Future-proofing the treasury function

Treasurers take on new role for a new era

With Covid as a catalyst for rollercoaster financial markets, the role of the treasurer has evolved in several ways.

For example, a key part of their focus is now on driving growth for the organisation in a digital-first world. This brings with it greater levels of interaction internally to ensure business objectives are met, technological capabilities are supported, and cashflow, working capital and liquidity needs are in place. 

How treasury teams work with their banks to leverage technology and new payment methods to facilitate a seamless client experience is also critical. “This can help refine business models to navigate changes, led by technology advancements and automation,” said Kaiwan Turel, director, treasury solutions group, global payments solutions, Asia Pacific at HSBC. 

In line with this, treasuries are taking increasing responsibility for becoming data led as they look to manage digitalisation projects in relation to financial data and processes. According to Turel, they need to leverage technology such as APIs to harness the client data to drive more informed decision-making.

Beyond data management, treasurers also need to enhance security as they try to keep pace with innovations in banking and upgrade payment infrastructure. “[They need] to capitalise on instant, open, integrated and cloud-based solutions to address issues around payment security and efficiency,” added Suvrodeep. 

Treasurers can also protect the business via technology such as behaviour biometrics to validate users, multi-factor risk-based authentication tools and IP white-listing. In addition, other tools can enable them to continue operating amid disruptions, by swiftly responding to risk events and, added Turel, creating capacity to recover from setbacks, without any material impact on the company’s finances. 

Here, too, it’s important to increasingly automate routine tasks using technology. It gives treasury the bandwidth to focus on true risk management by reviewing the design of processes, ensuring they are fit for purpose and having the right controls, whether they be detective or preventative.

Three components of a resilient treasury

To achieve these multiple objectives, Suvrodeep identifies three key steps to delivering treasury resilience: 

Adopt a data-driven approach
The importance of data cannot be under-estimated. “You can’t manage what you can’t measure,” said Suvrodeep, highlighting the need for real-time visibility into cash positions, for tracking the status of time-critical payments and for a forward-looking view of exposures. 

To achieve such key tasks relies on data-driven stress-testing, both market-wide and company-specific, to identify potential points of failure. “By using advanced technologies, such as machine learning, treasury can identify patterns and trends in large volumes of data that are invisible to human analysts,” explained Suvrodeep. “These can be effective in detecting potential frauds, responding to liquidity shortfalls and mitigating financial exposures like credit losses.”

Develop a deeper understanding of the business
The second step on the path to resilience – developing a deeper understanding of the business – adds further meaning to the data. For Suvrodeep, applying a strategic lens goes beyond just understanding existing business flows, but also where the business is heading. “If you are pivoting towards a direct-to-consumer model, that means a much higher volume of payments, managing multiple payment channels, devising tighter cybersecurity measures and implementing consumer protection policies.”

Create a well-defined and actionable Business Continuity Plan (BCP)
Also vital to resilience is the practical approach of creating a well-defined and actionable Business Continuity Plan (BCP) for treasury to navigate adverse situations. In short, it relies on having the processes, systems and people in place to respond to and recover effectively from unexpected incidents – such as using an alternative payment channel when the primary one is down, or tapping into cost-efficient back-up liquidity sources when a market disruption leads to an unforeseen shortfall.

Fostering resilient teams

However, smart technologies and processes are, in isolation, not enough to ensure resilience in today’s business environment. 

Also vital is having people with the skill-sets and knowledge to deal with events such as cyberattacks and unforeseen circumstances like the pandemic. “Human capital development must not be overlooked, and there must be processes in place to cover permanent departures when they arise,” explained Suvrodeep.

Equally critical is the right banking partner in helping a treasury team know what’s best practice, which comes from experiences of working with a cross-section of clients and in multiple markets.

The bank should also help to provide the tools to create a resilient model. “We have a suite of APIs that provide real-time visibility and data that is rich to aid data-driven treasury controls,” added Suvrodeep, highlighting HSBC’s sandbox environment, where a client’s technology team can validate a design before implementing it. 

At HSBC, in particular, technology solutions benefit from ongoing efforts to ensure a reliable service as transaction volumes multiply. 

These initiatives are also beneficial for the broader industry. For example, in terms of cross-border payments, the HSBC SWIFT Payment Tracker provides more transparency and visibility, and has been used 17.4 million times by clients across over 110 currencies to track the status of US$15.4 trillion worth of flows_^1.

“We are also investing significantly in SWIFT payment pre-validation to provide real-time validation of beneficiary accounts to reduce delays in cross border payments,” said Turel. “This is in line with HSBC working with other banks and industry partners to ensure there is resilience, robustness and strength in the overall payment infrastructure. It doesn’t only help treasuries and companies but also ensures security for the payment system and society as a whole.”

_{[1] HSBC data, taken from SWIFT gpi Observer Analytics tool via SWIFT, between April and June 2023.}