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Finding the Value in Disruptive Technology

  • By Andrew Deichler
  • Published: 11/19/2019

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Much of the talk at AFP 2019 was around digital disruption and how technologies like artificial intelligence (AI) and robotic process automation (RPA) are gradually infiltrating the corporate treasury and finance world. But one point was obvious during a panel discussion at the AFP 2019 Executive Breakfast, sponsored by RBC—for a treasury department to adopt any of these technologies, there needs to be clear use case for them.

Simply put, now is not the time for corporates to invest in flashy solutions if they’re not even sure what problem they’re trying to solve with them.

KEY CHALLENGES

Oksana Dominach, senior vice president and treasurer for Constellation Brands, began by explaining that her organization is currently in the process of reducing many of its manual processes and is consolidating many of its systems into one, to achieve straight-through processing. She noted that anytime a treasury department implements any type of system, the biggest challenge is engaging the business to show why it is necessary. “It’s really engaging them to show what the value-add is for this,” she said.

The flipside of the coin is that if you implement a large number of systems, over time you run into interoperability issues. Michael Dawson, head of liquidity and FX for Royal Dutch Shell, explained that his company is also largely streamlining its treasury function, due to the number of disparate systems it is currently operating. “We can do great things and we’ve done great projects,” he said. “But the challenge is that we’ve done so many of them in the past that what we have is a technology ecosystem that is huge and complex, and the systems don’t talk to each other.”

He added that Shell has essentially built its own infrastructure in the treasury space. “When I joined Shell in 2008, we had 75 people in treasury operations, and we had 57 systems,” he said. “That’s not sustainable. Our drive is to move towards standardization. Why should Shell have systems that only work for Shell? How do we adopt industry standards in technology to simplify all of this?"

Additionally, there is also a challenge in determining which available technology solution is going to be the most effective for treasury’s needs. As Todd Yoder, global treasury head of derivatives and hedging capital management strategy for Fluor, explained, treasury doesn’t just have a million dollars to drop on new software that may not  prove useful, particularly if it’s something that can already be done relatively efficiently in Excel.

However, even though “everyone is going to try and sell you AI,” Yoder believes that right now, we are going through a “great acceleration” in terms of technology, and that it is “the most exciting time in treasury, because of that acceleration.”

CHANGING LANDSCAPE

Moderator Carol Massar, co-anchor of Bloomberg Businessweek, noted that the need for data to be readily available is increasing. “The world is moving faster,” she said. “That’s where technology really comes into play—when it gets you that data, right there, when you need it.” 

But nearly as important as getting that data is being is the way it is presented to the user. If data visualization is bad, then it doesn’t matter how fast you’re getting it. “It blows my mind how some fintechs will spend millions and millions of dollars developing their product and their data visualization is absolutely horrible,” Yoder said.

Getting a faster and clearer view into your data can reveal major problem areas. After partnering with Bloomberg to get a better view of its FX exposures, Constellation discovered fluctuations that weren’t being addressed fast enough and were costing the company a lot of money.

To remedy the problem, treasury turned to RPA to pull balances daily and execute trades in a timely fashion. “It’s a great control,” Dominach said. “You’re taking that manual process out of it. There are a lot of those repetitive tasks that we all have in treasury that we can apply those bots to. We’ve actually been able to reduce headcount by using this technology.”

FINDING THE VALUE

Ultimately, treasury should make a point of using disruptive technology where there is value. If it’s not there, or at least not yet, then it’s probably not worth the investment. But if it can reduce certain risks and costs by a significant amount, then it’s worth considering. “Let’s use technology for the stuff that it’s appropriate for,” Dawson said. “Technology is not appropriate for everything. You still need humans to work on strategy and other things.”

For more insights on RPA and AI, download AFP’s two-part Executive Guide to Emerging Technologies, underwritten by Kyriba.

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