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The real-time reformation of treasury


While the impact of real-time payments on treasury operations has generated much attention, we should not overlook that this digital acceleration is also happening across a number of other fundamental treasury functions. What’s more, proactive treasurers can already begin unlocking benefits from these technologies, writes Shahrokh Moinian, Head of Cash Products, Deutsche Bank

Compelling real-time applications are in development for a number of treasury functions, including liquidity management, foreign exchange (FX) and cash-flow forecasting. And while developing and optimising these will take time, many building-block technologies are already available. With this in mind, forward-thinking treasurers are sizing up a range of early solutions, cherry-picking those that best mesh with their existing systems, and laying the foundations for a future real-time treasury.

Improve liquidity with real-time cash application

According to a recent survey conducted by Euromoney and Deutsche Bank, 50% of treasurers see liquidity management as the area with the most to gain from automation in the near future. Combining real-time payments technology with robotic process automation, for instance, corporates can make instant, automated sweeps to cover outgoings and keep account balances positive – reducing the need for borrowing and large working capital buffers. On the other hand, this also, means incoming funds are immediately available and can be quickly funnelled into new investment opportunities, generating better returns.

Meanwhile, when it comes to cash pooling, the traditional end-of-day model may become obsolete, being replaced by intra-day sweeping and eventually real-time sweeping (once the caps on real-time payments are raised).

Indeed, speaking for the purpose of our recent white paper, The road to real time treasury, Carola Schmitz-Becker, Vice President of Corporate Treasury at Deutsche Post DHL, discusses the delivery company’s intra-day cash pooling solution, which “ensures that subsidiaries receiving instant payments outside business hours do not trap cash in low-yielding accounts” – making it a valuable strategic boon.

The effects of real-time FX

Real-time technology can upgrade FX processes too. Often, the FX conversion and booking process is disconnected from the rest of the transaction so the corporate treasurer cannot see what exchange rate was applied and when.

Real-time technology can resolve this issue via booking solutions, such as Deutsche Bank’s FX4Cash, which carry out currency conversion in real time and generate a record of the time, date and conversion rate.

Yet clarifying the booking process is not real-time technology’s only FX application. By combining artificial intelligence and RPA, banks are able to calculate dynamic hedges for corporates’ FX exposures within a matter of seconds. This has the potential to dramatically reduce the risk of FX transactions, but the extent of its value will depend on how quickly corporates can register the creation of an exposure and feed this data to the bank. While most corporates are still some way away from carrying this process out in real time, they can still realise considerable benefits from relaying the information as quickly as their systems will allow.

Deutsche Bank’s DB Maestro platform, for instance, allows treasurers to programme a rules-based engine with their specific risk profiles and triggers to create tailored, instant hedges whenever new information is registered. When used in tandem with a real-time booking solution, this kind of solution can give treasurers improved visibility and unprecedented control over their FX exposures.

An improved outlook

PwC’s Treasury Benchmarking Survey reports that 75% of treasurers still struggle to compile an accurate cash-flow forecast. This is another area real-time technology can help address.

For example, banks can use application programming interfaces (APIs) to harness data from across treasury functions, presenting them to the treasurer as a dynamic treasury dashboard. Real-time payment data will feed into the dashboard from across the corporate’s internal systems, updating dynamically and automatically. Even if some elements of the dashboard are not yet real-time, treasurers can gain a more accurate overview of aggregated cash positions – driving better cash-flow forecasts. What’s more, this collated data could also be fed into simulation software, allowing treasurers to change certain variables to see how it would affect their overall liquidity positions.

Though these building-block technologies and initial real-time solutions are already available, there is still much work to be done – by both corporates and banks. Treasurers should be realistic about what their existing systems can support, and identify where they can start adding real-time value. Banks should provide practical guidance, while partnering with digitally proficient institutions to develop useful treasury technologies, and drive them to market.

For more information, please see Deutsche Bank’s whitepaper, “The road to real-time treasury”, here.

Written by Shahrokh Moinian, Head of Cash Products, Deutsche Bank



[1] 1 See Euromoney report “Treasury Non-Stop: Excitement builds for real-time” on the impacts of real time and APIs on treasury, published July 2018

Author: Kate Nelson