Treasury Management Technology: Businesses Look to Banks

Treasury's ability to impact the bottom line is gaining increased recognition at the C-levels of leading organizations, driving adoption of more-sophisticated and better integrated treasury automation solutions, according to a new report from Boston-based Celent. Companies are striving to increase the visibility and the velocity of the cash flowing through their organizations, Celent says, creating an opportunity for banks.

To optimize how this cash is deployed and invested, treasurers need accurate and timely visibility over an organization's cash, debt and investments around the world, the consultancy asserts. "Treasurers are in real need of automation solutions to facilitate these tasks," according to the report, "Treasury Management Technology: Optimizing the Cash Cycle." "Yet, for a majority of corporations, spreadsheet technology remains the dominant liquidity tool."

Treasury Tech Gains Traction

Through 2008, corporate usage of treasury technology by firms of all sizes will increase, Celent reports. "Banks must adapt their offerings to meet the needs of a range of corporate clients," says Madhavi Mantha, a senior analyst at Celent and author of the report. "For example, large corporate clients with diverse bank relationships may turn to banks for multibank connectivity and payment processing solutions, integrating bank feeds directly into their ERP solutions. In contrast, smaller treasury departments may seek ASP [active server pages] solutions that include connectivity, payments and treasury application functionality in a single, cost-effective platform."

In the report, Celent analyzes the current state of the corporate treasury technology market, looking at key drivers of treasury technology adoption and examining the advantages and disadvantages of the various automation options available to firms -- from spreadsheets to treasury workstations to ERP or bank solutions. "There is no one-size-fits-all when it comes to choosing the right approach to automating treasury functions," Mantha says. "A company's chosen strategy will vary based on the scope of treasury's responsibilities, its level of involvement in operational cash flows, its geographical footprint and the complexity of its banking operations." For example, according to the report, "A midsize treasury that is primarily focused on automating cash and position management, and with a limited number of banking partners as well as limited internal IT resources, will do well by choosing an ASP solution provided by either its primary bank or a specialized vendor."

Banks are in a position to play a role in streamlining corporate treasury operations, Mantha says. "Banks, hoping to mitigate the loss of traditional wholesale payments revenue, are increasingly implementing value-added treasury management technology in order to strengthen their relationships with corporate clients."