We Have the Technology: TMS Innovation

By Ben Poole | 6 November 2014

The world of technology is always moving forward, with innovation driving change that makes a difference in every aspect of the world around us. The world of treasury is not immune to this, with treasury management systems (TMS) evolving in a way that reflects the changing role of the treasurer.

In the consumer world, there has rightly been a lot of attention on the rapid evolution of smartphones and tablet devices, enabling us to access information wherever we are, day or night. If you apply this to the corporate world, there are a lot of benefits that can be harnessed by treasurers, which is currently generating a lot of interest. "In every RFP we have seen over the past couple of years, both mobile technology and mobile device support has been included," says Paul Bramwell, SVP of treasury solutions at SunGard.

A number of TMS providers include mobile apps as part of their system offerings today. Treasurers can use these to view reports generated on the TMS, as well as carry out payment workflow approvals, for example. There is also a trend for tablet devices in the workplace. "Tablets are better suited for productivity tasks compared to smartphones - we are going to see more of these in the board room over the next couple of years," says Eric Pannese, VP Product Management at Kyriba. "In this situation, we are thinking about what we can do to allow our software to work seamlessly across all devices. This will allow treasurers and CFOs to be able to access all of the data that they want, where they want it, on demand."

Even a lot of the look and feel of consumer products from the likes of Apple and Microsoft has been adopted by some of the TMS vendors. "Look and feel does seem to be a competitive space right now," says Damien McMahon, partner at PricewaterhouseCoopers (PwC). "IT2 adopted the look of Windows 8, for example. Treasurers are used to seeing this on their PC screen and when they switch to their TMS they see the same intuitive layout."

IT Integration

Integration is a lot more prevalent in today's TMS. A corporate can buy its data feeds, investment management software, confirmation system, SWIFT connection and TMS, while only being required to sign one licensing agreement for the whole package.

"We take the stance that our community of treasury users should only worry about one thing - remembering their Reval log-in.," says Justin Brimfield, chief marketing officer at Reval. "Everything else should be taken care of by their treasury solution partner. In the end, the treasury organisation wants streamlined workflows, but the treasurer shouldn't have to worry about getting all of their vendors to work together to integrate their offerings."

A number of TMS vendors work to identify the niche elements in treasury workflow - such as FX trading, money market funds, integration to an ERP, for example - and then build a connection with the partners in these areas. In this scenario, the TMS vendor can enter into agreements with the third parties and commit together to work together around their product releases to ensure that the integration is as deep and complimentary as it can be for the corporate.

Managing Big Data

With this type of integration now possible, the amount of data that is easily accessible to the treasurer has increased markedly. This brings up one of the technology industry's key buzz-phrases of recent years - big data. "Currently everybody is talking about big data, but you can't find anyone that is actually doing it," says PwC's McMahon. "However, I think there are a lot of vendors that are currently working on this. We are likely to see systems that are able to crunch large volumes of data coming from the business. These will be very beneficial for cash flow forecasting, and also with FX exposures as companies increasingly focus on hedging from a macro basis."

Database structures in treasury technology have advanced and there is a lot more efficiency in aggregation tools. "Corporates are looking at to see if they can integrate treasury data within other data in the organisation to get a better idea of company risk and cash flows," says SunGard's Bramwell. "There is also a tie-in with payments through days payments outstanding (DPO), and also with receivables through days sales outstanding (DSO). If you can pull all that information together, it gives you a far better holistic idea of where your cash is, where your cash flow risks exist, and your liquidity position as a company."

The manner in which such data is presented, both for reporting requirements and strategic decision-making is also evolving. "Data visualisation is a key trend," says Reval's Brimfield. "With the expanding role of the treasurer, the relevance of the insight that the treasurer can provide has gone beyond the CFO's organisation to include the board and various business units. Having the ability to access and format information for different audiences in different mediums is key."

TMS and the Changing Role of the Treasurer

Since the financial crisis in 2008 the role of the treasurer has grown within the organisational structure, becoming more operational and touching several areas of the business in a far deeper way than previously. This change of role has resulted in TMS vendors offering increased functionality in a number of different areas.

There is a far greater integration of the treasury into the financial supply chain today, which is having an effect of the offerings of TMS vendors. "There are a few TMS vendors that are getting more into factoring and supply chain finance," says PwC's McMahon. "Also, if you have a payment factory or an in-house bank, your payment factory is going to be managing the vendor payments. If the system can stretch back a little bit further and link in to the actual invoicing route and link to your bank then it can also do the supply chain finance side of things."

This also ties in with risk management, which is a much bigger burden for treasury than it was before the financial crisis. "It is about data and the data transparency that treasury needs to work with," says Carsten Jäkel, partner, finance & treasury management at KPMG. "Without that full transparency, how can the treasurer calculate their exposure to the different financial risks? You can look at commodity risk management, both with treasury and the supply chain. Commodity risk is not just about managing the risks from the treasury perspective, the whole process starts with the purchasing, it is part of logistics, and it goes through the whole supply chain."

Another legacy of the financial crisis is the increased regulatory burden felt by corporates. This is a highly complex area, with treasurers facing global, regional and local regulatory requirement, which in some cases can appear to be at odds with each other. "You have to look at the scope of the G20 regulations - different regulatory requirements around the globe that all need to be covered by a TMS," says KPMG's Jäkel. "As of today, systems and vendors are not ready for this." Expect this to be an area of ongoing development in treasury systems over the coming years.

One last glimpse into the future for TMS is on the payments side of the business. "Some of the bigger TMS providers are looking at how they can do payments - not just treasury payments - but payments to individuals using PayPal or Google Wallet, for example," says PwC's McMahon. "I think you'll see TMS moving more into the alternative payments arena."

By Ben Poole, bobsguide Contributing Editor

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