this, treasury should be able to identify inefficiencies of core processes and determine whether AI could help optimize them.
At the same time, we just recently talked to one of our (who is a speaker at the Nomentia Treasury Summit Helsinki 2024) about how they are currently building a business case of utilizing AI in cash flow forecasting. It’s important to mention that they have been using a TMS for many years and have created sustainable cash forecasting processes.
While AI offers endless possibilities, most treasury departments still need to focus on optimizing current ways of working and setting up essential business processes before it’s time to start experimenting with AI.
An exciting era for treasury is coming
In the world of treasury management, exciting opportunities lie ahead as advanced technologies like APIs, RPA, and AI come into play. Let's recap shortly how you can make the most of these innovations in their future operations:
APIs will be a powerful tool for connecting various financial software seamlessly. Many banks are now offering Premium APIs, which can be invaluable in optimizing treasury workflows and enhancing overall efficiency, so we suggest that you keep following the recent API developments of your banks.
RPA presents treasury teams with the chance to automate repetitive and rule-based tasks removing mundane manual tasks from your daily operations.
AI should be approached with a deep understanding of existing business processes and team dynamics. Identifying inefficiencies within these processes is key. AI has the potential to revolutionize cash forecasting, risk management, fraud detection, and automation, but most companies may need to get the basics right before jumping on the AI bandwagon.
Shortly, treasury teams that embrace some of these technologies will position themselves as leaders in efficiency and innovation. By strategically implementing APIs, RPA, and AI, they can streamline operations, reduce manual workloads, minimize errors, and make data-driven decisions. This not only benefits the treasury teams but also contributes significantly to the overall success of their organizations.