The answers indicate that 67% of treasury organizations do not have digitalization embedded as a KPI. Given the importance of digitalization in current business and going forward, we expect it will become a KPI for Treasury in the upcoming years.
The answers indicate that the main drivers behind digitalization in the Treasury organization are considered to be automated file exchange (67% of respondents) and TMS (62% of respondents). Hence, on top of these instrumental drivers Treasury will also follow the digitalization strategy of the company it is part of.
The outcome of this question confirms that Treasury organizations. that operationally seen are closely linked to the core business of the company, see the advantage of digital identity services.
The answers indicate that 52% of respondents don’t know if using digital identity services increases the customer experience. The distance between the activities of Treasury departments and customer experiences could explain this.
For 48% of the respondents, using digital identity services in treasury departments reduces operational costs. These costs tend to be made in onboarding clients (i.e. Marketing) and admin/invoicing. With digital identity services, hidden costs could be reduced.
The answers indicate that for 46% of treasury departments, making use of digital identity services mitigates fraud. 44% of the respondent don’t know if identity services impact fraud mitigation. For this topic, it is interesting to see what happens when Treasury seeks alignment with other departments within the organization, like Marketing and Admin, which use identity services.
There are limited changes in the average relevance and expected relevance compared to the results of 2021. In general, digital signatures are perceived as the most relevant, while Blockchain still needs a lot of development. Although it shows the same confidence in innovations as last year, it might also indicate that the pick-up is slower than anticipated. Last year, 27% of respondents considered Blockchain to have potential after needed development which has grown to 50% this year. The “already relevant” percentages of Instant Payments decreased compared to last year with 16% to 24%, which might indicate that the impact of this innovation is smaller than expected for corporate treasurers.
Payment execution remains a key function of Treasury departments. Many treasurers have delegated the function to other departments for practical reasons. Still, they remain responsible and accountable for the process. Most Treasury departments use some sort of automated connectivity to execute payments. What type of automation is commonly used? What is the role of manual interventions? Do Treasury departments want to be able to intervene manually, and why? Our survey addressed the other side of the spectrum as well: What about Instant Payments? Are Treasury departments ready? The responses to our questions may surprise you.
Manual interventions in the payment process will remain available as a fallback scenario. Although API connections are the future, SWIFT and host-to-host connections will remain important due to stable performance, ease of use, and implementation. Currently, only 6% is fully API integrated.
The answers indicate that for 40% of treasury departments, using instant payments is irrelevant in their sector due to a lack of use cases. Only 10% are using it in their daily business. Within B2C sectors, IP is a prerequisite. For business purposes, batch payments and cash concentration should also be processed instantly before they could reach a brought uptake within Treasury.
75% of respondents do not see any impact of IPs on their business.
The answers indicate that 54% of the treasury departments do not see the necessity of IPs impacting their cash pooling because their current sweeping process is fine. The interesting part is the flexibility in the sweeping process that IPs bring, which 38% of the respondents prefer. This will be investigated in the future. The resting 8% is not interested due to the new challenges it brings.
The answers indicate that 56% of treasury organizations are not looking forward to batch IPs because it is only relevant for particular businesses. The interesting part is of a shared service shares the same opinion as Treasury on this specific topic. 23% would like to batch IPs if their systems would be ready, and 6% stick to IPs. Just 15% are looking forward to batch IPs.
Within Treasury, Cash and Liquidity management remain the two leading areas which use FinTech solutions. Other treasury departments do not use FinTech across the board, or use it at all. Finding good FinTech partners remains tough. What service suppliers do Treasury departments use? What areas are expected to benefit most from FinTech solutions?
Open Banking and Payments lead the scores, with blockchain and digital identity trailing. Are the latter solutions simply too new? Treasury departments prefer to talk to independent FinTech suppliers with a sound, commercial history. Please join us in taking a close look at the survey results.
62% of respondents think FinTech can add the most value to payments and cash flow forecasting. This is in line with the Treasury area where most FinTech solutions are already used. The added value of FinTech is deemed the least in the areas of Blockchain and Digital Identity/ Services. Interestingly, these are the innovative topics that are considered to be the least and most relevant to treasurers, respectively.
63% of the respondents engage with FinTechs directly, while 61% (also) connect with FinTech companies through their banking, TMS, or consulting partners. Banks, TMS vendors, and consultants all have an equally important role for Treasurers to connect with FinTech companies.
56% of the respondents use FinTech solutions for their cash and liquidity management, while 42% do not use any FinTech solution at all. Around a fifth of the respondents have FinTech solutions in place in more than one Treasury area.
More than half of the respondents consider the years in business and the client base as relevant factors when engaging with a younger FinTech. Only 13% of respondents consider profitability as an important factor when working with a young FinTech company.
33% of the respondents do not have a preferred company profile when selecting a FnTech partner. However, independent FinTechs (with or without partnerships) are strongly preferred over acquired FinTech companies.
Starting March 2023, a new era of data messaging between banks will occur. Systems will need updates to accept the cross-border messages in the new XML-based “MX”-format, following the ISO 20022 standard. From November 2025, this standard will have emerged as the common language for exchanging electronic messages, allowing banks and their clients to exchange rich, structured data.
Large TMS suppliers have already become more active in preparing their software and in talking to their clients about the pending migration. Though, corporates and their system suppliers will have to put in an effort to reap the benefits of the more robust and versatile MX format. However, only half of the Treasurers know about this migration. It is clear that many unfamiliarity’s exist among Treasurers on this topic and that they will look at their banks for answers.
50% of the survey participants are unfamiliar with one of the major changes in the international payments industry. Professional media have been the leading source of information. Conferences play a minor role by informing 8% of the respondents. Banks and treasury management system suppliers could play another important role.
A large part of the respondents has no strategic orientation towards regulatory-driven IT migrations. Other respondents expect their business to be impacted. A small portion may use the opportunity to create competitive advantages.
The ISO 20022 migration will be no exemption to other changes in the financial industry. Both systems and work methods will be adjusted. At this stage, it is unclear to most respondents what may need to happen and how challenging the changes may be.
The advantages are unclear among the majority of respondents. The advantage mentioned most is lower back-office costs, followed closely by knowledge about clients and invoicing.
Most respondents expect to inform themselves via banks to become compliant with the migration, with the second most frequent answer being informing through consultants. Treasurers are in the early stages of gaining knowledge. Banks and consultants can play a key role in adjusting Treasury Management Systems or reconsidering bank relationships.
With Richard Fiedler, ISO standards specialist at Rabobank
The ISO 20022 is called the single largest change in banking in decades. The shift to a new XML-based messaging standard will unlock new opportunities for companies, their banks, and other stakeholders. Please join us in reading the interview with Mr. Richard Fiedler, ISO 20022 expert at Rabobank, who told us why corporates should familiarize themselves, how TMS suppliers, banks, and consultants can play a role, and which four steps treasures could take.
Share your story!
What was the most interesting result for you? How do IPs have an impact on your business and How do you look at the ISO 20022 migration? What other experiences or opinions do you have on these topics? Please share them below or on LinkedIn to learn more from each other. We are excited to read your input.
Please note that adding an email address, website, or company name is optional.
Please note that comments are moderated. We will accept them before you see your comment placed on the website. This can take a few hours.
treasurybarometer@enigmaconsulting.nl
Leave a Reply
Want to join the discussion?Feel free to contribute!