8 Reasons Why Treasury Systems Need to Change Now

Faced with a number of new operational pressures—from higher interest rates and market volatility to a changing regulatory environment and relentless digitalization—financial institutions are evolving their treasury platforms to embrace change and leverage innovation in a fast-evolving market.

Currently, resources are being stretched thin as many banks ask their treasury organizations to play a greater strategic role in the business. However, traditional ways of working are holding back treasury: Reliance on spreadsheets or a fragmented network of systems only increases the manual work, costs and operational opacity when managing the balance sheet.

Firms need to empower treasury staff with the necessary software deployment agility , insights, analytics and automation to be truly effective and strategic. Unlocking the potential of bank treasury is possible with the right solution; here are eight more reasons to modernize your treasury management system now. 

1. Focus on clients, not manual treasury processes

In today's competitive market, client services enable banks to differentiate themselves. In order to free up resources for client strategic initiatives, firms will need to retire inefficient treasury processes and automate/streamline manual and repetitive processes. In parallel, innovation offers a path toward expanded digitalization both for internal tasks and client services portals.

2. Benefit from centralized system 

There’s no substitute for a consolidated, front-to-back treasury system that can provide a standardized, cross-asset view for full life cycle risk and liquidity management. When staff have to pull together data from disparate systems that can’t talk to one another, the time, effort and costs weigh heavily on returns, performance and the business. Streamlining the tech stack should be imperative for every treasury office that wants to quickly plug into standards and best practices for a 360-degree, integrated dashboard across banking, liquidity, trading and investments.

3. Enable the use of a large variety of derivatives for hedging

The growth of derivatives has made them a useful lever for hedging in treasury management. However, increased uptake of derivatives comes with complex pricing and operational support requirements. Automated tooling for pricing and hedging accounting are valuable capabilities when growing a derivatives trading and downright musts to support it at scale.

4. Access real-time risk insights

Markets and volatility move too quickly for manual processes. Even overnight reports may not suffice when real-time tools for cross-asset risk transparency exist today. Treasury needs a comprehensive view to manage funding, liquidity, IR and FX risks, among others, especially in light of more stringent margin and capital requirements. But that’s just half of it; firms also need a treasury solution with stress testing, VaR calculations and what-if scenarios to manage and anticipate risk in real time.

5. Streamline regulatory reporting

The global regulatory scope is increasing and firms are feeling the pressure to continually onboard new reporting requirements as they grow, expand into new jurisdictions or comply with the latest reforms. At a point, manual methods become unsustainable and a liability given the velocity of regulation. Ideally, a bank treasury solution can automate regulatory submissions, generate complete auditability and serve as a single source of truth across teams.

6. Modernize treasury

Technology is rapidly advancing and treasury needs to keep pace as it’s a matter of having both the tools (e.g., AI/ML) and the infrastructure (e.g. cloud-enabled data management) to navigate fast-moving market dynamics. Agile treasury can be achieved by modernizing via means like straight through processing (STP) and cloud deployment for added flexibility, scaling and agility to future-proof resilient treasury operations.

7. Shift priorities to higher margin products

The variety of hedging products keeps expanding, with a focus on high-margin transactions and strategies. Such an approach requires a sophisticated cross-asset platform that supports pricing, valuation and stress testing. Being able to use new and evolving derivatives, intraday and end of day, will help enable treasury desks to improve margin and profitability.

8. Accelerate growth

A complete and modern treasury solution can benefit the business on a number of levels, from optimized total cost of ownership and decreased trading costs to margin optimization that reduces risks of overcollateralization (thereby saving cash for funding or reinvestment). All of this returns operational flexibility back to the business to drive toward new revenue opportunities by enabling scale, supporting globalization and quickening time to market.

Finding the right technology partner

Treasury’s growing strategic role reflects the criticality of its core competencies, from liquidity to risk and trading. Its elevated position within the business, however, requires a strong technology foundation to automate, enhance and reinforce operations.

As a technology provider to banks and market participants around the world, Nasdaq Financial Technology understands the key front-to-back needs of treasury, which Nasdaq Calypso is developed around. A preconfigured reference model that synthetizes over 100 implementations, Calypso treasury solution delivers a best-practice operation model with business rules and dashboards that allows you to get the best of your treasury experts and improve decision-making across teams. Contact us to learn more about how we can help you improve treasury operations with Calypso.