A practical guide to digitalising corporate treasury functions

In today’s fast-paced commercial environment, corporate treasuries across Asia are under mounting pressure to embrace technological transformation and keep pace with rapid advancements in digital solutions.

Recent progress in digital technology and digital finance promise to enhance efficiency and improve productivity by automating mundane treasury tasks or providing more advanced analytics. Implementing these new tools, however, can be a challenge for treasury leaders who are already facing a growing burden from regulatory requirements and corporate sustainability goals – on top of managing financial resources.

While organisations cannot expect to realise the full potential of digitalisation overnight, a careful, methodical approach can achieve meaningful and lasting gains.

For treasuries, the benefits of digitalisation have never been more compelling. Increased efficiency, reduced costs, improved risk management, and enhanced regulatory compliance are all on the table, as well as new opportunities for innovation to improve internal operations.

Leading businesses across Asia Pacific have already adopted digital payments and digital banking, streamlining processes and improving visibility of their assets and liabilities.

Beyond that, digitalisation gives corporate treasuries the agility they need to respond quickly to changing market conditions, regulatory environments, or reporting requirements.

Artificial intelligence (AI) and machine learning (ML) are among the most transformative technologies for corporate treasuries. At an operational level, treasurers can deploy AI to standardise and consolidate reporting from across their organisations.

AI and ML tools can also reduce risks by helping them meet regulatory requirements or flagging potentially fraudulent or erroneous transactions. They can streamline bank reconciliation processes and generate reports in real time.

One key benefit lies in centralisation. In today’s globally connected world, where e-commerce and digital wallets are increasingly the norm, payments and collections can be spread across multiple channels and multiple accounts – all of which need to be monitored and managed individually.

Digital solutions allow treasuries to bring these localised processes together under a central treasury system, where cash management, forecasting and reconciliation can all be handled more efficiently.

Digital financial infrastructure has been around for decades, but the new generation allows businesses to do much more than was previously possible.

Application Programming Interfaces (APIs) provide the rails for financial data to pass reliably between software systems. As the key enabler of the digital economy, APIs contributed an estimated USD10.9 trillion to the global economy in 2023 and are projected to grow to an economic impact of USD14.2 trillion by 2027; increased agility, productivity and revenue are among the top benefits reported by developers and business leaders.¹

Achieving benefits like these is core to the thinking behind the new ISO 20022 standardisation, which is emerging as the data protocol behind the next generation of financial messaging. Its enriched structure allows more information to be transmitted consistently, reducing the ambiguity and errors that are common with unstructured data and which can lead to delayed decision-making or missed insights.²

Leveraging the richer, standardised data contained in ISO 20022-compliant messaging, APIs can give corporate treasurers the seamless data integration they need for a unified view of liquidity from multiple bank accounts and regions. A recent study from Gartner predicts that generative AI tools could drive more than 30% of the increase in demand for APIs by 2026.³

The structured nature of ISO 20022 also allows for more automation in processing payments and reconciling accounts, significantly reducing the need for manual intervention and improving efficiency in treasury processes.

This can provide significant advantages for businesses operating across multiple platforms or sales channels, allowing a real-time, holistic picture of cash and liquidity.⁴ HSBC’s OmniCollect solution, for example, leverages API technology to consolidate collections from multiple payment channels into a single account on HSBCnet.

Digitalisation is also a key part of corporate sustainability initiatives. As businesses work to reduce their impact on the environment, many are turning to technology to improve energy efficiency and reduce wastage. This can range from smart meters that monitor and manage electricity consumption to sophisticated climate tech that supports distributed energy systems or enables precision farming.

Corporate treasurers contribute to sustainability efforts by allocating financial resources to support ongoing investments across the business. Within their own department, digital transformation can also have a big impact on resource consumption and waste. A simple example is the elimination of many paper-based systems, reducing the environmental impact of physical documentation.

The improved transparency of centralised treasury data can also support evidence-based corporate decisions that align with both financial and sustainability goals. It can even give treasuries a leadership role in aligning corporate financial activity with a company’s broader sustainability objectives.

Digitising key sustainability metrics can allow treasuries to deliver comprehensive and consistent disclosures in line with environmental, social and governance (ESG) reporting requirements.

Transforming a corporate treasury requires strategic and methodical planning. Here’s an outline for navigating the complex process:

• Engage all stakeholders: Gather input and feedback to ensure that digital initiatives meet the needs and expectations of those who will be most affected. From C-suite leadership to employees, partners, and suppliers, transformation processes need the support of a broad array of stakeholders.
• Align business goals: Clearly define the strategic goals and how digital transformation can support these aims, whether through improved efficiency, enhanced customer experiences, or new revenue streams.
• Assess current capabilities: Assess processes, technologies, and capabilities to identify areas that need improvement and could benefit most from digital solutions. This is vital for setting realistic goals and benchmarks.
• Create a roadmap: A detailed transformation roadmap should include short-term and long-term objectives, key milestones, and a timeline for implementation. It should also identify potential risks and outline mitigation strategies.

The digital transformation of a corporate treasury is a complex but necessary journey. Only after these steps are complete should organisations begin to specify key technologies or tools for purchase.