The Perfect Storm

1. The speed of financial risk is real-time, but most corporate Treasury operating models are batch - As real-time payments are adopted, transactions will settle throughout the day. In today’s batch world, transactions largely settle overnight (except for largely predictable collection activities and known urgent payments), while in the new real-time world understanding one’s cash position and the level of precision in the cash forecast becomes vastly more critical

2. Fraud risk is intensifying at the intersection of digital channels and social engineering - Treasury departments beset with staffing challenges or turnover are particularly vulnerable and would clearly benefit from stronger controls and predictive intelligence to flag and prevent fraud.

3. Supply chains are normalizing post-COVID, but many companies have significant friction and inefficiency in the working capital cycle - Companies are trying to digitize and automate the working capital cycle to maximize efficiency and accelerate execution and insights. Winning firms will leverage data and disciplined management processes to improve forecasting and collaboration around exceptions and disputes through integration of critical data with customers and suppliers.

4. We face economic uncertainty - exacerbated by increased political risk - with attendant risks to shifts in rates, inflation, and currencies - Many companies were unprepared for the impact of recent events on currency, interest rate and commodity markets and incurred financial losses as a result. Today’s turbulent market suggests that additional “tail events” could arise.

5. Banks must construct a diversified operating franchise to thrive in the face of changing customer behavior - The recent banking crisis reminded treasurers and CFOs that uninsured bank deposits – and moreover, the ability to clear transactions – are only as secure as a bank’s credit position. With the increase in interest rates, firms are also waking up to the value of their cash and increasingly seeking yield.

6. Corporates and banks must do more with less in a period of accelerating change – and hiring, developing, retaining staff is harder than ever - Most treasury and finance functions are small and sub-scale: prone to key-person risk, with disjointed data and technology, and inadequate automation and process orchestration. CFOs and Treasurers must address this challenge in multiple ways.

7. Everyone knows AI is going to change the world, but how it will do so – especially for Treasury groups - is unclear - The internet is abuzz about AI, and AI is accessible to the world through ChatGPT and other online tools that eliminate the need to understand complex mathematics to unlock the power of AI. Many firms are already using AI, unaware that it is central to their financial processes, as these solutions are embedded in critical tools.