Treasuries show rapid progress towards digital readiness

The DBS Digital Treasurer survey 2020 showed a clear impact of the pandemic initially forcing companies in Asia Pacific to rethink their digital strategies.

Treasurers have continued to respond in this way – leveraging technology to overcome supply chain disruption, from connectivity through Application Programming Interfaces (APIs) to enable remote engagement and eliminate manual workflows in the order-to-settlement journey. In short, treasury teams across industry sectors are clearer than ever about the need to pursue digitalisation.

This is reflected in  the shift in priorities for treasuries in terms of digital strategies. For example, says Randy Ou, vice president, group treasury at Alibaba, the weighting of internal projects is even more heavily in favour of managing risk, rather than the previous goal of digitalisation being to drive efficiency.

Axel Hauke, treasury manager at Agrocorp International, agrees with the shift away from reducing costs and inefficiencies with trade finance and logistics partners – yet e-commerce has been the main recipient from his perspective.

In addition to this and other internally focused objectives such as upgrading financial systems and adopting digital workflows, the impact of Covid-19 has been seen across transactions and settlements, as well as reporting and forecasting.

“There is a serious move to digitalisation and we are here to help,” confirms Mark Troutman, group head of sales, global transaction services, at DBS.

And within this new normal landscape, he believes banks are playing a greater role in helping businesses adapt to the reality of a post-pandemic world.

New ways of working

The DBS-Haier digital supply chain financing solution is a case in point: offering same-day financing to distributors of products made by Haier, the Chinese electronics manufacturer, via the  company’s own digital supply chain platform.

The Haier solution highlights the far-reaching role of APIs as key to the digital transformation of supply chains. More specifically, the programme with DBS uses 15 separate APIs, facial recognition and remote online account opening to register distributors for approved financing.

“For companies embracing the use of APIs in their businesses, the opportunity to transform their workflows are substantial, says Troutman. “I can only see the pace of adoption increasing rapidly as treasurers and CFOs learn about the technology further.”

For instance, APIs allow organisations to upload trade applications digitally and directly from their own internal platforms, offering an alternative to wet signatures, with enhanced real-time status notification capabilities. As a result, connectivity of treasury, finance and commercial business platforms, with banking solutions via APIs, has become the standard today.

Seng Ti Goh, director at Focal Partners Private, and until March 2021, president of the Association of Corporate Treasurers Singapore, says APIs are touted to be solutions for corporations with multiple systems and legacy set-ups.

At the same time, there is greater use of the cloud as companies intensify their focus on digital – from being used to create new commercial business propositions or migrating from legacy systems to cloud-based treasury and finance systems.

This is helped by what Goh describes as a less costly solution in comparison with five to 10 years ago. “MNCs are finding cloud solutions more compatible and cost effective to their global set-ups.”

For Ou at Alibaba, it will soon no longer be a choice for some firms to take a wait-and-see approach to APIs and cloud integration. “We encourage our industry peers to recognise this trend and begin to adapt, as digitalisation is one of the key ways for treasury teams to help drive ROI and other KPIs.”

Enhancing the customer experience

Indeed, today’s treasurers are also increasingly engaging – or being engaged by – their commercial and technology counterparts around the application of cloud-based technology and API connectivity to create new business opportunities and competitive advantage.

“This is having a profound impact on the role of the treasurer and its continued evolution,” notes Troutman.

As corporates try to drive better client experience outcomes from treasury, Hauke at Agrocorp International says the best measures from his perspective are shortening process times with external parties and reducing work-load for staff.

“It’s harder to keep track of improved accuracy, reduction in error-rates,” he says. “Ideally, we’d expect to grow a deeper and larger relationship with external parties with who we cooperate on digital initiatives.”

Goh sees two main ways to drive better client experience outcomes from treasury: firstly, basic operational excellence via metrics like timeliness, accuracy, completeness and transactional costs; and secondly, from the value add it can offer in terms of strategic advisory, plus being a facilitator of deals, bridging finance and business units.

At the same time, embracing digital is also changing the shape and nature of the interaction between companies and banks. Traditional RFPs and sales engagements are looking increasingly passé, in DBS’ view, as they get rapidly replaced by co-creation partnerships and the application of human-centred design thinking in solutions development, using agile and customer-journey centred practices.

These are all essential ingredients that enable companies to deliver a differentiated experience to their customers and suppliers with speed, adds Troutman.

Driving new types of automation

Going forward, there is scope for tech-enabled solutions to further shape the digitalisation process.

This can be seen, for example, via treasurers adopting Robotic Process Automation for manual work like daily cash and liquidity operations.

According to Goh, such initiatives will likely result in “lean and mean” treasury functions with less headcount, managing a wider portfolio. He foresee those remaining treasury professionals as “being multi-faceted and educated across disciplines”.

Further, global businesses will likely see a need for treasury centres in multiple locations, given the increased likelihood for a centralised set-up involving sophisticated tech systems. “Treasurers will likely partner with banks and financial institutions which are more tech-friendly and have ready solutions that can be integrated easily,” adds Goh.

In fact, Troutman says DBS’ ‘Engineering Sales’ approach is an example of how the bank is helping companies overcome barriers in adopting new technology in their finance and treasury departments.

“As companies embrace digitalisation both in the customer-facing aspects of their business and in the financial-related processes and activities underpinning the organisation, the corporate IT infrastructure plays a much greater role in transaction banking solution design than before,” he explains.

To achieve this, he says DBS guides treasurers and CFOs in both understanding the technology as well as positioning the solutions and benefits with CIOs. This includes working with corporate IT teams or third-party technology support providers/fintechs to tailor the digital solutions for maximum impact.

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