Forget Risk! How Blockchain, AI and RPA Can Improve Treasury and Finance

Mar 28, 2018

By: Jeff Glenzer, CTP, Vice President and Chief Operating Officer, AFP

When it comes to emerging technologies like blockchain and artificial intelligence, the knee-jerk reaction of many treasury and finance executives is to resist them. In fact, a 2018 AFP Risk Survey of 614 treasury and finance executives revealed that only 14 percent said they were “significantly prepared” to manage the risks that come with these new technologies. Another 54 percent admitted they were only “moderately prepared.”

Perhaps these treasury and finance executives are sticking their heads in the sand out of fear. However, I believe they should prepare for emerging technologies because of the promise they hold for treasury and finance.

Let’s examine some of the opportunities:

One of the largest pain points for members in corporate treasury is tracking and reviewing of bank fees. A distributed ledger could promote more efficient, straight-through processing of bank fees for financial institutions and corporate clients alike.

Banks have many legal requirements that treasury and finance must fulfill, but are incredibly tedious and add little or no value. Think: Know Your Customer, Foreign Bank Accounting Reporting, etc. personal information (driver’s license, passports, etc.) A blockchain could offer corporates a single source for providing personal information (driver’s license, passports, etc.) and standard bank documents for all banking providers in real time.

Many forms of capital markets placements—shelf registrations, CP issuance, loan syndications, interest rate swaps, share repurchases, etc.—have complex requirements for the registration and support of the participants. A distributed ledger could track ownership of the securities and offer real-time reporting of subscriptions, ownership, and settlement. 

Many foreign exchange transactions are slow and expensive. A distributed ledger could offer more transparency in pricing, thinner spreads, faster or near real-time settlement, and improved reporting. DLT may also eliminate vendors who act as principal and agent at the same time in trading on behalf of corporate end users, thereby driving up costs. Counterparty risk would become more about transaction risk and less about settlement risk.

No aspect of treasury and finance stands to gain more from blockchain than the payments ecosystem. With a built-in directory, end users could use a distributed ledger to pay their beneficiaries in real time, with full transparency and limited settlement risk using a ubiquitous, low-cost solution.

Trade finance is often a paper-intensive process requiring multiple parties for settlement. Leveraging DLT to electronify paper-based processes, such as import/export letters of credit, would support global trade and accelerate the flow of goods and services and settlement of transactions, improve transparency for buyers, sellers, third-party banks, beneficiaries, etc.

And, there’s much more opportunity than just distributed ledger technology. Robotic process automation could automate routine tasks like daily reports and account reconciliations. Artificial intelligence could be useful for fraud detection by analyzing transaction behaviors, improve many forms of forecasting, or support and even lead integrated business planning.

As entrepreneurs and technologists continue to bring their expertise with these technologies to bear on the corporate finance profession, I hope that their focus will be on solving these or other real-world challenges, not on the technology itself. As a professional society committed to the success of treasury and finance professionals, AFP offers a unique opportunity for those innovators to understand the needs and concerns of the profession and address these in their products. AFP would love to hear from and collaborate with innovators that want to understand and capitalize on these opportunities.

Even established technology—treasury management systems, general ledger systems, enterprise resource planning systems—presents security risks and other challenges.  For treasury and finance professionals to be successful in their careers and help their organizations thrive, they need to leave their comfort zone to learn new technologies and develop new work routines.

But think of the opportunity! Imagine a treasury and finance function that can refocus itself on thinking about weighty, strategic matters, with routine tasks performed for you – or at least less time consuming. A job where you can think, plan, imagine and strategize for a living?

I’ll take that risk.


At AFP 2018, MindShift sessions, speakers and exhibitors offer actionable advice on these emerging technologies. See what’s in store.