Tech Investments in an Era of Uncertainty

With interest rates rising and a possible recession looming, what are treasury and finance teams doing to ensure they’re as effective and efficient as possible? Two recent surveys provide divergent insights.

According to a recent “voice of the customer” report released by Deloitte’s financial services practice, a substantial proportion of companies continue to use outdated—in some cases, severely outdated—technologies to perform core banking activities. The report is based on a survey of 175 treasury professionals and in-depth follow-up interviews with 12 of them. Participating companies are small to midsize. Still, their responses are eye-opening.

In terms of the banking services they utilize, 67 percent require access to bank branches and night deposit capabilities. Forty-six percent use a cash vault service and 59 percent a lockbox. And 20 percent of corporate treasury groups still require CD-ROMs. Why? For 17 percent, the transition to a new solution would take too much time and money. “We are not as interested in direct API, since our ERP is batch and the ERP system would need to change,” said the vice president of treasury for a utility provider. And for 40 percent of respondents, their current treasury and banking systems are meeting their needs—so shifting to a more modern option doesn’t seem necessary.

By contrast, a Gartner survey released in late August suggests that larger companies are continuing to improve their treasury technology environments, despite the external economic uncertainty. Or perhaps because of it: Gartner points out the benefits of investing in back-office automation to drive down the cost of finance and treasury operations in the face of inflation.

Nearly every CFO respondent to the Gartner survey (98 percent) claimed to be protecting digital investments even as external uncertainties escalate, and 66 percent said their organization is increasing investments to support digital acceleration. When asked to rank the digital investments that they think most likely to improve efficiency, the first choice (ranked in the top three by 33 percent of respondents) was back-office operations automation. Pricing optimization analytics was a close second, at 32 percent.

“Automating back-office workflows is a key to achieving efficiency gains across a number of areas including accounts payable, accounts receivable, and internal IT services, such as help desk support,” says Randeep Rathindran, vice president of research in the Gartner Finance practice. “In a cash-constrained environment, where margins are under pressure, the urgency to improve productivity in these areas is heightened.”

For examples of how leading organizations are making the most of their technology investments, join Treasury & Risk for a live webcast, on Wednesday, September 14, 2022, when we will learn about the initiatives that made Toyota Financial Services and the San Diego Association of Governments (SANDAG) winners of the 2022 Alexander Hamilton Awards in the category Technology Excellence. Register today!