The changing face of the corporate treasury

Digitisation is transforming the role of corporate treasurers from a transactional function to that of strategic advisers. The core responsibilities of the treasurer have not changed. The focus remains on financial risk management, debt funding and cash management. However, today’s corporate treasurers are also trusted advisers to the business on financial matters, and their role is more data-driven, proactive and strategic than ever before.

In today’s environment, businesses run on data. However, the wealth of real-time data that is now available to corporate treasurers can quickly lead to information overload. Your bank can provide you with instant account balance statements, reports on your foreign exchange (forex, or FX) positions, and so on… but what do you do with that information? How do you interpret it and create meaningful action out of it?

That’s where automation plays such an important role. The faster information is received and the more accurate it is, the better the decisions that can be made.

The revolution of artificial intelligence (AI) and machine learning enables real-time analysis of vast datasets, enhancing decision-making by providing predictive insights into cash flow management, liquidity optimisation and risk mitigation. AI and machine learning algorithms have empowered corporate treasurers to analyse large volumes of data in real time. This capability is transformative, as it allows treasurers to predict cash flow patterns, identify potential liquidity issues before they arise, and optimise cash reserves more efficiently.

Absa is actively harnessing digital capabilities to deliver innovative solutions that empower corporate treasury clients. Our key initiatives include application programming interface (API) integration, which provides real-time access to account information, enables seamless transaction processing, and improves cash management efficiency; leveraging AI for predictive insights in managing risks; and intuitive, user-friendly digital platforms for efficient treasury operations management anytime, anywhere.

For instance, predictive analytics can forecast currency fluctuations, enabling treasurers to hedge against foreign exchange risks proactively. Similarly, AI-driven models can assess the impact of interest rate changes on debt portfolios, allowing for more informed decisions regarding refinancing and loan structuring. Having access to real-time data and advanced analytical tools empowers treasurers to make better financial decisions. They can identify trends, mitigate risks and seize opportunities, driving the organisation’s financial success.

A good example of this shift towards a ‘smart’ corporate treasury is optimised cash management. AI can identify periods of cash surplus and recommend investment opportunities to maximise returns while at the same time detecting potential cash shortfalls and suggesting actions to mitigate the impact, such as arranging short-term credit facilities or adjusting payment schedules.

The next step in the evolution of smart corporate treasury is the development of mobile treasury dashboards, which provide treasurers with real-time access to financial data and analytics, right at their fingertips. Mobile dashboards allow treasurers to monitor key financial metrics, such as cash positions, liquidity levels and investment performance in real time. This enables them to respond swiftly to any changes in the financial landscape. Having access to real-time data on their mobile devices also empowers treasurers to make informed decisions on the go.

Absa’s dedicated Digital Platform Services (DPS) department is instrumental in leveraging digital capabilities to empower its corporate treasury clients. Through our DPS department, we are actively experimenting and laying the groundwork for shaping the future of financial services. We are not merely preparing for impending changes in the financial landscape, we are actively pioneering and experimenting with new digital asset products. And while it’s still in the development phase, our exploration into a gold-backed stablecoin for institutional clients and the examination of potential advancements within liquidity management and custody operations have already yielded invaluable insights. These learnings are crucial as we build the foundational capabilities necessary to deliver these innovative solutions to our clients in the future.

These advancements will require a solid regulatory framework to ensure security and compliance, which is why Absa is closely monitoring the evolving regulatory landscape across its markets and beyond. By doing so, we are not only ensuring that our future products and services meet international standards, but also gaining insights that could inform how South African regulators might develop similar frameworks. This proactive approach is essential in maintaining the trust and confidence of our clients as we navigate this new financial paradigm.

Corporate treasurers will always play a key role in mitigating businesses’ financial risk and in driving operational efficiencies. But as digital technologies evolve, the treasurer’s role will continue to change. The potential for further improvements in treasury management is vast, and Absa is well positioned to help our clients navigate these changes.