Four forces reshaping the role of treasury and finance in 2022

The scope of corporate treasurers and other financial decision-makers has never been wider. Confronted by a challenging business landscape amid supply chain disruption and economic uncertainty, they increasingly need to provide higher-value strategic support and guidance – while still fulfilling traditional day-to-day finance and money management obligations.

A forward-looking McKinsey report, for example, explains treasury and finance professionals now spend 19% more time on value-added aspects of their roles, compared with a decade ago¹. These include pricing strategies, competitor analysis, ESG reporting, and new product and business model development.

“This trend is set to continue – and likely accelerate – in the wake of the pandemic, since treasury and finance functions have started to emerge as more of a business partner after helping senior management make urgent financial decisions during times of liquidity crisis. This is clear from the HSBC Rethinking Treasury Survey 2021², which found 84% of chief financial officers (CFOs) in Asia Pacific have changed the incentives of their treasury function to focus on strategic rather than tactical goals.” Lewis Sun, Head of Product Management, Global Liquidity and Cash Management, Asia Pacific, HSBC.

In particular, four key market trends are likely to shape the finance agenda in 2022 and beyond:

1. Digital adoption – technological innovation creating operational efficiencies that free-up time to focus on value-added tasks
2. Blockchain – leveraging the multiple uses of this technology to derive benefits that include the greater exchange and better visibility of information, authentication and seamless connectivity
3. Ecommerce – the growing influence of ecommerce among consumers and businesses, changing how finance teams manage financial risk and forecasting
4. Sustainability – with ESG now a business imperative, it challenges the role of finance in supporting a more sustainable organisation

Adapting to a new role

1. Digital adoption

Innovation will define the future of treasury and finance management. A range of technologies that include data analytics, robotic process automation (RPA), artificial intelligence (AI) and blockchain, will transform how treasurers work.

In particular, this will lead to more automation of traditional finance tasks; already this had risen from 34% in 2018 to 60% by 2020³. 

As a result, with more time on their hands and new technologies, treasurers can make use of application programming interfaces (APIs) to meet the demand for greater access to financial data and transaction capabilities by enhancing access to services and seamlessly connecting with third parties and their network ecosystems across markets and regions – including with banking partners.

2. Blockchain

Financial decision makers are also getting ready for blockchain and digital assets to become mainstream. Indeed, 97% of CFOs now expect to see blockchain technology used in their company, with trade documentation, payment security and FX management considered the use cases with the most potential⁴.

In practise, this brings with it benefits of record keeping and authentication capabilities. It also facilitates the movement of available cash quickly and easily to where it is needed most, and with more transparency – via a detailed view of account balances and transactions.

Finance teams must balance all this with potential risks from these relatively new technologies, such as:

• Limited regulatory oversight
• Securing knowledgeable talent
• Adapting legacy systems

This requires attention to data privacy, prevention of anti-money laundering and counter terrorist financing, and mitigation of potential cybersecurity breaches.

Figure 1: Top future use cases for Blockchain technology⁵

3. Ecommerce

Another undeniable global phenomenon finance teams must adapt to is the rapid growth in online, multi-channel transactions among consumers and also businesses.

This places new demands on the finance function. Among these is managing financial risk and forecasting; while ecommerce creates simplicity for the customer, financial decision makers must deal with new forms of potential fraud, as well as financial and non-financial risks.

The focus, therefore, must be to prepare for this permanent shift plus tap opportunities it creates for more automation that complements the business in the form of sales. Syncing with banking partners that have introduced digital and ecommerce-ready services – across payments, collections and liquidity management – will enable treasury and finance professionals to navigate the risks and deliver the expected consumer experience.

Figure 2: Drivers for embracing digital commerce⁶
% ranking as a top 3 driver for ecommerce

4. Sustainability

ESG, meanwhile, now has an overarching influence on every aspect of the role of finance. They need to explore and implement more sustainable ways to operate and fund their firms – from new ways of working to how they choose service providers.

Efforts to go paperless offer numerous advantages:

• Digital documents, processes and storage create greater efficiency, lower costs, faster processing and fewer manual processes
• Security and tracking, via e-signatures and online archives

To put ESG and sustainability into practice, however, requires greater use of technology for remote working and digitised processes. Financing also needs to be done sustainably, including standardised approaches and reporting.

The other ESG-related consideration for finance is managing the associated risks; 68% of treasurers are likely to allocate resource to managing ESG risks over the next 12 months⁷.

Figure 3: Extent to which treasury / finance has embedded ESG criteria into financing arrangements⁸

Equipped for the future

With all these new and emerging change drivers, financial decision makers need to build out both soft and hard skills within their teams.

Part of this involves asking the right strategic questions. This relies on a wider and deeper understanding of the organisation, its objectives and the risks it faces.

This is essential to help close the gap in terms of culture, perceptions and mindsets – both within the finance function and across the whole company – to prepare them for a more strategic role and the irreversible influence of new technologies and processes.

Ultimately, as the impact of these fuel an ongoing finance evolution, treasury and finance professionals can leverage innovative digital tools and capabilities through integrated transaction banking solutions to help fulfil their needs.

Figure 4: The top 5 most relevant digital finance competencies⁹

Sources
1 - McKinsey, Finance 2030:Transforming the finance function of the future, November 2020
2 - https://www.gbm.hsbc.com/en-gb/campaigns/rethinking-treasury-survey-2021
3 - Accenture, CFO Now: Breakthrough speed for breakout value, 2020
4 - https://www.gbm.hsbc.com/en-gb/campaigns/rethinking-treasury-survey-2021
5 - Deloitte, Global Blockchain Survey, 2021
6 - Gartner, Survey analysis - 9 Key Trends in Digital Commerce Adoption, 2020
7 - HSBC, Rethinking Treasury: The road ahead, Corporate Risk Management Survey, 2021
8 - HSBC, Rethinking Treasury: The road ahead, Corporate Risk Management Survey, 2021
9 - Gartner, The digital future for finance, 2021