Magazine du Trésorier, March 2017

Preparing the treasury function for the future – New people or new technology?

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1. The CFO’s view: Business partnering as a priority


In EY’s latest global study, conducted from December 2015 to February 2016, 769 worldwide finance leaders were surveyed to examine how the role of the CFO and the treasurer has evolved and how finance executives are creating value in their organisations.


A key finding is that their role has broadened as it now encompasses not only traditional financial skills, but also more strategic and market-facing responsibilities. Our research shows that 67% of the respondents worldwide from organisations of all sizes believe that “improving business partnering between finance and the business” is a major priority, especially throughout the cash management ability to support and finance all needed investment. Thus, to create value in the market, leaders need to focus on strategic business model transformation rather than solely on cost management. Due to the impact on corporate strategy, skills in operating model optimisation and treasury management are today increasingly demanded by boards and chief executives.


In that context, the treasurer must keep pace to accompany the anticipated shift from the traditional role to finance as an enabler and driver of corporate strategy, fast becoming a reality of the future.
 

2. The future of the treasury function: New technology or people?


The recent survey shows that four forces have continuously transformed the face of finance leadership:


1. Risk and uncertainty;
2. Stakeholder scrutiny and regulation;
3. Digitalisation;
4. Big data.


Treasurers are impacted by the first three in particular, dealing with increased market uncertainties, new regulations and reporting standards and are offered enhanced and new digital technologies.


On one hand, in an increasingly uncertain and competitive business environment with tight credit markets and dynamic trading conditions, heightened stakeholder expectations and complex regulations require to take more strategic view in steering organisations. On the other hand, as an ever increasing amount of available data, digital trends, digital technologies and tools continue to disrupt the way of managing treasury, the traditional role of the treasury function is increasingly be brought into question.


Consequently, treasurers need to think about the necessary competencies in their team, without disregarding technological and digital trends, as they require different profiles, competencies and responsibilities. Therefore, the question is whether to invest in new people or new technology?


Are today’s teams not up to the challenge?
Looking for new and reinforced competencies in the treasury teams


EY’s research shows that many leaders believe that their current teams are not prepared to face future demands. 52% of global respondents indicate they are unable to focus on strategic priorities by delegating responsibilities because of a lack of necessary skills in the finance team. Forty-seven percent say their current function does not have the right mix of capabilities to meet its future priorities.


In fact, 22% of them mentioned that “meeting the need for new skills by transforming how finance talent is recruited, retained and developed” is their number one strategic priority for the function of finance for the future.


Accordingly, treasurers need to plan today for tomorrow’s critical talent to answer to the new strategic and market-facing responsibilities. Drawing on market trends and business units’ forward-looking plans, leaders can more accurately forecast what talent is going to be needed, where the major gaps are and how those gaps can be addressed. As increasing automation of transactional tasks and the development of advanced treasury decision support tools alter the professional’s traditional career path, treasury leaders will need to redefine a new development curve. This will include mapping out how they intend to develop people to acquire the breadth of skills necessary to progress through their function, and nurture the leaders of the future.


Interpersonal and strategic skills that technology cannot replace will most likely stay in-demand while the need for IT and digital skills will continue to grow for at least the next decade.
 

Is the future digital?


Advances in new technologies — such as in-memory computing, cloud computing, analytics, mobility, artificial intelligence (AI), blockchain and robotic process automation (RPA) — and broader insights available on market conditions offer treasurers an exciting opportunity to reimagine what the treasury function will look like in the future. In addition, many treasurers have become key players in driving the adoption of these technologies in their organisations, and are leaders in the transformation that ensues from technological innovation. However, to make the most of new technologies’ ability to save costs and to increase insight, treasurers must challenge assumptions, encourage experimentation and manage at the same time the risks inherent in each technological innovation.


New Technology transforms the way treasurers work


69% see the role of the finance fundamentally changing as traditional tasks are automated or managed in shared services centres or driven by technological support.


New technology will free up a considerable amount of time available to treasury teams to work on strategic vision and decision support. While once the remit of treasury teams significantly consisted in an execution and reporting function, in the future the finance function will become a data-driven decision-support-centre, and reinforce its role of business partner for strategic developments of the company.
 

Technology will continue to play an increasingly significant role in executing many treasury tasks, such as cash management, while at the same time generating greater insight. The future treasurers must have the skills to correctly understand the results from new tools and translate them into opportunities. Meanwhile, they will spend a greater proportion of their time working with colleagues across the organisation to support the strategic decision-making process.

3. Vision of the treasury function


The treasury function will embrace technological innovations to improve effectiveness, increase efficiency, enhance insight and support corporate strategy and future developments. Treasurers will be required to make the most of these technological innovations, while bringing the necessary complementary skills and competencies.


Need to adapt to new technology and use it to their advantage to focus on strategic decisions


Treasurers must make bold moves to build a function that has the right people, with the right skills, to complement and get the most out of new technologies. They will play an important role in shaping an organisation’s overall people strategy. Success as a treasurer will depend on combining the intelligence of smart technologies with the brains, emotional intelligence and interpersonal skills of talented people in order to facilitate the strategic evolutions.


Thus, the answer to the question “Is the future of treasury new people or new technology?” is, of course, neither one nor the other but both. In the future, leading treasurers will be those that strike the right balance between technology and people. This will free the treasurer up to focus on further innovation, responding to the rapidly changing business context and supporting their organization in driving the business forward.