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Treasury Tools, 20 Years On

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Between treasury management, accounting, invoicing, cash management and all the other money tools corporates have access to today, it’s a wonder CFOs can keep their heads on straight. Making matters even more complex is the need for this accounts payable automation system to work with that ERP system or for that cash management software to integrate into this data analytics tools.

But the cloud revolution is upon us and with it comes corporate treasurers’ demand for financial Software-as-a-Service.

It’s changed the game, not only for corporate clients but for the FinTech players developing and offering these treasury solutions.

Having just celebrated its 17th birthday, treasury management SaaS firm Reval has a bit of insight into the development of treasury technology. According to Justin Brimfield, Reval’s chief marketing officer, it’s not just the technology that has changed corporate treasury — it’s the way it’s delivered to the treasurers.

“Despite what anyone will tell you, there is not one treasury solution that will meet the needs of all corporates around the world,” Brimfield stated in a recent interview with PYMNTS. “Each treasury, each organization, each vertical, perhaps even each region, will have nuanced, different ways they look at and manage treasury.”

Treasury management providers not only have to look at the latest technologies to provide Big Data and faster payment solutions for corporate treasurers to manage their corporate funds, but they have to deliver it in a way that makes sense to the size, industry and needs of that firm.

Brimfield pointed to the rise in third-party financial services systems as one of the strongest forces behind the development of the treasury management space.

A company that integrates a treasury management tool will need that solution to work with third-party ERP and accounting systems, but when those systems need an upgrade, the treasury management tool will similarly need to adjust its software.

The old world of treasury management, said Brimfield, is that corporations would have to notify their software solution providers that their other systems had an upgrade, and therefore, treasury tools had to follow suit and readjust themselves to continue working within the corporate system.

Brimfield declared that, in the new age of treasury management, those software updates shouldn’t be the problem of the end user.

“The client should really only worry about one thing,” he said, “and that’s remembering their login credentials.”

Software-as-a-Service is just that — a service. That means software-based tools need to take care of the updates, third-party integrations and compatibility issues with the rest of corporate financial systems, the executive said.

In the nearly two decades that Reval has operated in this space, Brimfield said that this necessity to shape treasury management tools around third-party solutions already in place at a company has been the biggest struggle.

“The business challenge is where investors have been used to a one-time license revenue model, and now they have to understand how to value a lower-cost, but recurring subscription model,” the executive explained, elaborating on the subscription-based, Software-as-a-Service model that many traditional financial services firms looking to jump on the cloud revolution have adopted.

And that, come quarterly earnings time, may irk some investors, said Brimfield.

“You’re going to see a real indigestion in the way traditional vendors report their earnings,” he added. “There’s a challenge that happens there, to keep investors happy.”

Another evolution in treasury management tools, the executive said, has been the need for corporates to access treasury and cash management tools that scale as they grow. The cookie-cutter treasury management solution offered by a bank may not fit a business in its first year as it fits in its 20th.

Brimfield describes this as a “natural break” in a business, when its sophistication in cash management demands surpasses that of standard, legacy cash management tools. This is also when businesses begin to look elsewhere for a third-party solution — apart from their banks — to manage money.

“It’s a challenge for a bank,” the executive explained. “Even with technology or innovation, it’s a challenge to meet the needs of a global, multinational treasury. I don’t think I ever find a large multinational with complicated treasury structure managing their entire treasury on a bank platform. They’ve always got some treasury solution designed for their needs.”

Banks are under pressure to address this challenge today, he explained.

Unfortunately, for legacy tools provided by financial institutions, the Reval executive said that banks today are tasked with consistently and constantly upgrading their treasury management tools to address the ever-changing needs of corporates, and that’s not a task every FI is up for.

It’s this “delivery of methodology,” Brimfield said, that has changed more than anything else in the treasury management space — even more than the technology behind cloud and SaaS treasury.

Today, corporations need value-added services — a treasury management system that operates on the cloud, is compatible with whatever other solution a business uses and can morph according to a business’ growth.

Corporations need to have a solution that automates their processes — from accessing and analyzing bank data, to ensuring that data is correct, to integrating solutions into ERP, investment and other cash management tools.

Compared to 20 years ago, these needs have heightened as corporations have squeezed out their IT teams, he said.

“It’s not just about delivering the technology,” the executive explained, “but also having the service around it.”

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