Responding to a Growing Demand for Holistic Treasury Consultants

Banks are already seeing a rising demand for a new type of treasury consultation – one that that seeks to address efficiency, visibility and control throughout the entire cash management life cycle – and have begun taking steps to build this capability. It will require a degree of transformation, however, and so most financial institutions (FIs) still have some way to go.

The Impact of Technology

Rather than view their clients’ needs through a holistic lens, many banks remain focused on traditional product verticals. They maintain separate accounts receivable and accounts payable (AR/AP) product units, and salespeople from these units often pitch their products to companies with no real focus on how the products impact the complete cash management life cycle.

Today, however, a couple of factors are driving banks to move away from their focus on product silos and accept a new advisory role. The first factor is technology, which increasingly is providing greater access to more real-time, usable information. Just look at what’s happening globally in the payments arena. Many countries around the world are offering real-time or near real-time payment settlement systems. In the US, treasurers see this and ask: Why can’t we do that?

New payment channels and technology tools are emerging as well. For example, in Greenwich Associates’
‘2013 Commercial Middle Market Payments Study’
, a blind polling of US businesses conducted by the consulting firm last autumn, well over half of large middle-market businesses reported using a mobile device for at least one banking or payment service. What’s more, over three-quarters of businesses that reported using a mobile device for banking and/or payments said they do so daily or weekly.

Expectations of the Next Generation

A second important factor driving the emergence of this more holistic, consultative approach to treasury management banking is the generational changing of the guard. There’s a new, younger generation of treasury professionals who grew up with technology and access to near real-time information that is now ready to assume leadership. As its representatives ascend within their financial functions, the demand for more efficient, technology-based solutions in treasury will only grow.

Even now, treasury managers – particularly those from the Millennial Generation born in the 1980s or later – are noting the disparity between what they can do using technology in their personal financial lives and how much less they can do in their business lives. Up-and-coming technology-savvy treasury managers are certain to push hard to eliminate those differences.

Indeed, the Millennials who are stepping into influential roles in treasury come with a greater appreciation – and even a demand for – banking services that take advantage of electronic processes and channels. This isn’t limited just to AR or AP, but all across a 360-degree view of the treasury function.

For the next generation of treasury leaders, access to timely information and the ability to make decisions based upon that information is the norm. They are more inclined to understand the value of receiving payments electronically and turning around and making disbursement decisions and initiating outgoing payments in the same fashion. To their way of thinking, why should they have to operate the treasury function in any other way?

Earlier this year, the US Federal Reserve Board reported that it was reviewing responses to its
public consultation paper on payment system improvement
and noted plans to further explore needs related to faster retail payments. If, in the coming years, the Fed is successful in introducing near real-time payments in the retail environment, this will certainly drive expectations among the next generation of corporate treasurers, who will want the same speed and efficiency for business-to-business payments.

As these types of improvements occur, an increasingly technology-powered treasury will require a different level of banking support -and companies are already exhibiting a demand for that. In the recent Greenwich Associates study, 49% of lower-end middle-market businesses and 59% of large middle-market businesses said they would see value in a payments consulting service provided by their primary bank. Of those in the latter group, almost two-thirds said they would be willing to pay their primary bank for such a service.

A New Kind of Treasury Advisor


Treasury managers are starting to look for bankers who can help them navigate their entire procure-to-pay (P2P) process and apply technology across the board to operate faster, cheaper and smarter. To fulfill this new role, banks’ treasury management sales officers and/or relationship managers need to become operational advisors on managing liquidity.

What this means is that treasury management bankers need to be equipped to look at the P2P process from beginning to end. They need to visit client workplaces, talk to the treasury staff in the trenches – including those who manage AP and AR – and gain an understanding of a company’s cash inflows and outflows and the processes built around them.

They need to ask lots of questions: How are you receiving funds? What does your receivables department look like? How automated is it? How are you making payments? Are you receiving payments electronically but operating your payables department in a more manual, paper-based fashion? How can we get those processes in synch to create a cohesive, hand-in-glove operating environment?

Treasury management bankers need to be able to conduct a new type of holistic operational review, where they ask questions such as these in order to identify the company’s operational challenges and recommend process changes and technology solutions that will ensure automation and efficiency from invoicing to collections.

Furthermore, they need to take ownership in advising treasury management clients about the impact of regulations, compliance and risk on their business. Many regulations directly impact banks but have indirect effects on bank clients. Treasury advisors should help clients understand why the bank is changing a process or requiring a new agreement or amendment because of a new regulation. Additionally, in the area of risk, advisors need to educate clients about new fraud threats and why the bank may be strongly promoting fraud-mitigation solutions such as Automated Clearing House (ACH) positive pay and electronic debit protection.

How do Banks Get There?

How do banks transform their people into the type of treasury advisors that clients now seem to want? How do they change them from product pitchers into a new type of holistic treasury consultant who sees the ‘big picture’, recommends better processes, suggests technology solutions, and can educate clients about business controls and the impact of bank regulations?

Many banks have already started by asking new questions and seeking different traits when interviewing and hiring treasury management bankers, and by re-engineering training for those hires to better prepare them for this new consulting role.

Going forward, training will need to be designed to develop treasury management bankers who are no longer generalists, but rather subject matter experts able to analyse a company’s treasury processes and knowledgeable about all of the bank’s product solutions and how they can add efficiency to client operations.

Restoring the Trust

Embracing this developing advisor/advocate role and taking the steps needed to make this transformation is a huge challenge for banks, but also represents a colossal opportunity.

It’s no secret that with some of the events of the past couple decades, most notably the 2008 financial crisis, banks have taken a hit to their reputations. Responding to client demand for holistic treasury consulting services can help them regain their standing with corporate clients and reclaim their role as a trusted advisor.

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