Evolving requirements of today's treasurers
According to an Aite Group estimate, overall revenue of the TMS market is now over US$1.2 billion and is experiencing extensive consolidation, with a handful of global players controlling a large percentage of the market share.
There is a paradigm shift towards simplifying treasury processes, increasing operational efficiency and standardizing organization wide policies. Since the Treasury Management System (TMS) market is predominantly buyer-driven, only solutions which can achieve operational excellence can compete effectively in terms of price and scale.
Vendors who sell TMS applications should have the vision to innovate and build solutions which transform the market and deliver value to clients. Apart from executing treasury transactions efficiently, the TMS solutions should be able to capture the information associated with these transactions – The intelligence associated with this information serves as the foundation for enhanced business decision making.
Complexity of managing Global Treasury operations
As an organization becomes globalized, its footprint and coverage increases significantly, which makes managing global treasury operations cost-intensive and complex. Financial institutions with a more domestic or regional focus will require treasury solutions which focus solely on operational efficiency and basic treasury requirements. These organizations can be targeted with plain vanilla treasury solutions, which automate their basic and critical treasury processes.
Plain vanilla treasury solutions with automation capabilities will help TMS vendors to penetrate emerging markets like Africa, where the financial institutions require basic Straight-Through-Processing (STP) and risk management capabilities. However to penetrate more advanced markets, more sophisticated versions of TMS solutions are required incorporating Enterprise Resource Planning capabilities.
Cloud-based Treasury Platforms
A cloud based TMS platform, will allow treasurers and risk managers to access industry-best practices across the areas of: Liquidity Management, Accounting Services, Payments, Collections, Reporting Frameworks, Collaborative Cash Flow forecasting, Risk Management, Balance Sheet Optimization and advanced predictive analytics for scenario planning.
These treasury management solutions will act as decision support solutions for Treasurers, allowing them to select functionalities that are most relevant to their organizational needs and to group and present data in a way which best suits their business requirements.
The Way Forward ...
In today's evolving regulatory environment, Treasurers and Risk Managers require transparent cash and risk management tools which allow them to:
- Predict and understand the movement of money across different currencies and different geographies
- Monitor cash flows on a periodic basis with the help of intuitive visual tools
- Integrate with solutions which will help them to improve cash control, reconcile transactions and automatically populate general ledger entries
- Optimize available resources and decrease their dependency on external sources of funding – To counter unpredictable market conditions
Treasuries have a need to interact with other businesses strategically, to deal with credit crunch situations during which treasurers are expected to provide the guidance to improve the company's financial performance.
Treasury practitioners have a need to actively monitor developments in the treasury industry across the globe to identify solutions which can cater to their needs in the most effective manner. Even emerging economies are trying to relax their currency controls in order to reduce the traditional restrictions which are placed on global treasury solutions.
The Treasury Management industry is in an evolutionary phase due to the emergence of new regulatory norms therefore Treasurers must seek to establish a strategic organization-wide vision to use these unique opportunities to create shareholder value. Those financial institutions which continue to rely on traditional organizational structures and technologies will find it difficult to achieve profitability and cost-efficiencies, as financial service providers are fine-tuning their products to cater to a new breed of global treasury operations.