Treasury technology is not up to scratch, say experts

Corporate treasurers have a right to be frustrated with disappointing features and sluggish improvements in the treasury technology industry, according to Proquest’s Ronald Fink.

Having been promised a whole host of functions that would put them at the epicentre of their organisations, many treasures are finding that “technological reality badly trails expectations,” says Fink. The financial meltdown led many financial institutions to focus on conserving cash, but with the crisis now passed, many treasurers will be revisiting plans to innovate – and they will need better treasury technology to do it with.

A big part of the problem, says Bruce Lynn, Managing Partner at Financial Executives Consultancy Group, is ever-shrinking competition, brought about by a string of M&As that have seen high profile providers buy out smaller competitors. “Instead of building a better product,” says Lynn, “they have been buying market share by absorbing their rivals.”

Whilst some platforms, such as those created by Kyriba, Sungard, Reval and Wall Street Systems, are seen to be making headway on the issue, a major complaint remains a lack of integration between treasury management systems (TMS) and enterprise resource planning systems (ERP). An inability to link the two makes it hard to extract information from either system that can be turned into intelligence in the other. This frequently requires treasurers to input data manually into the respective systems, often using time-intensive methods such as Excel spreadsheets. These hurdles can complicate tasks such as forecasting cash flow and cash pooling. “There’s no perfect system out there,” says Laurie McCulley, Partner at Treasury Strategies. It was once thought that “a single database would do it or that a variety of systems might work,” she says, but things haven’t turned out that way so far.

However, these issues aren’t entirely the fault of the technology companies, says Enrico Carmerinelli, a senior analyst at Aite Group. The disconnect also comes down to reduced contact between firms’ increasingly centralised, strategic operations and their subsidiaries. “Technology needs not just to help centralise but to help keep track of payments and accounts, because that information can be important, especially at a later stage,” he says.

Financial institutions also need to work harder to explain their requirements to vendors and to make sure that their internal structures are optimised, adds Lynn: “A vendor is not responsible to ensure that a company’s banking structure is aligned with its future business needs.”

Dan Blumen, of Treasury Alliance Group, agrees. “Vendors oftentimes need to be pushed,” he says.