Key trends to watch in cash management

Perspectives from the Banking CIO | Wednesday 01 December 2021

Frémont, California: Changes in legal, societal and competitive expectations have had an impact on the way treasury departments perform banking operations. The upheaval is not just a passing fad: this year will bring a new set of challenges for cash management services and solutions. Let’s take a look at the top tech trends that will create the biggest opportunities for treasury executives.

Invest in regulation technologies as a service

Treasury departments are turning to Regulator as a Service (RaaS) technologies to reduce pressure while maintaining strict compliance records. These services standardize reports, automate document processing, and use artificial intelligence technology to uncover trends and create reusable blocks and models. Investing in this new technology frees up valuable resources while reducing tedious paperwork.

The Banking-as-a-Service platform plays the role of cash management.

Changing customer tastes and spending habits are prompting banks to reconsider their outdated business models. Bank as a Service (BaaS) has become a key approach for tech-savvy banks to overcome the growth constraints of their old business model. The BaaS movement requires more than a simple desire for innovation; this forces treasury departments to reassess their interaction with the competitive landscape.

Cash management departments can turn rivalry into collaboration by adopting a BaaS mindset: personalized “neobanks” can leverage the payment capabilities of a financial institution to provide their customers with a unique experience. Rideshare companies have banking licenses to offer auto loans or savings accounts to their fleet of drivers. Businesses can also use a bank’s robust Know-Your-Client control system to verify customer credentials at low cost. Investing in the technology required to provide these new collaborative opportunities is essential to extend the value of a bank into the future.

Strong emphasis on environmental and social governance

Social responsibility is no longer a behind-the-scenes activity; societal trends have lifted the veil, shedding light on a company’s ethical activities. Environmental, social and corporate governance (ESG) has become a solid set of guiding principles for determining the long-term viability of an investment opportunity. The ESG assessment is influenced by factors such as a company’s carbon footprint, supply chain standards, panel diversity, and even the recyclability of product packaging.

Investors are pressuring treasury departments to align with ESG-friendly companies. Technology developers are seizing the opportunity and researching new methods to compile data from many sources into a one-stop ESG case. To determine the feasibility of an investment, these marketplaces are increasingly becoming an essential resource for cash management teams.