Technological innovation and disruption, now commonplace in consumer services, is poised to greatly influence the investment priorities and business plans of financial executives, according to the 2017 Treasury Management survey conducted by TD Bank. For 2018 and beyond, finance professionals cite process automation (31 per cent), distributed ledger/blockchain (23 per cent) and artificial intelligence/robotics (15 per cent) as the top disruptive technologies that will have the largest impact on treasury functions and payments over the next two to three years.
The survey collected insight from 340 corporate treasurers and other finance professionals at the 2017 Association for Financial Professionals Annual Conference in San Diego, CA. Disruptive technologies are top of mind for these individuals, who cited that they are preparing for changes in the treasury management industry by:
- Leveraging solutions from fintech providers – 31 per cent
- Developing in-house technology to get a leg up on competitors – 23 per cent
- Hiring more tech savvy employees to keep up with the trends – 15 per cent
Although most companies are taking proactive steps to embrace technology in their finance capabilities, another 29 per cent of respondents said that they are taking a “wait and see” approach. While more than a quarter of executives reported taking a more cautious road, 10 per cent of their peers indicated they will invest in one of the more experimental technologies: artificial intelligence and robotics.
“It is no surprise that technology and automation factor high in near-term investment plans, as financial professionals and treasurers – like most functions – are continually challenged with doing more with less,” said Chris Giamo, head of Commercial Bank, TD Bank. “The capability of these tools to increase speed, accuracy and efficiency could dramatically streamline workflows.”
Need for speed
While AI and robotics may represent the long-term future of treasury management, more than half of finance professionals surveyed (52 per cent) expect faster or real-time processing to experience major growth in payments innovation in 2018. Despite the industrywide expectation for adopting real-time commercial payment processing, 23 per cent of finance professionals see the ability to adapt to or process faster and electronic payments as their organization’s top operational challenge.
“Treasury management is approaching an inflection point and organizations must adjust accordingly,” TD Bank head of corporate products and services Rick Burke said. “The potential for AI and robotics to disrupt and revolutionize payment processing especially should not be underestimated.
“Just as the Federal Reserve and other industry bodies will need to develop a standard to clarify what defines real-time payments in the commercial world, finance professionals will need to develop and invest in new technologies to meet the demand for real-time payments.”
Challenges and Cash Allocation
Along with challenges posed by cybersecurity (32 per cent), finance professionals believe that challenges due to continued interest rate increases (30 per cent) and the current geopolitical environment (25 per cent) will have the greatest impact on their organization’s capital spending.
When asked where their organizations anticipate allocating excess cash, finance professionals cited:
- Acquisitions – 22 per cent
- Information technology – 22 per cent
- Capital Expenditures – 21 per cent