Treasury management trends to watch

There is no difference between the larger tier-1 banks and the tier-2 banks when it comes to niche players and treasury modules of universal banking solution providers; however, many tier-3 and four banks continue to evaluate options that are customized, easy to adapt, and cost-effective

Fremont, CA:Trends in Treasury Management

Treasury in the new age revolves around the corporate Treasury and banks, payment hub factories, consolidation by technology players, cloud services, and outsourcing. As Treasury's role has evolved, it has expanded into a comprehensive payment, supply chain, liquidity, and forex management function while becoming innovative in order to develop its own identity.

Treasury management trends have changed significantly both within corporations and within banks and financial institutions as a result of the adoption of some new-age practices.

The following are a few of them that deserve a closer look: –

1. Integral workflows

Transaction banking is benefiting from the integration of treasury workflows with the procure-to-pay and order-to-cash cycles of corporations. Integrating liquidity forecasting, payments, settlements, or even reconciliation can result in significant savings. Banks and corporate treasuries are now able to communicate online, which has led to a more agile and effective use of working capital with improved risk management.

2. Payment-hub factories

Since the last decade, payment-hub services have emerged as a vital part of corporate Treasury, enhancing cash forecasting, standardizing approaches, and enabling transaction processing. A payment hub bank can centralize and standardize bulk commercial and treasury payments, local and cross-border transfers, and inter-company transfers while providing reconciliation and netting services.

3. Greater proliferation of cloud

There is no difference between the larger tier-1 banks and the tier-2 banks when it comes to niche players and treasury modules of universal banking solution providers; however, many tier-3 and four banks continue to evaluate options that are customized, easy to adapt, and cost-effective. Thus, cloud-based services and Software-as-a-Service (SaaS) models are seen as having charm among smaller banks and are expected to continue to do so.

4. Technology marketplace consolidation

This industry has seen multiple acquisitions over the years, reflecting its nature. A number of well-known treasury technology suppliers have merged or acquired with larger industry players in recent years, and the implications are easy to decipher: Larger, more specialized players and stability are preferred by banks, which is either reflected by players who are single-minded and deep in this space (e.g., Murex, Calypso, Wallstreet) or players who offer treasury services as an integral part of their larger offerings (e.g., Misys, Temenos).).

5. Treasury operations

In large corporations and banks alike, front- and middle-office functions that handle dealing rooms and risk management still play a central role in Treasury, despite their smaller sizes. Due to the fungible nature of the Treasury's responsibilities, offshore locations offer time-zone leverage, cost savings driven by shared services models, and a higher level of consistency of global standards, especially in the area of Treasury Accounting and Compliance, outsourcing is natural for the back-office functions of Treasury. As Robotic Process Automation (RPA) and cloud technologies become more common, operations digitization will become more prevalent.