The importance of the corporate treasurer role today cannot be understated. A keeper of corporate coffers and a strategic partner to the CEO, the corporate treasurer is now stepping toward the front to drive corporate digitization journeys. At the same time, these professionals are tasked with doing more with less and facing pressure to add value to the enterprise while navigating through regulatory and geopolitical risks.
As a result, their financial service providers have a wider opportunity to develop and procure new products and services that address treasurers’ complex objectives. Yet for those banking partners, the fact that every corporate is at its own unique position in the digitization process presents a challenge as to which products to offer, and how to enable corporate clients to adopt them — a predicament that impacts everything from banks’ investments in infrastructure to their FinTech collaboration strategies.
According to J.P. Morgan’s Head of Wholesale Payments Solutions Lia Cao, corporate treasury solutions must be digital, flexible and holistic. Yet to truly serve the modern treasurer, she told PYMNTS’ Karen Webster, financial institutions must meet corporates where they are, to help get them to where they want to be.
Driving Digital Transformation
“Many industries are going through transformation, and therefore, the treasury’s role is also going through a transformation,” said Cao. “We see digital solutions adding value almost across the board — it’s critical to supporting the business strategy, and in supporting their navigation through the digital transformation of industry.”
But depending on where a company is on its digital transformation journey, the role of those digital tools will differ.
The most cutting-edge businesses are seeking next-generation solutions from their banks, while firms a bit less advanced will view digital tools as a value-add. Those in their early stages of modernization, meanwhile, will view digital tools as an opportunity to automate and streamline processes, yet will face the greatest challenge in adopting digital tools within legacy back-office infrastructure.
Cao noted that financial institutions must meet corporates where they are on their digital transformation journeys, with application programming interface (API) data integrations a critical component of being able to ease implementation friction and ensure new products work with treasurers’ existing systems, regardless of how modern those systems are.
Build Vs. Buy Vs. Partner
Integrating bank solutions into treasurers’ existing back offices isn’t the only data connectivity challenge treasurers need their banks to address today. Businesses continue to embrace the growing number of FinTech solutions available, a trend that traditional financial institutions (FIs) cannot afford to ignore.
While banks provide the global scale and security treasurers need, FinTechs can provide targeted solutions and an elevated user experience. But as Cao said, treasurers don’t necessarily have to choose one or the other when choosing to adopt new solutions.
“Treasurers should think about what are the issues they’re trying to solve, and then, what’s the best solution to address those challenges,” she said. “Sometimes it could be a combination of the two, bank and FinTech, to get the best of both worlds.”
Open banking frameworks, standardized API data integrations and bank-FinTech collaborations have become critical components of meeting treasurers’ needs and easing product adoption. These strategies allow a financial institution like J.P. Morgan to, for example, leverage APIs within virtual account offerings to provide real-time visibility into current balances, or integrate payment and banking functionality directly within existing treasury management systems and other portals — rather than forcing a treasurer to toggle from one platform to another.
For traditional banks, FinTech collaboration and acquisitions provide the speed-to-market that is so vital today. For the FinTechs, working with a large, multinational FI elevates their offerings as they’re required to meet a bank’s standards for security, compliance and functionality — creating a “win-win” scenario for the ecosystem, said Cao.
Providing Forward-Thinking Scale
Lower global barriers have businesses continually looking toward the horizon at geographic expansion and future growth opportunities. Meeting corporates where they are also means providing global solutions at the local level, as Cao explained, pointing to J.P. Morgan innovations in cross-border payments and virtual bank branch offerings in markets like China and India.
As treasurers navigate the risks of global expansion, they’re also guiding their organizations toward new business models, which have major ramifications for how businesses manage cash.
“If I adopt a subscription, pay-as-you-go, or direct-to-consumer model, what are the implications on my payments flow?” Cao said. “If I’m real-time on the front end, how do I think about back-end reconciliation? These are uncharted waters for our clients.”
While banks must meet corporates where they are in their digital transformation journeys, increasingly, businesses are seeking aid in preparing for the future. Understanding how to forecast cash flow, or brace for an unforeseen market event like coronavirus, means developing products and solutions that meet both treasurers’ here-and-now needs, as well as evolving needs further down the line.
With treasurers now strategic partners to their CEOs, guiding corporates in their digital transformation and expansion trajectories, the products and services they adopt from banks and FinTechs will have profound impacts on their ability to step up to the plate. With as many as 50 percent of corporates now considering switching their treasury banking relationship as a result of these evolving pressures, it’s more important than ever for banking partners to think strategically about product development and adoption, for today and the future.
“Given the very dynamic landscape corporate treasurers are facing, they have problems here and now,” said Cao. “But they’re also looking forward to the horizon, to the future and the future is very uncertain and fast-evolving which presents both challenges and more importantly, tremendous opportunities.”