The Corporate Bank Account Is Becoming an Event Stream

Corporate treasury typically works in sequence. Money moves, banks record it, statements arrive, and finance teams reconcile what happened.

Fast forward to today, and that sequence is starting to run in reverse. As payments become faster and transaction data becomes richer, the economically useful moment is not when a balance changes or a statement closes. It’s when the underlying financial event occurs, like when a customer pays an invoice, a supplier debit is initiated, a card transaction clears, a foreign exchange exposure appears, or cash lands in an account.

Each event carries information. Today’s software does not have to wait for finance to interpret that information before deciding what should happen next.

This doesn’t mean that the corporate bank account is disappearing. But it is becoming less important as the primary interface through which companies understand their money. Instead, treasury is beginning to look more like an event-driven system in which individual transactions can trigger reconciliation, liquidity movements, borrowing decisions, accounting entries and cash allocation almost as soon as they occur.

Read also: Instant Payments Unlock Working Capital by Allowing Treasury to Pay Later

Corporate Treasury Shifts From Observing Cash to Responding to It

The enterprise advantage in payments today no longer comes primarily from moving money faster. It comes from shrinking the time between something happening to the company’s money and the company doing something about it.

“We’ve seen a shift in moving away from the batch mindset,” Matthew Miller, managing director, treasury product executive at Bank of America, told PYMNTS in an interview published Thursday (Aug. 20). “It’s no longer nine-to-five. It’s now happening nights and weekends. The digitization of our environments is driving more to that single flow.”

The infrastructure needed to make that possible is appearing in pieces across banking. HSBC and Standard Chartered last week completed the first live interbank transaction using Swift’s blockchain-based ledger. The significance for corporate finance isn’t necessarily the blockchain. The transaction demonstrated how different bank infrastructures can exchange information about financial obligations through a common orchestration layer, with those obligations matched and netted before final settlement through existing systems. Swift said in July that 17 banks across six continents were preparing live transactions when the ledger became available for initial use.

See also: The Finance Stack’s Great Unbundling Has CFOs Asking What They Need to Own

Outside of interbank networks, real-time payments, APIs, virtual accounts and better structured transaction data are also shrinking the distance between economic activity and its digital representation. JPMorgan’s treasury APIs can send callbacks when payment statuses change rather than requiring an application to repeatedly ask whether something happened. KeyBank similarly offers webhooks that generate real-time change notifications across real-time payments and wire transactions.

Imagine a $2 million customer payment arriving at 10:07 a.m. In a balance-centric treasury model, the important fact is that the company’s cash position has increased by $2 million. In an event-centric model, the important information is which customer paid, which invoices were satisfied, whether the payment arrived early or late, what entity owns the receivable, which currency exposure disappeared and whether the cash is immediately available.

Once those facts can be established programmatically, the payment stops being merely an inflow. It becomes an instruction set.

Read also: Working Capital Is Becoming a Priced Portfolio for CFOs

The Same Payment Networks Can Produce Different Economics

Working capital is partly an information problem. Companies maintain liquidity buffers not simply because money moves slowly, but because they are uncertain about when money will move, what a particular movement represents and whether it can safely be redeployed. A payment that settles in three seconds but takes six hours to reconcile isn’t really a three-second financial event from the chief financial officer’s perspective.

Historically, corporate finance organized workflows around financial products, such as a wire workflow, an ACH workflow, an FX workflow, a reconciliation workflow and a cash management workflow. Event-driven infrastructure makes it possible to organize finance around conditions instead.

That changes what banks, FinTechs, ERP providers and treasury management platforms are ultimately competing to control. The valuable layer may no longer be merely the interface through which companies see their money or initiate transactions. It may be the orchestration layer that determines what happens elsewhere in the enterprise when financial conditions change.

The PYMNTS Intelligence report “The Bankers’ Playbook: The ROl Case for Instant B2B Payments,” a collaboration with The Clearing House, found in July that 88% of financial institutions surveyed rated the return on investment from real-time B2B payment rails as high or very high.