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Experts Weigh in on the Digital Transformation of Treasury

  • By AFP Staff
  • Published: 7/26/2021
Digital Transformation_article

The coronavirus pandemic accelerated the momentum toward a digital-first strategy as companies look to stay competitive and relevant in the current environment. But what exactly does that mean? Seeking answers, AFP recently hosted a webinar, “Digitalization or Transformation: What's the Difference?,” where financial professionals from around the world discussed how they are handling the transformation and what it has meant for their organization.

In part one of a series of articles based on the discussion, we bring you the perspective and experience of Mitsuru Tsuboi, deputy general manager, Planning & Administration, Finance, at Mitsui & Co., Ltd.

Where our company started in its digital transformation

Cloud technology has been very important in the digital transformation of Mitsui’s treasury. For the past five years, we’ve been using financial software as a service (SaaS), which has allowed us to streamline our trade execution and cross trade execution dossiers, such as transaction matching, reconciliation and evaluation.

Since the SaaS are in the cloud, functions and services are updated and added to as needed in accordance with technological advances and regulatory changes. There is almost no need to plan and execute system modification in-house.

Mitsui's finance team experienced success in our initial journey thanks to our great partners. So naturally, we are motivated to continue to explore more SaaS and exploit its advantages, such as how to integrate data between ERP and SaaS and how to store it.

Our current style of data integration still looks like peer to peer. However, by commanding use of SharePoint, semi-automating with RPAs such as Blue Prism and UiPat, and collaborating with communication tools such as Microsoft Teams, our team has devised a user-friendly way to smoothly connect data between ERP and SaaS. Workflow tools and RPA are very important when you start to embrace SaaS.

Advice for other corporate treasury departments

I would advise other corporate treasury departments thinking about where to begin their digital transformation journey to start with financial growth SaaS. Based on my own experience, I can also recommend a cross trade execution service such as a confirmation matching system and online bank reconciliation.

Confirmation matching system platforms, such as Finastra or Thomson Reuters, automate trade confirmations between SWIFT and non-SWIFT counterparties in real time, removing operational risk and increasing automation and efficiency. These systems prove the effectiveness of a document-free bank reconciliation, as well as the importance of user validation, which is a similar concept to KYC. The transition to what is now Thomson Reuters took Mitsui about 60 days to complete.

A bank reconciliation process is effectively one of the most important key control processes. Online bank reconciliation platforms, such as Reuters, can prevent false activity of user validations, which works as well as a KYC process.

The technology we’ll be embracing next

As far as what’s next on our radar, I hope we can embrace distribution ledger technology, DLT, in the near future. While I do not understand every detail or technological advantage of DLT, I know it works similar to the confirmation matching systems.

With DLT, I can upload data direct to an invoice, and the embedded algorithm will automatically determine if it is a match or not. If it does match, the buyer's bank will be automatically issued an irrevocable payment commitment. This allows the buyer to sell his accounts receivables easier to an investor.

Beyond this kind of basic three-way match, maybe we can involve more players such as various ESG certificate issuers and quality inspectors in the near future. Then, perhaps, we can make it five-way match or an eight- or ten-way match to increase our non-price competitiveness, which appeals to customers and investors keen to meet the ESG and SEG's requirement.

Miss the webinar? Watch the full recording here. Download the four-part series from AFP and Zanders, The Digital Transformation of Treasury: A Critical Imperative.


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