The transformation of corporate treasury: Fit for a digital future

The treasury function of Australian corporate organisations is changing and expanding in today’s volatile economic climate.

To enable this expansion, many corporations are investing in best-of-breed technology to ensure they are future-fit. They are undertaking digital transformation projects that can empower their finance professionals to embrace the larger scope of their roles with confidence.

At the recent HSBC Innovation Summit, a specialist panel addressed the issue of future-proofing treasury functions. The experts on the panel included C2FO’s managing director Matthew Wilson, SAP Asia Pacific Japan’s regional director of finance and risk solutions Michael Vorias, and Stripe’s Asia Pacific payments performance and strategy lead Con Archis.

They reflected on how organisations are positioning themselves for a future in which more businesses will be managed digitally. They also discussed the importance of data for enhanced visibility and how emerging, innovative technologies – such as artificial intelligence and blockchain – are already impacting the treasury and finance functions.

The panellists agreed that the corporate treasury function is changing – from a role supporting the CFO and the finance division to one that is more proactive, steering the business through difficult times and delivering on insights and action plans.

This expansion is partly in response to an increase in the number of challenges and disruptions that organisations are facing. These include the advent of big data, a more complex regulatory environment, more prevalent cybersecurity risks, and the increasingly elaborate expectations of customers and other stakeholders.

Many corporate treasury divisions have also been assigned additional responsibilities, such as funds transfer pricing and supply chain financing.

Treasurers need to be more efficient than ever, ensuring that the many operational processes they are responsible for are undertaken in less time, with greater accuracy and at a lower cost than ever. And, at every step, these processes need to comply with all regulatory requirements.

As treasurers increasingly gain access to the right data in real time, they are becoming more strategic in the way they support their organisations. They are assuming more direct responsibility for improving the bottom line.

“Treasurers and CFOs, in these volatile times, need access to all the necessary information at the press of a button,” says Vorias.

The treasury function also has an important role to play into the future: influencing an organisation’s cybersecurity measures. Corporate treasurers are on the front line of risk operations and cash visibility. As such, the information they provide to their organisations every day is vital to business decision making. Security breaches of the IT systems that enable this information flow can damage an organisation’s operations, profitability and even reputation.

The move to the cloud has been important because it gives treasury departments the ability to become more agile, while reducing an organisation’s total costs. The effort and funds saved in this move can be redirected back into the organisation, enabling it to do more with less.

Digitisation involves automating processes and transactions as well as integrating with time- and cost-saving tools.

To help companies, HSBC has launched APIs that enable corporate treasuries to seamlessly access banking services. Digital solutions such as HSBC’s Liquidity Management Dashboard (LMD) and Cash Flow Forecasting allow treasurers to view and harness their payables and receivables data, helping ensure accurate cash flow forecasting.

Having an integrated platform like LMD also provides a single source of truth that treasurers can rely on and use to support decision making.

At its most fundamental level, digital transformation involves the digitisation of paper, which is cumbersome, liable to get lost and susceptible to fraud.

Innovative distributed ledger technologies, such as blockchain, offer a fungible instrument that organisations can interact with and amend much more quickly than any paper record.

For many organisations planning to digitise finance and treasury functions, the most difficult question is where to start?

Several experts at the HSBC Innovation Summit suggested approaching the initiative as a business project, rather than as a technology project. When implementation team members keep their eye on the desired business outcomes, they find it is easier to evaluate success or failure at various points along the way.

In addition, by approaching the project from a business rather than technology perspective, the organisation is more likely to focus on the people aspects, such as change management and human-centred design, which are key to effective implementation.

“If you’re going to have a digital strategy,” says Wilson, “then you want it to be seamless, and you want it to be easy to adopt, even for the supply community.”

At the outset of the journey, it is critical to get the right people in the room and on the team. Having diversity within the team from day one, including people with different experiences and backgrounds, is important. This can create a healthy tension – for example, between those who advocate a customer focus and those who support technological efficiency, ensuring both perspectives are represented and addressed simultaneously.

And it is important to get the strategy right as quickly as possible.

“Digital first impressions matter,” says Archis. “Trust builds over time, of course. Repeat dynamics and all sorts of behaviour come from that. But the initial experience also matters, especially once you start to digitise.”

Another suggestion is to gain strong sponsorship for the initiative at both senior executive management and board levels.

At all stages of the implementation, clarity and consistency are vital to ensuring focus on the desired outcome. Organisations need to be clear about where they need to be in five years – and what success will look like at that time. They can then work backwards from that vision to determine the details of the implementation strategy.

Finally, it is important to work with a partner that understands what the business needs and can support its innovation, said John Scott, HSBC Australia’s Country Head of Global Payments Solutions.