Significant Gap in Use of STP to Support Treasury Functions, Finds Research

For treasury departments, straight-through processing (STP) means the automated, controlled, secure and timely transfer of information from the beginning to the end of a defined process. Yet research has found that only 51% of treasurers are currently using STP or automation to support the flow of work in their organisations.

The research, undertaken by IT2 Treasury Solutions, a provider of treasury management software to corporate treasuries and financial institutions, also found that in the next three years, the percentage of treasurers using STP or automation to support their business is expected to rise to just 68%.

IT2’s research also established that treasurers have very different attitudes to the importance of improving connectivity within certain key areas of their company’s treasury function: for payments, foreign exchange (FX) trading and confirmations, some connectivity is already in place, but with various adoption rate (60%, 37% and 29% respectively). However within three years, the connectivity level for those three key areas will significantly increase, aiming for a connectivity adoption of 84%, 72% and 58% for payments, FX trading and confirmations respectively.

The research found that in areas such as commercial paper portals (10%), continuous linked settlement (CLS) (13%) and money market fund (MMF) portals (35%), very few treasurers already have or are planning to improve levels of connectivity. This could possibly be attributed to different factors like commercial paper being a less attractive investment in the current environment and continuous linked settlement being mainly important for the largest and most active treasuries. In regards to MMF investments, these are primarily of interest to US corporations.

The research asked treasurers about their attitudes to connecting to SWIFTNet, a network which enables corporates to engage with their banking partners worldwide for the exchange of information, such as payment instructions and electronic bank account administration (EBAM). Whether connecting directly or via a SWIFT service bureau, 16% of respondents are already linked to SWIFTNet, with 29% planning to do so within three years and 55% saying they might connect later.

Kevin Grant, chief executive officer (CEO), IT2 Treasury Solutions, said: “The application of STP through the latest technology makes treasury data more reliable, secure and up-to-date. Post-financial crisis, this data is under even greater and more regular scrutiny so it is surprising to find that a significant minority of treasury departments are not automating their functions to make the most of the benefits that STP can bring.”


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