Balancing Digital Aspirations While Addressing Risk Management Fundamentals

FX Risk Management Solutions Quarterly | Issue 132 | October 2021 | The Hedger 6 Rethinking the future of corporate treasury New digital technologies and the evolution of financial services have prompted corporate treasury to rethink its future. Harvesting and utilizing data as a means to optimizing and meeting company risk management objectives is now a top priority for many of our clients. Although companies have digital aspirations, either by will or necessity, and they are mobilizing resources towards opportunities, challenges remain. Many companies are still suffering from fractured infrastructures, along with manual processes, and data challenges. These companies need further investment to put in place established tools to help them automate transactional activity. Effective treasury policies, delivered through processes and procedures, managed through key performance indicators are also necessary to drive best practices. Others who are well advanced in their digitalization agenda must continue to use partnerships and new technologies to achieve their digital ambition and position corporate treasury as a lever of growth. Consequently, the study concludes multiple playbooks are emerging dependent on company needs and level of maturity across both risk management fundamentals and level of digital aspiration. Dr. Duncan Cole Director TTS Client Advisory Group +353 1 6226160 duncan.e.cole@citi.com Erik Johnson Director Global Coordinator +44 20 7986 1525 erik.johnson@citi.com Mariyam Baig VP TTS Client Advisory Group +353 1 6226256 mariyam.baig@citi.com Figure 5: Multiple playbooks emerging • Establish consistent Treasury Policies, Processes and KPIs to manage operational and risk fundamentals. • Implement functionally centralized organization with remit over all Treasury functions performed globally. • Centralize management of Cash and Risk through Treasury centralization constructs; deploy an In-House Bank once feasible. • Be catalyst for organizational deployment of Centres of Scale (e.g. Shared Service Centres) for operations efficiency, control. • Deploy common backbone infrastructure (e.g. TMS) across all Treasury processes; advance TMS/ERP external integration. • Partner with commercial business to ensure deep understanding of balance sheet needs, where risk generation occurs. • Establish Digital and Data Strategy for Treasury in context of organizational priorities. • Assess Processes and Procedures for opportunities to digitalize. • Assess Data availability, timing and veracity to support digitalization. Assess current technology stack vs. future state. • Assess Talent needs to deliver digital objectives. • Use assessments to define Roadmap to deliver on Data and Digital Strategy, balancing opportunities, payoffs, and timing. • Leverage opportunities to partner with Banks, Technology suppliers and emerging FinTechs to learn, experiment, and progress. • Define future-state for Treasury in context of business strategy, organizational priorities, and appetite for transformation. • Create new capacity by completing digitalization journey for routine Treasury processes. • Leverage Data to transition from reporting to analytics, insights, and forecasting to improve decision quality. • Experiment to establish trust in emerging technologies and algorithmic techniques for “best next action” decision-support recommendations and automation. • Engage business partners, identify opportunities for Treasury insights to support growth, and deliver. • Think Data, Think Big, Start Small. The Best Practices Treasury Strengthening Fundamentals The Digitalizing Treasury Advancing Data & Digitalization The Growth Enabling Treasury Value-Added Business Partnership Playbook 1 Playbook 2 Playbook 3