Category: Technology

Treasury and Finance Trends for 2021

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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

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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.

Attempted Payments Fraud Via Email Compromise: What Does It Look Like? 

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Sponsored content submitted by PNC

Payments fraud attempts are widespread across all industry types as a result of email compromises and financial malware infections. Understanding how these fraud schemes are designed to infiltrate and compromise your business and taking action to prevent them are critical to your defensive strategy. It is imperative that employees with access to funds movement services are aware of these fraud schemes and can recognize potentially fraudulent or malicious activity against their email or login credentials. These are very real threats, and we encourage you to educate staff throughout your organization. 

Cybercriminals initiate fraudulent payment requests, or requests to change payment instructions, from email accounts that appear to be from a company executive (such as the CEO or CFO) or from a known external partner, such as a supplier. The fraudulent “From” email address may be a fictitious account in the executive’s name, or it may be a slight variation of a legitimate supplier email address — both of which can trick the recipient into believing that the communication is valid. It is also possible that the sender’s legitimate email account has been compromised, making it essential that employees are able to recognize the characteristics of a fraudulent payment request. 

Also be mindful that even when an email account is not compromised, there is quite a lot of information available in “Open Source” records (social media, public records) that cybercriminals can obtain easily in developing such schemes. For example, large construction contracts, such as for universities or hospitals, are disclosed in public filings. Cybercriminals can access these records, register a website impersonating the legitimate contractor, and initiate communication with the university or hospital introducing a “new” accounts receivable contact and account number set up specifically for this contract.  

Oftentimes, the cybercriminals will wait several months before initiating contact and use open-source records to identify accounts payable personnel. In such schemes, the cybercriminals don’t need to know the amount of the upcoming payment or even the projected date for the payment. Instructions sent typically state something like: “All payments going forward should be made to the new account number and to the attention of the new accounts receivable contact.” As construction contracts are typically paid in net 30-, 60- or 90-day increments, often the victims are unaware of the fraud until weeks or months have passed, making recovery of funds extremely difficult.  

Another email impersonation fraud scam targets employee direct deposits. Hacked or spoofed employee email accounts are used to request changes to the employee’s direct deposit information. As with all email requests relative to payments, you should confirm them with the requestor at a known telephone number. 

This article was reprinted with the permission of PNC. CLICK HERE to view the original post or to learn more on how you can protect your organization from cybercriminals, REGISTER for the Windy City Summit.

New Technology – Understanding Basic Concepts

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Written by: Francesco Tonin
Bloomberg L.P.

I was recently planning content with a TV producer for a show on currencies, including crypto currencies. I asked if she knew how a bitcoin miner can verify that you possess your private key without the miner knowing your private key. I understand when you pay online with a credit card the bank has a record of the card number on file, they verify the number was inputted correctly. But a bitcoin miner does not know your private key, so how in the world can they verify that you have one?

Her answer was a very simple blanket statement, similar to other responses I have received to the same question. Her reply, “it was possible thanks to blockchain technology.” This is the right answer if you currently work in corporate treasury and will never have anything to do with blockchain. But it accepts our inability to crack the concepts that make blockchain technology so powerful. If we as treasury professionals do not understand, own, direct and manage those powerful tools, then we will be relegated to the corner.

This blanket statement is not the same answer you will find at the Windy City Summit!

Soon, firms will adopt software that will run on blockchain technology for payments, document processing or other workflows. It is a sound financial decision for firms that will increase profits. We must prepare today for tomorrow’s technology. Educating ourselves today will give us the ability to understand the basic concepts to be able to contribute to the discussion on the new blockchain technology, this will not be difficult, but it requires a little effort, a little attention and a little self-challenge.

At the 2018 Windy City Summit I presented the core concepts of blockchain. I was pleasantly surprised by the amount of attendee interaction. The questions, ideas and insight from the attendees was extraordinary. The Annual Windy City Summit encourages attendees to be part of the debates, to challenge the speakers, examine new technology and see how it may or may not impact their day-to-day processes. That is why people attend the Windy City Summit year after year: to gain exposure to new ideas, to discuss and engage in questions about hard concepts on which a Google search is unlikely to shed much light.

Those who attended the blockchain technology presentation last year will not be relegated to the corner when blockchain becomes a reality at their firm. They will manage these powerful tools all because they are prepared.

I hope you attend the 2019 Annual Windy City Summit and start preparing for your technology future.