Top Treasury Technology Innovations to Watch in 2021
by Eleanor Hill, Editor, TMI
It’s often said that necessity is the mother of invention, but it can also be the catalyst for adopting innovations – in a rapid time frame. Nowhere was this more clearly displayed than the world of treasury technology in 2020.
As has been well documented, the Covid-19 pandemic pushed treasurers towards a much more digital way of working. As a result, many treasury teams started to re-evaluate existing processes and workflows. They also found weaknesses in their technology set-ups that not only hindered effective working from home but led to inefficiencies, manual workload, and left room for fraud, cybercrime and errors.
Against this backdrop, treasurers’ interest in innovative technology has moved on tenfold. To find out more, TMI asked treasurers which technologies they would most like to learn about in 2021 – and while there are some obvious contenders on the list, there are one or two surprises as well.
- Data analytics. The top technology of interest to treasurers this year is data analytics, according to 29% of respondents. Going hand in hand with the rise of big data and data-driven treasury, teams are looking fortools they can leverage to analyse huge amounts of data in an insightful, accurate and timely manner. Of course, not every treasury has the budget to buy in such tools, so they are looking to their banks, vendors and fintech partners to assist. One example is the embedding of data analytics alongside the cash flow forecasting modules within bank platforms (which are also becoming more commonplace). Here, data analytics can be used to analyse customer payment behaviours and increase collection efficiency. Of course, there are myriad use cases for data analytics within treasury and we expect to see some great innovations in this area in 2021.
- Application programming interfaces (APIs). Treasurers across the globe are becoming much more familiar with APIs and 28% of survey participants are keen to find out more about them – scuh as their abilty to help integrate systems and workflows in a seamless manner. Fortunately, some great case studies exist in this area, not least is the winner of the TMI 2020 Corporate Recognition Award for Best API Project – Autoneum in partnership with J.P. Morgan.In a nutshell, the Switzerland-based tier one supplier of thermal and acoustic insulation for the automotive industry was looking for a solution to easily and quickly gain real-time visibility over its cash balances in its global subsidiaries. Any solution needed to integrate with its existing software platform, as well as having strong fraud and cybersecurity protocols. Autoneum turned to its relationship bank, J.P. Morgan, for help to use one of the bank’s API plug-ins to increase visibility over its account data. The bank has built multiple APIs that integrate with the major treasury management systems (TMS) and enterprise resource planning (ERP) systems. Ultimately, the plug-in was installed, tested and launched for Autoneum within four weeks. An amazing result! For 2021, we predict more of the same – but we also see treasurers increasingly using APIs in cash management. For example, as well as pulling data from disparate systems into a consolidated warehouse, we also believe treasurers will make more use of push APIs – to trigger payments. Certainly an area to watch.
- Central Bank Digital Currencies (CBDCs). One of the more surprising poll results was the 14% of treasurers interested in exploring the topic of CBDCs. This puts CBDCs front and centre for treasury education in 2021 – and a recent article and podcast by Jean-Marc Servat, Chairman of the European Association of Corporate Treasurers tackles this issue. It’s interesting to see how crypto-assets have evolved from the almost taboo topic of Bitcoin into central bank innovations. There have been a handful of successful, but limited, pilot schemes of CBDCs in countries such as Uruguay and China. In October 2020, seven major central banks and the Bank for International Settlements (BIS) published a joint report outlining the key requirements for CBDCs and the European Central Bank (ECB) launched a public consultation on a digital euro. While CBDCs remain at the early stage of innovation, and will be largely targeted in the retail and small business sphere to begin with, corporate treasurers should pay attention. This is an inflection point in the attitude towards crypto-assets and marks the start of a new era for central banks endorsing and embracing technological innovation.
- Artificial intelligence (AI) and machine learning (ML). While we expected to see treasurers showing an interest in AI and ML, it is perhaps surprising that just 12% selected it as their top area to learn about in 2021. On the plus side, this potentially reflects the progress that has been in made in 2020, not only to raise awareness of AI and ML in the treasury community – but to put it into action. Like APIs, this is an area where treasurers are turning to their partners for support. We have seen some fruitful collaborations between banks and fintechs to embed AI and ML into areas such as reconciliations in order to assist corporates in matching invoices, including part payments, for example. Cash flow forecasting tools have also benefitted from AI – enabling corporates to plug in hundreds of variables and compute scenarios in seconds. Additional exciting use cases are sure to emerge in 2021, with TMS vendors also busy innovating in this space.
- Robotic Process Automation (RPA). Robots are becoming increasingly prevalent in treasury departments in a bid to automate low-value manual processes and free up time, while reducing errors. Many treasurers are now familiar with the benefits of RPA, with just 12% wanting to find out more. But it’s important to note that RPA can evolve to be much more than a basic automation tool. In 2021, we expect to see the use of more ‘smart bots’ – which combine the power of RPA with AI and ML to deliver even greater efficiency benefits.
- Distributed Ledger Technology (DLT). For a long time, DLT or blockchain, seemed like science fiction to treasurers – or at best a technology that had great potential in other walks of life. Today, however, 5% of treasury leaders rate it as their top priority for exploring in 2021. And with good reason – it is making waves in the payments space. One J.P. Morgan client has selected blockchain as its primary means of making payments, as it believes the technology offers greater real-time capabilities than traditional payment rails. Blockchain also allows for the deployment of smart contracts, which self-execute once pre-agreed parameters are met. This could see payments made automatically, and in real time. As such, 2021 looks set to be an exciting year for concrete uses of DLT within treasury.
If you are interested in finding out more about any of these six technology developments – or others beyond the scope of this blog post – please explore TMI’s Innovation Lab, in partnership with J.P. Morgan. Here, you will find actionable insights as well as profiles of innovative fintech partners. Also keep an eye out for our Technology Series in the magazine, on our new sustainable TMI App (search ‘Treasury App’) and brand new website. We will be kicking off with a guide to data analytics – so don’t miss out!