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Why your bank needs a modern treasury management solution

treasury management solution

Why your bank needs a modern treasury management solution. Source: shutterstock.com

Amidst increasing volatility, evolving regulations, and low interest rates, corporate banking institutions are met with immense pressure to keep financial, operational, and reputational risks at a minimum. To do all these, financial organizations need a treasury management system that can drive wealth management.

Such a system can enable a corporate bank to not only generate returns on portfolios that feature diverse asset types, but also manage hedges and risks. With these features, a corporate bank can effectively play the role of an investment partner and adviser to businesses that entrust their assets to them.

Making the Case for Upgrading to a Modern Treasury Management System

Before they can enjoy or pass on these benefits to their clients, financial institutions must first make an effort to modernize their treasury management system. Legacy systems simply don’t have what it takes to keep up with the ever-changing financial environments that have become the norm in the digital age. In fact, opting to keep these dated systems will be a disservice to corporate banks and the clients that they serve.

With a treasury management system that’s designed and made to meet the challenges of the digital age, however, corporate banking organizations will be able to successfully navigate the following hurdles and maximize the opportunities they present:

The Need to Increase Productivity and Promote Innovation

Among the many benefits offered by the digital age is that it has made automation more accessible to financial institutions of all sizes. This is a boon for treasurers, many of whom have been inundated by daily tasks.

Indeed, many treasurers struggle to complete their work within the time allotted to them. The lack of time is an issue that can be resolved by the introduction of automation in the institution and using the said technology to handle repetitive and run-of-the-mill tasks that treasurers typically manage on their own.

Such a move will enable treasury departments to maintain, if not improve, their productivity levels. Automation and other digital innovations enable treasurers to shift from simply completing routine tasks to devoting more time to analyzing, strategizing, and planning for the accounts they handle. This, in turn, gives them the free time and space they need to come up with creative solutions that will enable the bank’s corporate clients to reach their financial goals.

The Increasing Complexity of Treasury Operations

The London Interbank Offered Rate or Libor served as one of the standards for setting the interest rates charged on loans, mortgages, and debts with adjustable interest rates. This standard has been in use for more than 40 years.

Recently, however, the Libor has been at the center of various scandals, losing its credibility. Then, by the end of 2021, it was replaced by the Secured Overnight Financing Rate or SOFR, a benchmark that many experts deem to be more accurate than its predecessor.

This shift in standards is just one of the many changes that corporate banks will have a hard time adapting to if they don’t have access to a modern treasury management system. On top of this, they also need to deal with a volatile market, evolving regulations, and the need for real-time information for payments.

A treasury management solution that’s built for the digital age is designed with agility in mind, enabling a corporate bank to keep up with these changes. These solutions can factor in different investment classes and time zones, account for manual and automated processes, immediately implement changing regulations, and consider information discrepancies. Such functions will prove to be useful to corporate financial organizations that are pressed to make timely decisions while managing investments on behalf of their clients.

The Need to Manage Risks in All Aspects of the Financial Operation

Managing risks is one of the many functions of a financial institution, which is why banks invest in quality AML solutions that prevent financial criminals from using their systems. However, a corporate bank’s treasury management system also plays a critical role in keeping risks within a tolerable range. Thus, having the right solution is essential to ensuring the liquidity of the organization and safeguarding the investments of its corporate clients.

To effectively do this, though, a treasury management solution must provide a means to monitor the changing economic and market conditions in real-time. Aside from showing the present state of the market, a treasury management system must also be able to provide historical data and analytical models. These offer a deeper insight into the risks that the bank and its corporate clients might take on by making certain investments.

Business owners are keen on growing their investments, and because of this, they’re always on the lookout for corporate banks that can help them maximize their opportunities to create and maintain their wealth. Corporate banking institutions, on the other hand, rely on robust treasury management solutions to handle and grow the financial assets and holdings entrusted to them by their clients.

Through the use of a modern treasury management system, both a bank and its corporate clients can enjoy a mutually beneficial partnership. And, together, they can maximize any opportunities that may arise within the ever-changing market.

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