Pulse Check: Is Your Treasury Organization Set to Last?

Written by: Victoria Albovias, Executive Director, Corporate Treasury Consulting, Commercial Banking, J.P. Morgan

While growth opportunities abound for corporations today, treasury operations often remain small and lack the infrastructure to support growth. By taking an in-depth assessment of your treasury’s current state, you can define and implement a strategy for treasury transformation.

Treasury organizations today face considerable challenges to support their respective businesses efficiently while retaining appropriate levels of control. In the face of a dynamic market, constant expansion and new technologies, treasurers must continually assess how well their current structures can support the company in the long term. Treasurers should think about critical components that may not be working as efficiently as they could—and what resources are needed to reach effective and scalable treasury operations. There are three main areas that treasurers should assess for opportunities to improve: cash visibility, efficiency and automation, and control and risk management.

Access and Visibility to Your Cash

Central to treasury’s role in an organization is ensuring transparency and access to the company’s available liquidity. A primary challenge for treasury teams is collecting balance information from different sources of data and efficiently deploying cash across the company. A thorough survey of entities, accounts and cash holdings domestically and internationally is the first step in understanding the efficacy of your liquidity management structures. Some questions to consider include:

  • Where are your banks located and who holds your cash?
  • Who in the company has authority over the accounts?
  • How does treasury access the account data and available cash in these accounts?
  • How quickly is treasury able to determine a cash position domestically or globally?
  • How and where can you deploy excess cash efficiently?

Treasury teams are constantly looking for ways to streamline their accounts and banking partnerships as a first step to improving liquidity controls. Managing many accounts with numerous banking partners can be taxing and time-intensive, so assessing existing account structures upfront can help you manage cash more efficiently in the long run. At the same time, treasury can also look for new technology in the market—through banks and software vendors—that can help facilitate data aggregation and analysis. These efforts can help treasurers centralize their liquidity and realize greater access to real-time data—better positioning them to make smarter decisions for their treasury organization.

Efficiency and Automation

While accounts receivable (A/R) and accounts payable (A/P) are not always within the control of the treasury team, both will be impacted by any strategies the team develops. Efficiency within the order-to-cash and procure-to-pay processes can increase working capital availability, thus driving greater collaboration among the three functions. Treasury’s role as the bank relationship manager provides access to resources that can streamline and even transform how the A/R and A/P teams operate. Some questions to consider internally include:

  • Are there collections channels and payment types that drive inconsistent or exception processes?
  • Are vendors paid via optimal channels and pay types to reduce manual, paper-based efforts?
  • Is the data exchange between the company and banking partners optimized to minimize exceptions?
  • Are tools available to our partners to help them improve their working capital metrics?
  • How does the company’s technology infrastructure help or hurt these processes?

The opportunities here will typically be uncovered through a deep dive with the A/R and A/P teams, leading to a better understanding of where there are manual processes or delays that impact their day-to-day efforts. It’s also critical to gain insight and support from other partners, such as those in information technology, whose own strategy and capabilities can impact these efforts.

Control and Risk Management

In a connected global economy, treasury must take steps to ensure protection from outside threats while at the same time maintaining control of cash and investments. One area treasury must control is counterparty risk, including credit, default, settlement and country risk. From a control perspective, counterparty risk exists across a number of paradigms:

  • Who is holding your cash?
  • How quickly can you access your cash when needed?
  • In the event of a market shakeup, is there a regular review process in place?

Beyond these concerns, the threat of cyberattacks has been increasing rapidly over the years. Millions of dollars are lost each year due to corporate fraud and cybersecurity breaches and, as the holders of cash, treasurers are key stakeholders in this fight. Treasurers are increasingly partnering with IT and other arms of the organization to build safeguards directly into workflows, update and standardize policies and procedures, and educate employees on risks.

Now, more than ever, it’s incumbent upon treasury to be able to identify its challenges and drive toward a structure that is best suited to support its business. New market solutions and technology have created more opportunities to improve visibility, efficiency and controls, and treasury is primed to take advantage of these. A disciplined and thorough review of your current structure is the first step toward making change happen.

Connect with J.P. Morgan at Windy City Summit

Our J.P. Morgan industry experts are excited to be back in person at Windy City Summit. Join us for the following sessions: How the Pandemic Transformed the Future of Treasury, Cybersecurity: Getting in Right (Now), and Demystify Blockchain – Past, Present & Future. Visit the AGENDA page for full session descriptions, dates, times and presenters.

Don’t miss out on this year’s amazing event! Register today.


Treasury and Finance Trends for 2021

Sponsored Content by Fifth Third Bank

As finances readjust to a new year, Fifth Third Bank offers anticipated payment technology and treasury trends for 2021. While much about what 2021 will hold is uncertain, there are a few trends that are easier to forecast. Trends in the payments space are among them.

The digitization of payables and receivables functions has been underway for some time now, and the pandemic has only accelerated this trend. Adoption had been slow, but COVID-19 has served as a seismic wake-up call for the treasury space, spurring the business community to action. A good example of this is the rapid adoption of electronic business-to-business (B2B) payments. A recent EY report found approximately 60% of survey respondents indicated that the adoption of electronic payments is the most meaningful change in the B2B space.

Over the past few years, digital transformation has allowed treasury professionals to take on an increasingly important role providing invaluable insights into their organization and support for strategic growth objectives. As new innovations continue to reengineer the treasury function, the coming year holds tremendous opportunities for treasury departments to demonstrate further value to the overall organization.

The Evolution of Managed Services for Payment Processes

One area that shows real promise for treasury in the near-term is managed services related to payment processes. The overall global managed services market is growing rapidly. Valuate Reports’ recent study suggests managed services will grow from more than $178 billion in 2019 to greater than $309 billion by 2025. That’s a CAGR of 9.6%.

“We believe the continued evolution of managed services around the movement of money will be a game-changer for corporate treasury,” explained Bridgit Chayt, Senior Vice President and Director of Commercial Payments and Treasury Management for Fifth Third Bank. “This trend is moving corporates from a transaction processing-centric relationship with banking partners to one that ocuses more on back-office integration that delivers invaluable treasury insights, along with greater automation and efficiency.”

As 2021 unfolds, managed services in the cash management space will continue to be seen as a transformational option that enables treasury organizations to take advantage of the latest cloud-based, digital technologies without having to invest in complex and costly infrastructure. The managed services model means adopters always have the latest version of the technology, thereby reducing reliance on legacy platforms. It also means not having to focus on maintaining the security of on-premises systems.

Innovative managed services are offering on-demand convenience, which is crucial as many job functions have shifted to a remote, work-from-home posture. And these next-generation solutions also provide a seamless user experience that is seen as increasingly vital for keeping today’s digitally-native employees happy. Perhaps most importantly, managed services enable treasury to focus more of their energy on core business matters and strategic imperatives for the organization.

Leveraging New Layers of Analytics to Improve the Treasury Function

Many treasury organizations have begun to recognize the potential value of data related to the cash management function. Emerging technologies are making it possible to leverage this data to power analytics-driven decisions that will dramatically improve treasury efficiency, automation and the customer experience.

“New digital tools are increasingly relying on next-generation technologies, such as artificial intelligence (AI), to analyze patterns, and then factor in policies and risk tolerances to make highly-effective liquidity recommendations,” stated Chayt. “Over the next few years, I think we can expect a much greater reliance on AI, data analytics and robotic process automation (RPA) to help realize tremendous opportunities to achieve straight-through processing and reconciliation. These technologies will become indispensable to clients as businesses begin to find ways to monetize them as well.”

As more and more of the treasury function becomes interconnected, data and analytics will enable treasurers to add value and make faster, better decisions.

Treasury Will Be Counted on to Deliver Greater Value

Ever since the “Great Recession,” the role of treasury professionals has continued to evolve. Treasury has elevated its stature as a thought-leader within the organization, increasingly participating as a decision-maker at the highest levels. In the years to come, treasury will be relied on for the vital task of managing liquidity, forecasting cash flows, and supporting the bottom line. And the current pandemic has only served to raise treasury’s profile as a vital organizational resource.

To meet the constantly changing demands of the business, treasury will need to continue to build relationships across the organization in order to expand their understanding of company needs and priorities. By partnering with cross-functional stakeholders, treasury can broaden its impact, while increasing its credibility. At the same time, treasury can tap into the deep bench of experience found within banking partners to ensure the organization’s strategic objectives are being fully supported.

Innovation: Driving Tomorrow’s Treasury Today

Greater efficiency with less manual intervention will continue to drive advancements in treasury. “Many of these technologies are available today, enabling treasury to manage liquidity more effectively, forecast more accurately, and leverage data and analytics to improve the customer and supplier experience,” concluded Chayt. “In the near-term, we envision new innovations coming as banks, Fintechs, and other third-party providers continue to partner, bringing niche solutions to the marketplace to meet the evolving needs of treasury organizations.”

Chayt cites the example of real-time payments, which, in addition to speeding up payment processes, is also delivering critical remittance information that opens the door to advancements in back-office reconciliation. There is also the opportunity to introduce new ways of handling the negotiation of terms and discounting at the time of payment. The efficiencies made possible by these types of initiatives will bring tremendous value to the organization.

As 2021 unfolds, corporate treasury professionals can expect innovation to continue to be the watchword, as they strive to deliver greater efficiency and value to the organization.

This article was reprinted with the permission of Fifth Third Bank. 


Advancing Client Outcomes Through Technology

Written by: Dee Sommerville, Head of Commercial Banking Middle Office – JPMorgan Chase, and Anish Bhimani, Chief Information Officer, Commercial Banking – JPMorgan Chase

Though the client journey may begin with a phone call or meeting, long-term success is dependent on what happens after negotiations are complete and agreements are signed. Specifically, the true measure of success rests in how clients’ needs are handled once the sale is made and downstream implementation and service professionals get to work.

Throughout 2020, our Commercial Banking (CB) client onboarding team executed over 220,000 product implementations across multiple geographic, service and product level complexities. Aligning the right person to the right work at the right time was critical to providing an optimal experience for our clients—but until recently that work had been a relatively manual process.

Historically, our implementation managers relied on a series of labor-intensive, qualitative analyses of teamwide capacity and workload metrics to assign implementations. We knew there had to be a better way.

Last year, our CB Middle Office organization—comprised of teams across client implementation, service and experience—reimagined how to quantify incoming work requests and route them based on attributes such as team member availability, training, and existing client assignments. Shifting to an automated decisioning model would further streamline our operations and advance the overall client experience.

From Concept to Realization

Working together, our CB business analytics and technology teams designed, developed, and deployed The Assignment Assistant—an algorithm-powered portal that interprets, quantifies and recommends work allocations based on a multitude of factors and conditions.

  • Using a statistical approach, we identified the key attributes of an assignment and how those factors impacted the way work had historically been allocated.
  • By identifying the most complex attributes of a request, we were able to score and categorize each implementation.
  • This data helped us better understand each assignment’s impact—including effort, duration, capacity and requests currently underway with the same client.
  • We were able to create a holistic view of a team’s workload, enabling us to better field incoming requests and assign them based on resource experience and availability.
  • In addition to streamlining end-to-end workflows, the output provided critical insights and metrics into a task’s relative complexity and requirements to deliver superior outcomes.

Feedback from managers who participated in the pilot was extremely positive, with one commenting, “The Assignment Assistant has put data at my fingertips. It’s helped me place the right work with the right resource, faster and more accurately than ever before. The result is a more precise deal assignment flow and a better client experience.”

These Three Were Key
    1. We wouldn’t have reached this point without rethinking traditional boundaries and role expectations across functional groups and project teams. Crucial breakthroughs came from business analysts, technologists, data scientists, and operational managers. Innovation is every team member’s responsibility.
    2. A strong data infrastructure was critical to our approach. Companies often have more data than they realize. The key is to harness the power of that data to provide insights into how to evolve your business and provide better client experiences.
    3. Building with an iterative approach in mind was a priority. We designed the platform to enable continuous improvement and technology advancements over time.


Evolving with Our Clients

In 2021, we’ll migrate The Assignment Assistant to an enhanced, scalable in-house tool that accelerates our Artificial Intelligence and Machine Learning gains. Building on this cloud-based platform will significantly reduce the time needed to make updates while enabling ongoing improvements through a self-learning algorithm. Complexity is ever-evolving in our business, and this solution will be there to ensure clients and colleagues benefit from the power of technology automation and insight.

We’re excited to support this year’s Windy City Summit, and we hope this sparks creative collaboration across your own teams.

NextGen Treasury: Your Digital Roadmap

Content Sponsored by BMO

Digitizing payments has become more important than ever as organizations look to increase working capital, create efficiencies, potentially reduce costs and minimize risk. Furthermore, the COVID-19 pandemic has pushed many businesses to adopt automation as a way to address these concerns across the broad community of suppliers, customers, and partners.

According to a 2020 survey by the Association of Financial Professionals (AFP), nearly 60% of respondents said their organization was very likely or somewhat likely to convert the majority of their B2B payments to suppliers from checks to electronic payments. Only 5% indicated they have no plans to convert.

Journey to Digital Payments Infrastructure

But what does that journey to implementing a digital payments infrastructure for corporates look like? Susan Witteveen, who heads the Treasury & Payment Solutions group at BMO Canadian Commercial Bank, recently moderated a discussion with three experts to discuss best practices:

  • Robert Lowther, Senior Vice President of Finance at MNP
  • Megan Kells, Head of North American Treasury and Payment Solutions, Product at BMO
  • Matthew Bleecker, Director of Payments Optimization Strategy at BMO


View On-Demand Recording of Panel Discussion

This panel discussion took place on February 8, 2021, and is being shared with the permission of BMO.

CLICK HERE to view the on-demand recording or read an edited summary of the conversation.

Three Tips to Help Keep Your Business Safe from Scammers

Fraud is on the rise with the current pandemic, and now is not the time to let your cyber guard down.

Scammers use widespread events like this to take advantage of people and companies, and with so many of us working from home now, it’s important to keep in mind the following safeguards when using online banking sites.

These three tips can help.

1.  Keep employer data secure when working remotely

If you’re using your personal devices when working remotely, be sure to follow your company’s IT department policies and report any suspicion of viruses or computer performance issues to the appropriate authority at your company. Examples include:

  • Reduction in processing speed
  • The computer locks up, reboots or restarts unexpectedly
  • Unusual pop-up windows
  • The computer cannot be restarted or shut down


2.  Avoid business email compromise situations

A prevalent ploy known as phishing involves fraudulent communications designed to trick you into divulging personal, financial or account information. These scams can include emails that connect you to fraudulent websites and request personal information.

Phishing emails have also been used as vehicles for malware or computer viruses that silently capture information, such as passwords and user IDs, from the infected computer to commit wire and ACH fraud.

Avoid clicking links in email messages, even if they appear to be legitimate. Instead, make a quick phone call to confirm the email can be trusted or type the legitimate URL into your web browser.

3.  Obtain a secondary form of authorization before making changes that would impact any type of money transfer – check, ACH or wire transfer.

Fraudsters have tried to steal billions of dollars from businesses by posing as company executives and ordering huge wire transfers. These scams can be in the form of emails, phone calls or texts and may refer to specific individuals or business functions such as payroll, human resources and accounting. A common tactic is to convey a sense of urgency and/or secrecy. Often, the emails arrive late in the day, just before a holiday or weekend or when the purported sender is out of the office.

If you receive an email that appears suspicious, be sure to check the authenticity of the email prior to performing any wire transfers. Never act upon changes to payment instructions from an email or fax message alone. Instead, check the validity of the instructions from the requester with another trusted party at the company, using a different communication method.

The above examples are not comprehensive, there are many and varied types of scams out there. While the convenience of online transactions and the internet makes our life easier, we must take reasonable precautions to keep safe. For more information on current fraud issues, bookmark these websites and check back as they are updated regularly:

Scams and fraud attempts are unfortunately on the rise, but by staying vigilant, we can better protect our businesses and our personal data.

This article was reposted with the permission of CIT Group Inc. ©2020 CIT Group Inc. All rights reserved. CIT and the CIT logo are registered trademarks of CIT Group Inc. Deposit and loan products are offered through CIT Bank, N.A., the FDIC-insured national bank subsidiary of CIT Group Inc.

ESG in Strategic Asset Allocation (SAA): A practical implementation framework

Authors: Gunnar Friede, Guido Lombardi, Peter Warken, Jason Chen, Dirk Schlüter, Robert Bush, Francesco Curto, Eric Legunn  

Much research has been made in the past few years about how to integrate ESG in various asset classes; however, ESG research on a total portfolio level—or strategic asset allocation (SAA) level—is still very limited. As a 2019 PRI publication put it, the integration of ESG aspects in SAA “is an area that has received relatively little coverage about what it should mean in practice” 1 

This study seeks to address the current blind spot of research to further facilitate ESG integration comprehensively at an overall multi-asset portfolio level. The specific objective is on (i) understanding the potential impact of integrating ESG factors on risk-adjusted returns, (ii) what is the best approach to pursue to minimize impact. Our analysis concludes that it is possible to have portfolios that reduce significantly ESG risks without meaningfully different risk-adjusted returns vs traditional index SAAs at relatively low levels of tracking error (“TE”). We estimate that the optimal ESG impact can be achieved for TEs between 75 and 100bps, although an investor’s preference between their risk budget and ESG utility function will determine their appropriate trade-off between these two measures. Other findings:  

  • ESG integration can be run for either individual asset classes or at a total portfolio level. The combined approach (optimizing the SAA and implementing via ESG indices) is the most efficient approach from the standpoint of total ESG utility versus tracking error.  
  • Basic integration optimized across regional indices, sector indices, and ESG Indexes provides different levels of ESG 1 Principles for Responsible Investment. (September 2019). “Embedding ESG Issues into strategic asset allocation frameworks: Discussion paper.” improvement that depends highly on index/fund selection. The impact can vary from a reduction of 10% to F-rated (highest risks) stocks and carbon intensity to as much as 80% and 50% respectively for the same tracking error of 25bps.  
  • Changes in regional weights (e.g. having much more Europe vs the US than in the standard market-cap-weighted portfolio) improves the portfolio ESG characteristics only slightly. 
  • Better (ESG) results can be achieved by constructing the SAA with traditional sector indexes instead of regional ones.  

Much better results can be achieved overall by allocating to ESG indexes. In this latter case, the share of worst ESG-rated securities 2 can be reduced by ca. 80% and the carbon footprint by 50% vs the traditional SAA – for tracking errors as low as 0.25%.  

In the spirit of simplicity and wide applicability, our work has been focused primarily on liquid global asset classes for which there exist a replicable set of underlying indices. As such, we established this framework by leveraging readily available passive ESG indices, which we find sufficient in achieving the various parameters such as climate risk alignment. While we recognize that alternative asset classes and instruments can play a significant role in enhancing the ESG characteristics of a strategic portfolio, this framework is focused on presenting an intuitive, implementable solution for liquid asset allocations. 

This article was reprinted with permission. Read the full paper here. 


1Principles for Responsible Investment. (September 2019). “Embedding ESG Issues into strategic asset allocation frameworks: Discussion Paper. 

2Ratings are based on the DWS ESG Engine. See appendix for more details. 

MARKETING MATERIAL: For Qualified Investors (Art. 10 Para.3 of the Swiss Federal Collective Investment Schemes Act (CISA)) / For Professional Clients (MiFID II Directive 2014/65/EU Annex II) only / For Australia: For wholesale Investors only. For institutional investors only. Further distribution of this material is strictly prohibited. In the U.S. and Canada for Institutional Client and Registered Representative Use Only. Not for public viewing or distribution. Any hypothetical results presented in this report may have inherent limitations. Among them are the sharp differences which may exist between hypothetical and actual results which may be achieved through investment in a particular product or strategy. Hypothetical results are generally prepared with the benefit of hindsight and typically do not account for financial risk and other factors which may adversely affect actual results of a particular product or strategy. Any forward looking statements (forecasts) are based on but not limited to assumptions, estimates, projections, opinions, models and hypothetical performance analysis. All of which are subject to change at any time, based upon economic, market, and other considerations, and should not be construed as a recommendation. 

For Investors in the United States: This document is intended for discussion purposes only and does not create any legally binding obligations on the part of DWS Group. Without limitation, this document does not constitute an offer, an invitation to offer or a recommendation to enter into any transaction. When making an investment decision, you should rely solely on the final documentation relating to the transaction and not the summary contained herein. DWS Group is not acting as your financial adviser or in any other fiduciary capacity with respect to this proposed transaction. The transaction(s) or products(s) mentioned herein may not be appropriate for all investors and before entering into any transaction you should take steps to ensure that you fully understand the transaction and have made an independent assessment of the appropriateness of the transaction in the light of your own objectives and circumstances, including the possible risks and benefits of entering into such transaction. You should also consider seeking advice from your own advisers in making this assessment. If you decide to enter into a transaction with DWS Group you do so in reliance on your own judgment.  

The information contained in this document is based on material we believe to be reliable; however, we do not represent that it is accurate, current, complete, or error-free. Assumptions, estimates and opinions contained in this document constitute our judgment as of the date of the document and are subject to change without notice. Any projections are based on a number of assumptions as to market conditions and there can be no guarantee that any projected results will be achieved. Past performance is not a guarantee of future results. The distribution of this document and availability of these products and services in certain jurisdictions may be restricted by law. You may not distribute this document, in whole or in part, without our express written permission.  

For Institutional Use and Registered Rep Use Only. Not for Public Viewing or Distribution. The brand DWS represents DWS Group GmbH & Co. KGaA and any of its subsidiaries, such as DWS Distributors, Inc., which offers investment products, or DWS Investment Management Americas, Inc. and RREEF America L.L.C., which offer advisory services. Investment products: No bank guarantee Not FDIC insured. May lose value DWS Distributors, Inc. 222 South Riverside Plaza, Chicago, IL 60606-5808 www.dws.com I rep@dws.com Tel (800) 621-1148 © 2021 DWS Group GmbH & Co. KGaA. All rights reserved. I-082544-1 (4/21)