Treasury’s new full-time job? Keeping pace with tech, customer expectations

Mary Ellen Georgas-Tellefsen December 17th, 2019
Treasury Management

Treasury leaders require more resources to innovate and compete

Meeting a treasury customer’s needs is critical to a strong, long-term and profitable relationship. While this concept is not lost on the treasury leaders we interviewed in our recent whitepaper, many face a difficult predicament: How to keep up with the pace of technology and the rising customer expectations that accompany it?

Three factors emerged from our interviews:

  • First, consumer expectations are now bleeding into corporate life, upending the status quo for digital user experience.
  • Second, the complex relationships that treasury holds with commercial customers, combined with a shortage of resources, make it difficult for treasury to focus exclusively on innovation.
  • Lastly, both Fintechs and core processors create challenges for treasury when it comes to launching new solutions and enhancing current platforms.

Rising customer expectations

Better technology has been disrupting consumer experiences for years. Today, as individuals, we live in the era of “now”—and like it or not, so do businesses. Apple, Amazon and Instagram have today’s treasury management end-users expecting an intuitive and easy digital experience.

“Treasury management clients are also consumers, and their expectations are increasing. They have come to expect easy and intuitive user experiences,” said one participant.

Another executive confirmed, “Customer expectations on the retail side are driving new customer and user expectations with treasury management system interfaces.”

Unfortunately, many solutions fail to deliver. Most current treasury management interfaces provide a less than ideal user experience.

Complex relationships

Customer onboarding and ongoing relationship management also bring challenges. Reading between the lines when talking with interview participants, treasury experiences pressure to provide existing customers (i.e., big commercial lending relationships) with excellent and responsive service, regardless of whether it is digital or human assistance.

Participants admit tech itself can become a distraction. Treasury leaders expend valuable time on vendor selection and integration processes rather than product development and customer experience. Especially at smaller financial institutions, treasury management leaders commonly perform onboarding, set up and service tasks to meet customer needs.

Fintechs gain traction by unbundling traditional treasury services

Fintechs are also raising the bar for customer experience, and in the process, threatening financial institutions’ abilities to maintain complete control over their customers’ cash and treasury management relationships. FIs interviewed see these new competitors disrupting traditional business models, innovating in specific product areas and unbundling parts of the cash management ecosystem.

Not surprisingly, Fintechs arose as the number one external challenge for treasury leaders, cited by the majority of FIs interviewed. Yet the relationship is complicated; FIs must consider Fintechs as trusted partners as well as competitors. Smaller FIs, in particular, are likely to work with Fintechs in order to achieve their technology goals.

Some participants attributed the popularity of Fintech solutions to the changing commercial customer base. Younger CFOs and corporate treasurers expect an intuitive digital experience and seamless technology solutions. Their personal experiences with technology also inform their perspectives.

As one participant noted, “Customers and prospects now have a lot of options to consider for managing cash.”

“It is becoming more and more difficult to differentiate us [the FIs] from Fintechs; customers do not always know or appreciate the differences between what an FI can offer versus a Fintech,” said another participant.

Financial institutions must accelerate time-to-market

Despite their varied responsibilities and organizational sizes, when it comes to technology, treasury leaders at FIs large and small share a common struggle to modernize and innovate.

Leaders do not believe they have the capabilities or the resources to innovate or go to market as fast as Fintechs. Internal processes, including compliance and legal hurdles, are a common factor that slows time-to-market; participants were quick to point out that most Fintechs operate with far less regulatory oversight.

Core processors also create challenges for treasury management. Smaller FIs, in particular, expressed concern they are “held hostage” to the schedules and product development capabilities of their outside vendors.

“We would love to scrap our core processor and start over,” stated one treasury leader.

Resources are critical for speed and innovation

It’s obvious that developing a next-generation, strategic treasury management function is not without obstacles. A laser-focus on improving technology will be essential to a viable treasury management offering, and a healthy, profitable commercial financial institution.

As one participant concluded, “If technology enhancements versus costs are not evaluated effectively, smaller banks will be behind the eight ball.”

While every FI’s innovation roadmap will be unique, the leaders interviewed are focusing product development in these four areas:

  • Payments, including real-time, international and integrated payables capabilities
  • Platforms, including developing APIs and enhancing mobile and online platforms
  • Targeted industry solutions with sector-specific packages
  • Customer experience, from onboarding to daily activities

At the same time, forward-thinking FIs are putting structure in place for stronger go-to-market capabilities, focusing on:

  • Elevating the profile of treasury. Positioning treasury management in a more autonomous, strategic position levels the playing field within the FI. The result is improved collaboration between departments and greater access to critical resources. In particular, a well-staffed product management function will be crucial to compete effectively.
  • Mapping the customer experience. As a next step, map the desired experience for treasury management customer. This includes documenting all aspects of the end-to-end customer experience, from onboarding to back-office service. This provides foundational knowledge to develop the right technology roadmap, prioritize investment and choose the best partners.

It also ensures priority for the customer experience enhancements that will create valuable, long-term and loyal customer relationships—and revenue for the FI.

Up next in our treasury management series: Are talent woes putting treasury management’s future at risk?

This content is accurate at the time of publication and may not be updated.