"Customers are looking for deeper degrees of integration," Durkin said, adding that they're also focused on the information they get back from their bank. "They're looking for more transparency in terms of acknowledgements and status."

Uncertainty about cloud solutions has subsided, Durkin noted, with corporate treasury executives having absorbed the message that the cloud can allow for faster implementations and more frequent upgrades.

Craig Jeffery, managing director at Atlanta-based consultancy Strategic Treasurer, noted an improvement in the reporting provided by treasury management systems as those systems incorporate business intelligence (BI). He added that the BI tools allow a self-service approach to both reporting and analysis.

Payments

One area attracting a lot of attention these days is payments. Jeffery said treasurers are looking for "broader payment capabilities."

Some treasury management systems are becoming payment hubs, he said, and supporting all kinds of payments, even those that don't originate in treasury. "Maybe I don't want to approve all A/P payments through the treasury management system, but I might have three A/P groups," he said. "I can send files from those areas to a payment hub, and it will do format changes and deliver them to banks."

Thomas Leitch, chief operating officer at treasury management software vendor TreasuryXpress, says many corporates he speaks to want to be able to handle payments through a single system.

"Almost all our deals in the U.S. include payments and workflow around payments," he said, and noted that if a company has multiple banks, using the treasury management system to initiate bank payments frees treasury staffers from having to spend time logging into various bank websites.

"The real disruptor in the treasury space is the API."

—Thomas Leitch, TreasuryXpress

Dan Carmody, executive director at TreaSolution, a treasury consulting and training company, noted the move toward faster payments, such as same-day ACH payments, and linked that speeding up of payments with treasury departments' interest in more timely reporting.

"If you have real-time payments and you have delayed reporting on those payments, it makes things a little more complicated," Carmody said.

Longevity

Paul Bramwell, a principal at EY Global Treasury Services, argued that treasurers' number-one consideration as they're shopping for a treasury management system should be how long the vendor plans to support the software. The market for treasury solutions has undergone considerable consolidation in recent years, leaving some vendors owning a number of different systems.

"Treasurers ought to be considering and taking very seriously what the likely time frame is that those systems will be supported by the vendors," he said. "Treasurers have been burned in the past by investing in technologies which have relatively quickly become obsolete. Given the market consolidation, it's more and more difficult to make a choice."

Strategic Treasurer's Jeffery said treasury teams these days are looking for vendors with "staying power." They're measuring that by assessing two factors, he said: how much the vendor is investing in the product a treasury is considering adopting, and how much outside investors, like private equity firms, are investing in the vendor.

"Are other people betting on this company? I think that's the right way to look at it," Jeffery said, and noted the long periods that companies often end up using their treasury systems. "You want something that grows in value."

Enrico Camerinelli, a senior analyst at Aite Group, argued that the concentration that's occurred in the market for treasury management systems shouldn't concern treasurers.

"When you have a concentration, you have a much wider portfolio of different systems; you have a menu from which you can choose," he said. "With all under one roof, perhaps I can negotiate better. I might get better service."

Upgrades

Treasury management system vendors provide regular updates to their systems' functionality, and EY's Bramwell said one upgrade likely to be coming next year will reflect changes to accounting regulations that make hedge accounting more accessible.

He predicted that treasury systems will also be boosting their functionality related to commodities, "partly because the changes in hedge accounting make commodity hedging easier and more accessible."

The issue of cybersecurity also comes up with regard to upgrades. BofA Merrill Lynch's Durkin said companies should be sure they're keeping up with a vendor's security updates and patches, and treasuries shopping for a system should ask about the frequency with which security updates will occur.

Next year's upgrades might also include features that help treasurers comply with the requirements of SWIFT's Customer Security Program (CSP), Jeffery said, such as multifactor authentication and the implementation of a reasonable timeout so that if someone walks away from a system he or she is logged into, it will lock down after a certain amount of time.

"If you're not using multifactor authentication, and if your provider does not offer that, that needs to be an enhancement to support [SWIFT's] security program," he said.

APIs

TreaSolution's Carmody said that given the length of time companies tend to use a treasury system, they need to take into consideration how treasury technology will evolve over the period they're likely to use the system.

One technology that's getting a lot of play in treasury circles these days is APIs, or application programming interfaces, which link systems together, allowing data to flow from one system to another.

APIs are expected to get a boost early next year when the EU's Payment Services Directive 2 (PSD2) requires banks in Europe to start providing customers with four updates a day about their accounts. While PSD2 doesn't specify how to provide those updates, banks are expected to use APIs.

"That's a big shift," TreasuryXpress's Leitch said, noting that bank account information traditionally has been exchanged by sending files containing the information.

Leitch said the effects of PSD2 are likely to spill over to the United States.

"The real disruptor in the treasury space is the API," he said. "Treasury management system vendors will have to slash and burn everything they built in the last 20 or 30 years in order to conform with changing trends and the speed at which we operate in the marketplace right now."

Leitch noted that vendors can plug into banks' APIs to receive data, and he said the greater use of APIs would help speed up implementations of new treasury management systems.

"The longest part of any treasury management system implementation is typically waiting for the banks to connect to the corporate and start sending data," he said.

A survey conducted by Strategic Treasurer and TreasuryXpress found that while 72% of companies expected their treasury management system implementation to take no more than nine months, only 41% of implementations were finished within that time frame.

Leitch said TreasuryXpress is rolling out a new system early next year that treasuries "can get up and running in a day." The new system will only be available as a cloud solution, which Leitch said was part of what enabled the speedy implementation, along with the methodology TreasuryXpress has developed for running implementations. "Treasury's relationship with IT is what slows it down."

Robotics and AI

Another technology that's getting attention in the treasury space is artificial intelligence, or AI, along with the related fields of robotic processing automation (RPA) and machine learning.

Robotic process automation involves letting systems "make decisions based upon preapproved input," Jeffery said. "It's like a decision tree with tolerances; you train the machine to do it."

Treasury management systems already employ some elements of robotic process automation, for example, to provide the accounting codes to record payments hitting the bank account in the general ledger, he said.

Machine learning can allow systems to take into account huge amounts of data. TreaSolution's Carmody said that could come in handy for cash forecasting and reconciliation.

With cash forecasting, systems "that have access to a comprehensive data set can utilize machine learning to give estimates on cash forecasting scenarios," he said. "On the reconciliation side, the machine learning capacity can analyze transactions as they are happening and reconcile them.

"A machine learning system might be able to see patterns in a cash flow that a human may not have easily been able to calculate, and point it out as a reconciliation area," Carmody added.

Leitch said TreasuryXpress already uses AI in its support function and plans to integrate it into its front-office operations, with possible uses including cash forecasting and analyzing liquidity.

For example, he said, AI might provide analysis around forecasting data and trends, including historical data. If the company has often overvalued a certain item on the budget in the past, the system might point that out. "It's basically enhancing the corporate treasurer's ability to make a strategic decision, but not making that decision for them," he said.

Blockchain

Blockchain, the distributed ledger technology that underlies the cybercurrency bitcoin, has been touted as a potential tool for many financial chores. Strategic Treasurer's Jeffery noted that banks have invested sizable amounts in blockchain technologies, while payments provider Ripple and fintech Finastra are both using the technology.

Blockchain technology could be used in treasury management systems to provide "real-time, instantaneous validation of transactions," Carmody said. "It's yet to be fully developed, but there's potential for blockchain rollouts when it comes to cross-border trade, where you need to be able to validate all the parties in a transaction."

But Leitch argued that blockchain won't have a big effect on treasury technology for another 10 to 15 years.

Outsourcing Implementation

Leitch predicted that treasury management system vendors will embark on a price war next year.

"It's already started in Europe," he said. "It's now going to move to the U.S. The cost of solutions is dramatically being brought down."

He also cited the prospect that some treasury management vendors may start to outsource the implementation of their systems to consulting companies. "That might cause a huge disruption in the flow of implementing a treasury management system and getting it up and running," Leitch said.

EY's Bramwell noted that ERP vendors have outsourced the implementation of their software for years.

"Software vendors are starting to realize that they are software companies and not services companies," Bramwell said. "They are wanting to focus more on being a software company and devoting their resources to making the software the best that it can be."

Jeffery said that while some implementation activities that are less complex might be better performed as part of an outsourcing arrangement, treasury management software vendors that outsource too much risk losing their expertise in certain areas. "The core and most complex aspects [of implementing a system] should never be outsourced," he said.

From the December 2017 special report

See also:

Treasury Systems for SMEs