Transform Your Treasury Operations with Seamless Bank Connectivity
This article is written by Palm Introduction Treasurers face the constant challenge of managing cash flow, liquidity, and risk. The need for real-time visibility into cash balances and transactions has never been more business-critical. This blog post explores the benefits of bank connectivity, why it’s essential for treasurers, and how leveraging technology can transform your treasury operations. Discover how enhanced connectivity can streamline your processes, reduce manual work, and empower your team to make data-driven decisions. We’ll cover various connection methods, the significance of cash visibility, and how Palm’s advanced solutions can help you achieve seamless bank connectivity. Why Do Treasurers Crave Bank Connectivity? Treasurers are the backbone of any organisation, responsible for managing cash flow, liquidity, and financial risk. With multiple accounts spread across various financial institutions, having a consolidated view of cash positions is key. It allows treasurers to optimise cash management, avoid unnecessary debt, and make informed investment decisions. In today’s digital age, traditional methods of bank communication are no longer sufficient. Treasurers crave connectivity because it provides the speed, accuracy, and efficiency needed to stay ahead. By connecting directly to banks, treasurers can automate data retrieval, reduce errors, and ensure that they always have the latest information at their fingertips. Why Cash Visibility = Efficiency Visibility into cash balances is a game-changer for treasury teams. It eliminates the need for manual data collection and reconciliation, freeing up time for more strategic tasks. With consistent and unified access to cash positions, treasurers can swiftly respond to changes in the financial landscape, ensuring that the organization remains agile and resilient. Efficiency is not just about saving time; it’s about making better decisions. When treasury teams have accurate and up-to-date information, they can identify trends, forecast cash flow more accurately, and mitigate risks. Enhanced visibility also fosters collaboration within the team, as everyone has access to the same data and can work towards common goals. Why Do Some Treasury Teams Still Rely on Manual Reports? Despite the clear advantages of bank connectivity, some treasury teams continue to lean on manual reporting methods. One significant barrier is the lack of technical support to implement new systems. Many organisations may not have the internal resources or expertise to set up automated solutions, leaving teams to rely on traditional methods that are more familiar but less efficient. Another prevalent concern is the belief that enhancing connectivity will incur prohibitive costs. Budget constraints can make it daunting for treasurers to invest in new technologies, leading them to continue with the status quo instead of seeking innovative solutions that could ultimately save money in the long run. Lastly, time constraints play a crucial role in this reliance on manual reporting. Treasury teams are often inundated with day-to-day operations, making it challenging to allocate time for evaluating and deploying new systems. The pressure to maintain ongoing operations can overshadow the potential benefits of transitioning to automated processes, thus perpetuating a cycle of inefficiency. Ultimately, addressing these concerns is vital in helping treasury teams embrace the transformative How Can You Connect to Your Bank to Retrieve Data? Host to Host Host-to-host connectivity is a direct link between your treasury management system (TMS) and the bank’s servers. This very common method is highly secure and reliable, allowing for the seamless transfer of files and data. It is ideal for organizations with high transaction volumes, as it ensures that data is transmitted efficiently. Bank statements are sent in standardized file formats such as MT940, BAI, and Camt.053. The challenge, however, is that bank branches may leverage differing fields within the format, which results in inconsistencies when creating reconciliation or mapping rules to translate the data. Host-to-host files are typically delivered on a schedule, which also limits the ability to receive and send information in real time. Setting up host-to-host connectivity requires technical expertise and coordination with the bank’s IT team. However, once established, it offers a robust and scalable solution for real-time data exchange. Treasurers can benefit from automated file transfers, reducing the need for manual intervention and minimizing the risk of errors. Electronic Banking Internet Communication Standard (EBICS) EBICS is a standardized protocol for electronic banking that allows the secure transfer of large files and data between banks and businesses. It supports various file formats such as XML, SWIFT MT messages, and EDIFACT. EBICS also offers multiple security features such as digital signatures and encryption to ensure the confidentiality of data. EBICS is not a widely used protocol, so the international treasury team will need to be mindful of whether their bank supports it before proceeding. SWIFT Connectivity Larger corporates may choose to use their own SWIFT connectivity. This enables them to connect directly with their banks via SWIFT messaging. This method is highly secure and standardized, providing real-time access to bank balances, statements, and transaction status updates. However, setting up a SWIFT connection requires significant resources and expertise. It can also be costly for smaller organizations that may not have the volume of transactions to justify the investment. For these reasons, SWIFT connectivity is more commonly used by large corporations with complex international cash management needs. API APIs (Application Programming Interfaces) are revolutionising bank connectivity. They enable real-time data exchange between systems, providing instant access to account balances, transaction details, and other critical information. APIs are flexible, easy to integrate, and can be tailored to meet specific business needs. Using APIs, treasurers can create customised dashboards, automate workflows, and gain actionable insights. The real-time nature of APIs means that treasurers can make decisions based on the latest data, enhancing their ability to manage cash flow and liquidity effectively. However, not all APIs are created equal and treasurers will need to be mindful of the APIs they choose to leverage to support the business . We will cover the key differences here. Connectivity Partners For organisations that lack the technical resources to implement direct connections, partnering with a connectivity provider can be an excellent solution. These providers offer comprehensive services that include setting up and maintaining…
Franklin
Treasury Contrarian View: AI in Treasury—Hype or Reality?
Artificial Intelligence (AI) is one of the hottest topics in corporate finance, and treasury is no exception. Vendors promise smarter forecasting, faster reconciliations, and real-time risk management. But here’s the big question: Is AI in treasury living up to the hype, or is it just another buzzword with limited real-world impact? Where AI Is Making a Real Difference Where the Hype Outpaces Reality The Balanced View: AI as an Enabler, Not a Replacement Instead of viewing AI as a silver bullet, treasury leaders should see it as a tool to enhance existing processes: Let’s Discuss We’ll kick off the conversation with insights from our board members and treasury tech partners who are actively experimenting with AI. Share your thoughts below—we’d love to hear your experiences! James Kelly, Co-Founder, Your Treasury, comments: We’re in the early stages of use of generative AI in treasury and teams are getting real value from chatbots and meeting summaries, but these are quite small use cases. While machine learning has been used in some very large treasury departments and banks for forecasting, it’s use has been far from widespread and so for most of the market, there’s a new skill to learn. It’s also the case that it won’t work for all businesses or all cash flows as the ‘huge datasets’ described above aren’t available in many businesses or for certain cash flows. Where there is genuine potential is in reducing reliance on key staff by becoming an ‘organisational memory bank’, offering how to guides instantly, as well as the ability to produce reports and guides. Over time, we should see AI infused into most treasury processes. For example, if a transaction is reclassified once manually, this is remembered for the future. Ultimately we’ll move away from modular systems where modules don’t talk to each other, to tools that can manage whole processes in one place. This may be the current chatbot style or may be controlled by voice or other means Does that mean that treasury is going to be fully automated and without people? It’s highly unlikely for a number of reasons: 1. Our start point is pretty manual, with a lot of complex ad hoc tasks, so from where we are to full automation is a huge leap.2. It’s unlikely that this would be acceptable for many boards and auditors given the sensitivity around cash.3. To achieve that level of automation would require significant use of AI agents and generative AI, which has been repeatedly shown to be power hungry and devious. See Glass Almanac’s AI: OpenAI’s New Model (o1) Lied and Manipulated Its Way to Survival During Testing and Bank Info Security’s Models Can Strategically Lie, Finds Anthropic Study For these reasons we always look to balance the benefits of generative AI (which are significant and unlock problems we previously couldn’t automate efficiently) with the risks and only use it to the minimum extent required. It’s almost certain that new treasury roles will emerge in managing and maintaining models, as well as roles requiring the hugely important soft skills (anyone who’s done a bank refinancing will tell you that the legal clauses are a small part of the process). Overall, there are significant opportunities but deployment needs to be done thoughtfully Matthew Harlan, Chief Treasury Officer, Nilus, comments: AI in treasury is neither hype nor a magic bullet—it’s a tool, and like any tool, its value depends on how well it’s applied. While AI has made meaningful strides in areas like fraud detection and automation, its effectiveness in forecasting and risk management are dependent by the data that feeds it. The real opportunity lies in using AI to augment treasury teams, not replace them. At Nilus, we’ve seen firsthand how AI-driven insights can enhance liquidity management and operational efficiency when paired with strong data and centralized fragmented systems. I’m excited that presently, we are living in the future and believe that now is the time for Treasury teams to engage with technology and reimagine the future. Lorena Pérez Sandroni, Head of Treasury, PayU GPO, comments: AI provides valuable insights, and I truly believe it can enhance the role of a treasurer by automating routine tasks, which leads to high levels of turnover in our teams when these tasks are too tedious and there is no room for further personal development while things still need to be done! I believe the success of AI, like any other technology, will depend on proper implementation and integration into existing treasury systems, requiring investment in technology and training. Are we doing this while enhancing the use of AI in corporates? However, AI will never replace the strategic insights that a human treasurer brings. 😉 Also Read Join our Treasury Community Treasury Mastermind is a community of professionals working in treasury management or those interested in learning more about various topics related to treasury management, including cash management, foreign exchange management, and payments. To register and connect with Treasury professionals, click [HERE] or fill out the form below to get more information. Notice: JavaScript is required for this content.