Future Treasury 2018: By 2025, automation will have a dramatic impact on treasuries—for better or for worse

Automation is happening all around us, and the treasury is no exception. Robotic process automation is already being used to reduce the administrative burden of cash pooling, invoicing, auditing and data consolidation. But with advances in technology, and particularly artificial intelligence, the scale and pace of change is likely to increase. Will treasuries drive change, and carve out a more strategic role; or will they be a passenger, and let it threaten their very existence?

Our recently published Future Treasury report found that treasurers expect to be a major strategic player within their organisations by 2025. But we also found that their actions don’t meet their ambition. 84% of treasury finance policies don’t take technology into account. If treasuries are to achieve the pivotal role that they aspire to, they will have to take a more active role in digitalisation.

Automating the back office

Technology like robotic process automation (RPA) can speed up internal efficiencies and reduce the time spent on administrative tasks. It’s already being used by treasuries to help with tasks like cash pooling, invoicing, auditing and data consolidation. This is likely to increase, and the treasurers we spoke to expect to be spending significantly less time on back-office tasks by 2025.

But RPA isn’t just about speeding up administrative and routine processes, or reducing costs. It can also enable better fraud detection, especially when combined with effective big data and analytics capabilities. Perhaps most importantly, it can also help to reduce mistakes. This will be increasingly important as the speed of business continues to accelerate and margins for error shrink.

These changes could reduce the size of treasuries, potentially side-lining them within the business. It’s important that they have a plan for their future and build the skills they need to provide value in new ways. Over a third (34%) of those we talked to said that adding new skills through training and/or recruitment will help ensure their future strategic relevance.

Improving decision making

Looking to the future, as artificial intelligence (AI) and RPA become increasingly sophisticated, we expect to see digital assistants helping with more advanced tasks. Virtual advisors could help treasurers conduct a number of key tasks better. That could include informing treasurers about the best ways to optimise liquidity and KPIs, performing complex financial risk assessments, managing currency hedging in real time, and improving the accuracy of forecasting—to name just a few.

AI will help businesses achieve the seemingly impossible. It will enable them to make better informed, more thoroughly reasoned decisions, within the short timeframes of today’s business world.

Machine learning systems are able to ingest and analyse data from a vast range of internal and external sources: historical economic data, weather patterns, real-time data from sensors in the field, detailed sales information, demographic and behavioural data and much, much more. And they can test thousands, even millions, of hypotheses to find patterns that realistically no human could ever spot.

But our study showed that most treasuries aren’t actively involved in the digital transformation of their business. While three-fifths say they are “participating”, less than 4% of treasurers say they are driving it. And over a third (37%) say they are informed about digitalisation by other areas of the business. This lack of involvement could lead to the treasury being left out of important decisions that affect it. It could even see it being bypassed—with business units sourcing their own payment solutions, for example.

Championing AI, and even becoming a centre of excellence, could be an opportunity for treasurers to seize the initiative and play a more active role in their organisations’ transformations. Being able to provide rich data-driven insights would demonstrate the treasury’s value to the wider business. This would help it achieve its ambitions and define a more strategic role for the future.

Defining a future role

Technology can free up time for treasurers to focus on more strategic objectives, like driving business innovation and planning for the future. Many of the changes disrupting industries as diverse as retail and construction rely on functions and expertise traditionally associated with the treasury. The switch to subscription models is a good example. The shift away from owning things like software, cars and even jet engines can have massive implications on cashflow, credit control, liquidity and risk. The treasury should be actively involved in strategic conversations like this, and driving the changes to processes and updates to systems required to make it work.

But many treasuries are operating in isolation and not forming relationships with other functions or participating in strategic projects like digital transformation. If they don’t get more involved, they are likely to lose control over the digitalisation of their own function and risk being marginalized or even made irrelevant.

While most CFOs see the treasury as a partner in digitalisation, they are on their own. Fewer than two-fifths (38%) of IT organisations say the same, and just over one in five (22%) CEOs agree.

Time is running out. Change isn’t slowing down, and treasuries risk being left behind as businesses realise the necessity of embracing new technology to reinvent themselves. Just 1% of the treasuries we spoke to thought that the treasury wouldn’t be a strategic function by 2025; but unless changes are made, they might be right.

Discover what treasuries need to do to become a more strategic partner and play a greater role in digitalisation.

To find out more, contact your Nordea Cash Management Advsior or write to txbmarketengagement@nordea.com.

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