Your Treasury is a role model for more than counting money Your Treasury is a role model for more than counting money Your Treasury is a role model for more than counting money

Foreign exchange trading has come a long way in eliminating many of the manual elements in the process.

“True digitalization is not just automation. It´s disruptive.”

FX trading has been going through both automation and digitalization by this definition. While some have gone as far as automating both the initiation and execution of trades, most have stopped there. Digitalization is an ongoing process for various products, each with their own stages of progress. As an example, spot FX was low hanging fruit for automation in the execution of trades and this process started already some 20 years ago while other products such as Fixed Income has plenty of natural hurdles to get past before market participants are comfortable to put the trading on autopilot. While more liquid products such as benchmark issues of government securities may be well suited there are so many instruments that are not traded for days or weeks that will be much harder to automize even with the best AI driven solutions.

The strong growth and abundance of available data in the financial markets may have been the fuel for trying to be just a little bit better than the competition, in terms of analyzing and predicting the markets to improve the outcome in the management of positions. While traditional macro economics certainly is data driven, it is hard to use as a predictor of market moves in the short run.

Algorithmic trading is not a novelty. Hedge funds use quant models to create trading strategies. Banks use models to calculate the probability of credit losses based on different scenarios in the real world. Investment managers use data to optimize return versus risk taken, by analyzing historical performance of various assets while looking for negative correlations. Fund managers use models to allocate funds between different markets and sectors.

Many companies should look no further than their own treasury department if they want experience in how to work with data driven forecasting and decision making for other parts of their business.

Multinational banks and corporations have worked in hybrid formats for decades. Being responsible for the bank’s risks or the corporation’s access to liquidity created the need to create a hybrid workflow. Often this included bridging time-zone differences as well as regulatory hurdles. Corporate treasuries are often very innovative to overcome the hurdles that exist to get well functioning processes. This has led to a gradual decrease in dependence on being present in a specific physical location

When planning for the next step in the corporate strategy for a hybrid workplace – treasury might be able to show you some insights from their own experience.

Where is your organization heading from here?
 

Since most treasuries are small, often consisting of only one or a few individuals, the above statements may sound out of reach. This is partially true; many organizations do not have the means or resources to utilize all the technology tools available out there but depending on the situation, one may always cherry-pick the solutions that gives the best return. If the company is growing, one can also plan and organize the workflow to be able to utilize these tools when the time is right.
 

Again, the Treasury is a key area to involve in any push to get a better utilization of the capital resources in a company. With the right structure in cash management solutions and measured incentives for performance follow-up your company will be on your way.

Is your Treasury an internal role model for digital transformation?

If not, we would love to help you to get there, and the month of June is a perfect time to discuss your fall agenda with us.

We offer services such as: Treasury Review, Treasury Policy Review, Working Capital Optimization projects, Cash Management improvement projects, Treasury Management system procurement and/or implementation to name a few.

We are a group of 50+ consultants covering, Treasury, Internal Audit, Risk & Regulation, and Risk Modelling. With well over 200.000 colleagues around the worlds we are well equipped to help our customers in most areas.

Reach us at treasury@kpmg.se