The business case for real-time treasury

people having a meeting about real-time liquidity management
Pete McIntyre, the liquidity expert

Written by Pete McIntyre

September 15, 2020

In our previous blogs, we have discussed what our software, Realiti®, does and how our clients use it, as well as the journey from an assumed to actual cash management funding model, which can often be challenging but, again, this is something that Realiti excels in helping overcome.

What I often find is that if there is a regulatory need, audit point to close out and/or to gain a reduction in the liquidity buffer (whether this be via reducing credit usage, excess cash at an agent or other) then it is far easier to gain sign off to implement a solution like Realiti. However, there are so many more benefits that can be gained from having intraday real-time visibility that are often not accounted for, and, in many cases, they can enhance the overall control environment of an institution.

So, what’s the problem and why is it so hard you say? Well, a lot of these benefits are hard to put a price on (which is generally needed to identify the ROI) when there has not been a risk event to date but you know there is an inherent risk to the process and if went wrong, the impact could be significant.

To this day I am still unable to find somebody who can put an exact value to these items, and I am convinced it will be a long time until I do.

With this in mind, I thought I would use this blog to share a few of my thoughts around those items that often go missing but are integral to building a business case to implement a real-time treasury solution:

  • Reduced manual effort – Remove those significant manual, time-consuming processes and touchpoints like collating funding numbers via excel and, in turn, reduce your risk of error. Redeploy effort to things like initiatives, as well as reducing your risk rating.
  • Improve BCP capabilities – Flexible online views of data enable users to process their day-to-day tasks no matter where they are based, which is even more critical in a BCP scenario.
  • Greater business accountability – Having the ability to produce MIS daily and seeing how functions are performing will drive accountability, improve behaviors and/or liquidity usage.
  • Increased visibility – As a result of greater visibility, funding improves which invariably will generate a cost save whether by reduction of long or short balances at correspondent, counterparty claims as a result of fails or operational errors.
  • Enhanced control effectiveness – Having access to intraday data and funding to actuals increases transparency, reduces manual intervention, increases controls, enables for greater monitoring, and forecast of cash requirements – which results in an enhancement to the overall control effectiveness of the function.
  • Regulatory/franchise impact – Regulators can see there are adequate controls in place to manage the firm’s liquidity, and reputational risk decreases as a result of better funding decisions – whether this be agent bank or counterparties.
  • Opportunities – With a real-time solution comes opportunities, whether this is defining organisation structure, optimising liquidity – whether this be via improved booking, controlling payment flows, reducing collateral held to support activity or even being able to generate reports when you want, and in good time. Whatever you do there are so many opportunities to be had and efficiencies to be made as a result.

So, in conclusion, what do I think? Well, I think the above identifies sufficient reasons why implementing a real-time solution shouldn’t just be for regulatory need or an audit (although those are important), in fact, I think those items I have outlined are becoming a must, and are evidence of ‘what looks good’. My challenge to you all…..firstly, collectively agree there are gaps and risks, and benefits will be achieved within the firm, even if you cannot put a value to it. Once you have done this then the business case, justification and sign off will not be far behind.

At Planixs we’ve already solved many of these problems for our clients and helped with their business case – clients who are now seeing the benefits as a result of not only our Realiti product set, but also using our deep industry knowledge and expertise to achieve the best results.

If you want to start experiencing some of the benefits outlined in this blog, please contact us today to speak to one of our banking and treasury experts.

You may also like…