The increasingly digital nature of today’s financial industry means that technological innovation is all but a must for modern banks to grow and prosper. It’s especially critical for bank leaders to understand that innovation involves much more than rolling out fresh new products and services. Banks should also leverage contemporary technology to improve key processes like customer service, data management, compliance, and the like. A robust digital banking system can go a long way toward improving operational efficiency, boosting employee productivity, and driving profitability to new heights.

Digital tools and solutions are especially important for empowering corporate banks’ treasury divisions. Though treasury is frequently overlooked by many innovation programs in favor of more customer-facing areas, the truth is that a flexible treasury management system has the potential to unlock great value for any bank. After all, an agile treasury enables smarter and more efficient allocation of bank resources. It also helps banks manage profit-and-loss-related risks much more effectively.

Here are four concrete steps banks can take to improve their treasuries’ agility:

Identify Your Bank’s Strengths and Weaknesses

Before banks can even begin investing in digital solutions for better treasury management, they must first develop an innovation strategy that directly addresses the department’s strengths and weaknesses. Being intimately familiar with the effective aspects of existing processes and those that need improvement will help banks choose the right tools. This knowledge will also allow bank leaders to make well-informed decisions when making changes to workflows and everyday operating procedures.

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One effective way a bank can assess its treasury division’s incumbent operations is to perform a SWOT analysis. This can help them identify the following critical insights:

  •       Strengths – Evaluate existing processes, protocols, and bank relationships. Pinpoint is the strongest and most effective of these. These procedures can continue being employed to the treasury’s advantage.
  •       Weaknesses – Identify internal challenges and roadblocks that prevent the treasury team from making strategic, data-driven decisions.
  •       Opportunities – Identify areas where you can immediately make potentially positive changes. Prioritize points for improvement that stand to enhance your processes most when addressed.
  •       Threats – Determine what market conditions and other external factors have the greatest potential to negatively affect the bank’s cash flow. Point out which threats have the highest probability of occurring and develop contingency plans to mitigate their impact.

Automate Treasury Management Processes

Current research shows that one-third of bank treasurers working with legacy systems don’t have time to complete their daily tasks. This is because many corporate banks continue to depend on antiquated processes, such as tracking cash flow manually through spreadsheets.

Unfortunately, such outdated processes are not only time-consuming but also highly vulnerable to error. As modern banking grows increasingly fast-paced and competitive, older treasury management programs could cost corporate banks a fortune in lost profit and productivity.

Rapidly mounting digitalization across the financial industry means that wide-scale process automation is no longer a luxury but a necessity for banks everywhere. A study by BCG shows that automation can potentially reduce the operating costs of a bank’s treasury department by 20 to 30 percent and raise its average NII contributions by 10 to 15 percent. This uptick in efficiency ultimately benefits not only the treasury division but also the bank as a whole.

Banks seeking to modernize their treasury management programs usually begin by retiring spreadsheet-based procedures and instead entrusting routine tasks to digital software solutions. Corporate banks would also do well to replace procedures that require employees to log onto bank portals and manually normalize data. Automating these processes frees up time, resources, and manpower for more value-adding activities that require human intervention and special expertise, like analysis and planning.

Enhance Risk Management

Improving a treasury division’s security, fraud prevention, and risk management functions is another important part of creating a more agile treasury on the whole.

Rapidly evolving, unpredictable market conditions require banks to monitor the market and other external economic factors in real time. Access to accurate, up-to-date information on potential business risks and opportunities helps banks make more informed decisions based on historical data. With this critical information in hand, they’re better equipped to identify significant lending and investment patterns. This, in turn, allows them to manage cash flow appropriately.

A good treasury management system can enhance the department’s risk management capabilities in a number of ways. Timelier gathering and delivery of risk-related information enables a more holistic approach to balance sheet process management and facilitates more effective strategizing. The most advanced systems can even oversee a bank’s origination-to-liquidation cycle from beginning to end.

Switch to More Short-Term Cash Forecasting

Given how fast the business environment of today is likely to change, traditional 60- or 90-day forecasting views are no longer sufficient to help banks stay on top of developments in the market. As such, many banks and other financial institutions have begun shifting to monthly, weekly, and even daily forecasting for greater agility and responsiveness.

For treasury departments, the need for more short-term forecasting entails leveraging solutions that can track cash position fluctuations and other liquidity-related metrics in real time. Timelier, quicker views into liquidity ensure banks can access their cash reserves when needed while minimizing excess.

Treasuries need to become increasingly flexible and efficient to help corporate banks survive and thrive in today’s highly unpredictable business landscape. The right digital solutions can help treasurers generate a wealth of competitive and financial value for banks for years to come. With an agile treasury behind them, banks can then tackle challenges confidently without compromising the quality of their offerings and services. 


Posted by Steven

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