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Treasury is a mission-critical function, interconnected across business units and responsible for managing the balance sheet of the enterprise.
And as market and macro changes accelerate, banks are reassessing their treasury operations and what they need to manage liquidity, financial risk and funding with agility, efficiency and intelligence. Increasingly, banks have moved to modernize treasury software and resolve fragmented systems, manual workflows and legacy technology.
At a high level, modernized treasury is automated, data-driven and real time, with granular controls and tools complementing transparency across funding, liquidity, trading, hedging and risk management. Having this leading-edge capability unlocks efficiency and effectiveness and best enables the organization to succeed.
A recent Nasdaq Financial Technology whitepaper highlighted the key pillars of modern treasury, and how advanced technology can help firms get there.
The paper, entitled Creating a Modern Treasury Function: The Pillars to Efficiency, Effectiveness and Success, noted that evolving regulations, market volatility, and interest rate fluctuations are straining banks’ treasury operations, requiring more person-hours and increasing costs and the risk of error from manual processes.
The whitepaper outlined four key pillars of a modern treasury function:
- Powering operational excellence — Modern treasury leverages automation to leverage operational agility and standards, providing a consolidated view across treasury functions, a ‘single source of truth’ for all financial data, and IT cost optimization;
- Navigating regulatory milestones and compliance — Modern treasury enables automated reporting, strengthens risk management, and minimizes disruption associated with regulatory change;
- Maintaining market best practices, which entails a pre-configured operating model, real-time enablement, and community connections; and
- Facilitating strategic planning – A modern treasury function greatly reduces manual tasks, freeing up staff to focus more on forecasting, budgeting, and alignment with business goals.
Technology, and having the right solutions-provider partner, is key to an optimized treasury function. While modernization is a substantial project for a bank, the Nasdaq whitepaper noted that for every $1 spent building a platform, it typically costs $2 to maintain existing systems, and the potential for snowballing costs can threaten even the basic functioning of treasury operations.
The whitepaper stated: “Whether utilized as a managed SaaS service or deployed in a cloud environment, modern treasury technology opens the door to opportunity for the bank: opportunity to shed the burden of manual and rote work baggage, to quickly expand into new markets and products, to be agile in risk management, to have the peace of mind that the bank can rely on the vendor to keep it plugged into best practices.”
Click here to access the whitepaper.
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