Identifying the optimal technological solutions for treasury to make the right investment at the right time • François Masquelier Chairman of ATEL Founder of SimplyTreasury
3 Objectives 1. To get a picture of current IT and TMS environment and landscape 2. To determine areas for improvements to assess potential gains from investing in technologies 3. To define inefficiencies to better evaluate benefits of investments 2
(1) Current TMS market place • By understanding the current technological and TMS landscape, you can interpret what your company could potentially gain from investing in automation, digitization, Fintech’s, blockchain, robotics and AI 3
TMS selection, not an easy decision • Most complex decision for Treasurers • It is not simply launching an RFP with the same repeated questions ever… • Treasury must have a vision of what it wants • What will suit the best to my specific needs, and which is available now on the market? I need to understand the market and tech’s behind solutions • My needs should be in-detail described • There is no silver bullet ! • Selecting and implementing the right mix of treasury technology solutions within an established timeline and budget requires care • They need to leverage new digital technologies …. Nevertheless, Corp’s should resist the urge to tailor their new system to existing inefficient processes • It is a fantastic opportunity to change processes 4
Hackett Group’s research reveals that actual tech spend has been consistently DECLINING since 2009 • World- class organization’s IT spend has dropped by 27% over past decade , but not because finance is failing to invest • Investing in tech today should be a lot cheaper than it used to be, while at the same time AUTOMATION is greatly improving finance’s capabilities • Savings in core tech are funding new initiatives and CIO’s work hard in the DRIVE TO SIMPLICITY , which results in fewer applications • Application of the mantra: « the best automation is ELIMINATION » • Tech’s = the biggest force to reshape modern finance organizations • However, to revamp finance organization you need to: ✓ increase spending on tech ✓ rationalize IT architecture ✓ further automate ✓ move to the cloud 5
Where are treasurers with IT organization? • IT landscape is VAST and FRAGMENTED • Consists in MULTIPLE SOLUTIONS (partly interfaced) • Usually SINGLE TENANT • XL are MORE USED than ever → export of XL files to be retreated/crunched with all risks of errors it includes • Treasurers keep SOLUTIONS IN PLACE FOR LONG → prefer to postpone changes, despite risks linked to longevity of current solutions • Therefore, they try to « CONSOLIDATE », reinforce and supplement existing IT structures to deliver expected reporting • ROBOTIZATION helps automating existing processes, which remain too manual • New reports are made on XL or, for more sophisticated ones, on E.T.L. • Eventually, NO TMS SOLUTION (with additional modules) is FULLY SATISFACTORY 6
Tech (over-)dependency of Treasury • Treasury department has become highly tech dependent • Biggest consumer of IT solutions among finance teams • Paradoxically, finance technology has never been so sophisticated • Absence of IT resources within treasury departments is an issue • Recourse to IT department (although relationship not always easy) or to external (IT) consultants • With the increase of fraud cases and cyber risks, needs for interfacing, automating, certifying, encrypting and BCP ing etc … processes and systems THE 2 PARADOXES OF SOPHISTICATION 7
Multiple challenges make the job more complex overtime • In turbulent times, when distractions are abundant (e.g. volatility, negative IR, new regulations, KYC’s, new IFRS standards, political issues, trade wars, BREXIT, tons of new API’s and jungle of solutions, etc …) need to keep in mind the CERR principle → goal is Cost-Effective Risk Reduction • To free-up time what really matters (maximizing capital available for core business risks), treasurers need to rigorously apply the OHIO principle → Only Handle It Once (unfortunately not always right in practice). Means doing holistic STP • Need for embedding compliance and after such a tsunami. However it sucks resources away from costumer-focused activities that should generate more value → mastering technology can provide framework to “set and forget” compliance • Getting rid or mitigation of executional and analytical parts of the function to concentrate on strategic one’s 8
What influences treasury technology? Company development and growth Seamless IT New regulations interfaces Dematerialization New tax regimes of paper Requirements Changing on treasury Straight-Through accounting Processing (STP) technology landscape are evolving In house bank Increased external and payment connectivity factory Increase importance Demand for better of information on Increased risk analytics exposures pressure to cut costs Treasury organization and development Regulation, tax and accounting changes Treasury operations and demand for efficiency and centralization 9 Keeping pace with tech developments / requirements, incl. prevention from cyber attacks and supporting business continuity
8 Major Trends in Treasury Technology What will change on TMS landscape? TMS Vendor consolidation (a step further). 1 Wide spectrum of niche solutions (market fragmentation - new comers 2 from tech sphere) 3 Different deployment models Explosion of new (smaller) IT providers 4 5 Digital adoption and innovation in BI and automation 6 TMS solutions became more generic and less open to specific developments Need for E.T.L. to develop reporting and bundle solutions 7 8 Everything in the Cloud (SaaS for all - no more license for Software) 10
TMS is the ANCHOR POINT of IT landscape connected to multiple platforms and data sources ERP Dealing Platforms integration Payment Connectivity Group reporting tools TMS Bank portals + TR + TriOptima Cash Digital technologies Forecasting (API’s) Different niche Market data tools provider 11
What is the best TMS solution? Interesting question but impossible to answer • Global treasury management is in constant state of evolution • Hurdles like FX volatility, regulatory reforms, frauds, shifting market restrictions, taxes, IFRS standards, etc … are causing unprecedented challenges for CFO’s and treasurers • It limits financial visibility and slowing efficiencies with clunky and unfamiliar management processes • Old fashion XL come together with host of operational risks • Market is unfortunately (too) crowded and review of the best solution is a nightmare • Dilemma : best of breed solution specialized versus one global ERP type solution (e.g. S/4Hana, Oracle E- business suite,…), the Arlester • In some TMS lines (e.g. ION) there are solutions in competitions within their range (?!?) “There is no best TMS solution. It should be analyzed case -by-case to find what will fit the best or at most with our needs, without fulfilling all of them. Arbitrage will be required. All this makes our choice complicate” 12
From Data to Dashboard Dashboarding layer Reporting (ETL) layer/compliance FX Payment Tri Treasury IT Tools + + + + TMS … ERP Platform factory Optima (Treasury Architecture) Treasury BIG DATA BULK Modern approach Classic approach Top-down Bottom-up 13
3 forms of using a TMS 3 1 aa 2 In house software(s) on own servers Hosted Single tenant Multi tenant In 1/3 party servers 14
Need to CONCEPTUALIZE and plan treasury transformations 1 2 UNDERSTANDING UNDERSTANDING TECH’S VENDOR’S MARKET 3 SETTING OWN (IT) TREASURY STRATEGY IT architecture to be part of Treasury roadmap 15
TMS contextual galaxy New technologies (IA, Machine Technology Compliance EMIR learning, RPA, API’s,…) Compliance Refit, IFRS, MiFID2, PSD2,….) Digital Society Needs influences Transformation, Real time data as a (Corporate) service mobility CLOUD Needs Offering (Solution providers) Cost control Psychological Risk Management Influences Increased visibility AGILITY Economic & Globalization financial Economics cycles Influences Volatility 16 Source KYRIBA
If SaaS is the future, what are the benefits delivered by that model? • Pay for what you need Reduced Predictable Cost • 1 No internal hardware or IT costs • No upgrade costs (external or internal) • Full redundancy: no single point of failure Business Continuity • 2 Higher availability: across all time zones • Improved Recovery Time for minimized disruption • Always on current release Innovation 3 • Newest software tools; no obsolescence • Economies of scale → vendor viability • Quicker implementation; no need for IT Implementation and Support • 4 Ease of support; every client on same version • No individual configuration/ support issues 17
Wishful thinking or future IT solution? Ideally, my TMS should be on SaaS model, all-in one tool, pay-what you need, friendly-user shaped, customizable and with excellent technical support from vendor and with a dynamic key-user group. 18
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