2023 Treasury Tech Survey Results

Announcer  00:33

Okay, well welcome everyone to today’s webinar on the 2023 Treasury Tech survey results. This is Brian from Strategic Treasurer, and we’re pleased you could join us as we evaluate the survey results and discuss the implications for organizations in 2023 and beyond. But before I introduce today’s speakers, I have just a few quick announcements. Zoom offers several different ways for us to interact today. If you would like to post comments or questions viewable by all attendees, please use the chat icon in the toolbar. If you’d like to ask your question to just the presenters, please use the q&a icon in the toolbar. You can ask your questions at any time during the presentation and we’ll try to get to as many as we can. But if we don’t get to your question, someone from our team will gladly follow up with you. There will also be a few polling questions throughout today’s webinar, where you’ll be able to select your response from a list of multiple choices. You will need to click the submit button on the polling questions to have your response recorded. If you are here for CPE credits, you will need to answer at least three polls today. And last, please ensure that your resume display name includes both your first and last name. So we’ll know to whom we should send the credits. Our speakers for today are Jon Paquette, vice president of solutions at TIS, and Craig Jeffery, Founder and Managing Partner of Strategic Treasurer. Welcome Jon and Craig. And I’ll now turn the presentation over to you.

 

Craig Jeffery  02:11

Thank you, Brian. Jon, it is good to be here with you again doing another webinar. It’s been a it’s been a few months.

 

Jon Paquette  02:19

Yeah, it feels great to be back, though.  Excited to be here.

 

Craig Jeffery  02:22

When we’re done with the unofficial part of summer think all the kids are back to school, everyone who’s on either LinkedIn live or Zoom directly. Welcome. Thanks for spending some time with us. You know, there’s a lot of things that you can do in your afternoon or late morning, and we’re glad you chose to spend part of it with us. We’re excited, there’s a lot of good information to share. I see a lot of chatter in the chat box, which is awesome. A lot of engagement. So what are we going to cover today, it’s a survey, the Treasury tech survey, this is this is a survey we’ve run multiple times over many years, we don’t run it every single year. We’re going to cover this agenda. So what’s going on with the survey, it’s multi year, over 200 responses were taken. We’ll look at adoption and growth of technology. So what are some of the adoption rate, but we’ll look at the range of technology, the use, plans to use, plans to adopt. And the good news for those who are technology providers. A lot of people plan to use it. Good news for you. If you’re seeking to add technology into your mix. Many, many of your peers have technology or are adding it. So it kind of builds the All my friends are doing this and there’s a good reason for it. Then we’ll move over to what are some of the items of importance, everything from vendor commitment to the products that they provide. The technology that they use, using modern technology is very important to you and your peers, because that was ostensibly that relates to the longevity of value in the situation where value increases with a partner technology versus staying stagnant or decreasing. I want to move to AI and machine learning. A couple of areas where there’s a real focus on AI and machine learning has been where it’s been in the past and expects to continue. This would be for forecasting, as well as for fraud detection and protection. There’s a few other areas there as well. So stay tuned for that rather than the general headline. We’ll get into some of the specifics and how that’s calibrated, then we’ll look at exposures and risks. And the top top exposure this year is interest rate risk that’s increased significantly from the last survey. Foreign exchange risk stayed about the same despite the ongoing globalization that stayed relatively consistent is at number two and cash flow, cash flow volatility cash flow risk I showed up at number three, but there’s certainly other risks that people are looking at. And then at the end, Jon, I’ll talk about a few takeaways from securing our payments to the rise of machines, how they’re using that. And this idea of the product roadmap, how important that is to all of us in Treasury, and how that’s playing out with the surveys, then we’ll end with some additional comments about risk management. Well, with that, we get into the survey overview I mentioned earlier, over 200 people took it. For those who are on this webinar. Thank you for taking, it’s easy to get well over 200 people on a webinar, we’re well, well over that more than double, almost triple that. And getting to a better response to a survey is challenging. So thank you for taking the survey. We do know that it’s it’s good to learn information from webinars. And those who take webinars also learn quite a bit. Well, it ran for about four weeks, there’s over 50 questions, not everyone answered all the questions. And you can see very, very high concentration in North America, Europe, and Asia pack area where the next most dominant areas, you can see the different roles and titles, so mostly management level to senior management across the board. So we were delighted that T is underwrote this year’s edition. So thank you, John and Jen noodle who helped push push that through, because there’s a lot of good information for everybody to see. But that gets us to the first set of treasury tech adoption and use Jon and I know you’ve got a few things to say, on this front.

 

Jon Paquette  06:47

Yeah, for sure. So I think some interesting results here to kind of kick us off as we kind of evaluate the results of the survey Craig just mentioned here. So you know, here we’re looking at treasury tech use and adoption over a multi year period, both in terms of the current use and what people plan to begin using within the next two years. And you can see right at the top here, treasury management systems kind of still reigned supreme in terms of the Treasury tech that most organizations have in place, kind of surprised that there’s 30% of companies out there that still either do not have a TMS or don’t plan to use a TMS within the next, you know, two years, but it could be that a lot of companies using solutions that are more embedded into their ERP system that might be coming more commonplace, or, you know, so called best of breed solutions that maybe just focus on specialized areas of treasury management, like Cash Forecasting, or payments, or whatever it might be still probably the same out there that are, you know, maybe still using Excel on the banking portals as their primary as their primary means of technology as well. fastest rate of growth for plan to use over the next two years is actually bank fee analysis that 20% that you see there in orange on the second bar graph there. I thought that was interesting. I mean, obviously, you know, everybody’s kind of got their eye on the economy. I’m sure budgets are tight, treasurer’s are always thinking about bank fees, interest rates are increasing. So you know, Treasuries are probably looking to see corresponding increases in ECR rates and maybe looking to evaluate their, you know, the bank partnerships in their bank feeds more holistically. So yes, it’s good, it’s good to see that getting a lot of attention also kind of interesting, too. So there’s a lot of, I think there’s been a lot of advancement in that space in the market, too. So maybe it’s driven a little bit by, you know, the technology has kind of come to market to help treasures in that space as well get into a couple of categories here, like reconciliation and procure to pay that I think have always kind of received a lot of attention from organizations in terms of upgrading their technology. So they seem to be a little bit lower than the first to hear the TMS is in the bank, the analysis type solution. So maybe organizations have, you know, kind of accomplish a lot of their goals as it pertains to that. And there’s still investment going on there. But it’s not the sort of rapid pace as you’re seeing in other areas of treasury technology. And then the to the cada, you know, round things out here both payment factoring and treasury aggregators coming in to kind of the lowest percentages of both currently in use, and, you know, near the bottom here for charter for plan to use for the next two years. I think this might be driven a lot by demographic, honestly, because you know, payment factory solutions and Treasury aggregators. If you’re not familiar with the treasury aggregator, it’s sort of a solution you can put in place to manage bank connectivity, back communications, if you have a broad portfolio of bank relationships, and you’re looking to simplify that. And so obviously, those two technologies probably are more better utilized, or might generate a better ROI for organizations that are large, global, complex, multi bank relationships, right, which might not fit the profile necessarily of everybody that took the survey. But I can tell you, if you are looking at upper mid market, globally complex organizations, these two factors here are huge on the list of what those companies are looking to do to modernize their strategies. I think we even have some interesting results on the next slide that indicate that some of those trends we’re seeing kind of pushed downstream a little bit too in recent in sort of recent results and recent history here. So yeah, this this, this slide just calls attention to some of the sort of the key trends here. we’re seeing across technology adoption from the survey TMS is seeing 100% growth expected in the medium to small business segment, which is sort of characterized as the less than 5 billion the way that sort of the the, the, the results were, were kind of cut here. And I think that makes a lot of sense. Because, you know, TMS is where almost that type of technology where there was sort of this expectation that you had to have a level a certain level of sophistication, complexity within your business to really necessitate having a TMS. Otherwise, maybe they were too costly, they were too much to implement, they’re too much to maintain, particularly in the days where you have like, sort of on premise installed TMS is or even treasury workstations and things. And the technology’s changed a lot. So now these applications are sad, they’re modular, you can pick what you want. They’re all cloud based. So the barrier to entry is much, much lower. And this technology is almost for everybody. Now, the way that it’s sort of, it’s sort of been staggered. So we’re definitely seeing a lot of growth in this segment, particularly between the 1 billion and 5 billion space, that seems to be, you know, kind of the sweet spot where a lot of treasury technology, or logic, Treasury technologies tend to be put in place in businesses where it wasn’t previously, reconciliation, I think you’re seeing kind of like the same trend as well, where you know, sub 500 million businesses are starting to invest in technology, just because it’s becoming so much more accessible, the way that it’s designed the way that the software offerings are put out there in the market, I think also maybe an increased pressure on cash flow. So if you’re, you know, you’re reconciling more frequently, you’re able to identify outstanding receivables more quickly, you’re able to track the sold better and bring down the soda increased cash flow, a lot of small businesses are super focused on that right now. So that could be kind of driving some of that adoption as well. And I think this was the stat that I was referring to, on the on the previous slide here that, you know, medium, small businesses expected sort of double their adoption of payment factories, which were really sort of a technology that was reserved for the, you know, the over 5 billion market previously, maybe the upper mid market enterprise level organizations with really complex global payment needs. And now a lot of other businesses are starting to see the benefit of more efficient payment processes, better aggregation of payment data, better control over centralised sort of pin factory, and what that does for you know, processing efficiency as well as risk like fraud mitigation, right? So, and then Treasury aggregators expecting 100% growth in business in North America. That’s an interesting one to me as well, because I think, you know, in the European market based on what we saw, Treasury aggregators probably came to market a lot sooner, and they became a mob a lot more commonplace for organizations to put in place as a way to manage their bank activity strategy, particularly with those that had really sophisticated bank connectivity needs. And in the US market, it kind of almost stayed as you know, hey, we have a TMS, let’s manage and connectivity because a TMS, that mindset shift, mindset is shifting a little bit. And people are seeing the value of just managing bank connectivity, and your communications and your formats and protocols, through something specialized in doing that, and having that feed downstream applications like a TMS or ERP, or whatever it might be, right. So emerging, you know, kind of emerging market in the US and something that’s getting a lot more attention, I think, and the typical treasurer’s list of technology tools. So I thought that was an interesting stat too.

 

Craig Jeffery  13:11

Some some good points, Jon. And I’m not really disagreeing with what one of the things you said on the previous slide that you mentioned how it was a lower number for aggregators. And and I think, for payment factory, but I will, I guess it is a lower number in terms of total percentage. But when you look at the percentage growth, these are 60 70%, growth looking, which is higher, right, it’s a smaller percentage, aka, whatever you call it, smaller percentage utilization, but the growth rate is looking to move up more the hockey stick curve. So that that I think is good for those who are selling payment factories and aggregation services, like you said, there’s been there’s a significant difference between sizes of organization. You know, I think that’s, that’s, that’s probably good news. And you made a really, really, really good point about some of these technologies are, are becoming more accessible, this democratization of technology becoming much more accessible. That’s a really notable point. And so it is, it does move downstream that the largest companies can always afford it. And it was out of reach now it’s within reach. So some really, really good points there. And I think that makes a difference on what people do in their organizations, right? How they have a support, paying for some of this technology, and making the case. So John, and everybody on here, what’s your current and planned use of tech? There’s a double stacked question. These are both select all that apply. The top section is what do you currently use? And the second is what do you plan to use within two years? So go ahead and select any of those that you like. You know, Jon, you know, the breakouts between Europe and North America, for example. I think that was that was pretty insightful as well. The growth of aggregation was much, much more dominant Europe, there are a lot of smaller markets, companies were in a much more complex situation, they were in multiple, multiple countries. They’re becoming international companies happened sooner than in the huge US market, for example. And then I think the US markets catching up with that complexity being in multiple markets. So those complexity solutions have to address those needs.

 

Jon Paquette  15:46

Yeah, I agree completely.

 

Craig Jeffery  15:48

All right, we’ve got, we’ve got a result now. Jon, let’s see what, let’s see what’s happening here. So you can see the history up top, which is, let’s not let’s not comment on that too much, because we’ve got survey results. And polling results are interesting to which do you plan to use Treasury aggregator 20%. So this is a, this is quite a good thing for you, right? The payment factory and treasurer aggregator? One, one in six in one and five companies here, which is higher than the survey, are interested in this type of tech, they plan to use it within two years. So that’s a that’s, that’s good news in a lot of ways. Any any thoughts on this?

 

Jon Paquette  16:34

Yeah, I mean, agreed completely. I think, you know, the top two are still the same, you know, TMS? Isn’t bank fee analysis solutions, and that no real surprise there. But um, yeah, fix execution platform should open up to 30%, I guess people are probably thinking more about fluctuations and exchange rates and managing currency risks and things like that. So that was definitely interesting to me as well. But I think, yeah, the Treasury aggregator numbers, the payment, factory numbers are probably great indicate, I think, exactly what we talked about on the previous slide, just the growth of those areas in this particular market in the US and how, you know, solutions, organizations becoming more global in the US are just looking for new strategies for how to manage things are really kind of leaning towards some of those solutions more than they were previously.

 

Craig Jeffery  17:14

Yeah, that’s functionality grows in any of these individual platforms, they tend to add services that bleed over, right, what are my what are my ethics exposures? Or, you know, I can now connect to more banks with this tool and that tool. Really interesting. Thanks, everybody, for responding to this question. If you would like to see the results of these poll questions, go ahead and type the letters TIS, for ti es, or you can type Paquette, if you spell it right. That’s probably too hard. But if you type it in, and we get, let’s just say 150. There you go. someone typed in forget, you’re doing great. Jon, will will, will include it and send it on the slide to everybody. So yeah, thanks that, you know, cloud, the internet. For those of you who aren’t 25 or younger, you may remember the phrase ASP application service provider, and then it became cloud. And then we became software as a service. And we switch the word, some of the some of the meanings changed slightly. But this idea of everything moving into the cloud, this is the cloud, as a way of hosting and providing services is dominant across all categories, significantly more than half of all, current and plan use sits in the cloud. It’s moving in one direction, there’s nothing that’s moving back to on premises, it’s all moving to the cloud. This is a multi year trend. And some of these, it’s well over a decade or more than a decade, half TMS. The first cloud versions were coming out around 2001 and 2000 2001. And then, you know, within four or five years, the majority of new sales were happening in those spaces. So that’s taken place to with Treasury aggregator an aggregator is, as we define it is, it’s a payment payment factory. So being able to format payments, send them to any bank that’s needed. It also acts as a data consolidator can connect to all the different banks, pull in balances and transactions and then push those into whatever underlying systems you need, from your data lake to your accounting system to a TMS, to whatever you need it. And netting platform is those companies that do a lot of intercompany activities, oftentimes global, and they net the trade activity once a month reducing the FX and transaction costs that are inherent in paying yourself in multiple jurisdictions. So some really Really good, really good points. So the cloud is dominant, we’ve known it’s been dominant, it’s been significantly the platform of choice. And that continues to grow, and distinctions continue to emerge. And so here you can see the calibration of how far along these different technology players are. In their report, we share information on a few, few different platforms as well. But that brings us to what is influencing the decisions to buy, you know, what’s top, you know, looking at the top one vendor commitment over time to the product, when you think about how do I future proof my, my purchases? How do I protect my organization, there’s a couple of things that certainly come to my mind and come to many of all of our colleagues on the phone it’s one is you have to have vendors committed to the product. And that can be more or less concentrated, if you have the support 12 Different industries with 17 different types of products that all may be in favor out of favor at a particular point in time. But showing commitment over time to a product is the number one dominating reason it’s extremely important. So that’s number one. What’s number two, you can see we sorted them. So the next blue item is leverages modern technology. So why is leveraging modern technology well, that supports faster implementation, better integration, is more scalable, provides for greater longevity. And so you can see this and things like supporting API use machine learning, the ability to leverage modern tech is number two. And I don’t think that’s going to decrease. And so when you’re thinking, Am I getting technology? Am I in supercurrent, tech, you know, proven technology that’s still current technology is a little bit out of date, but that’s, you know, well proven, or am I looking at something that’s older, that’s a, that’s a key factor in people making those investments. So if you look at the third and fourth row, John, when I looked at this, look at the results, I was pretty surprised that both roadmaps were, were really high. And you can see, you know, they’re ones a little higher. And, you know, extremely important and important to the robustness of the future roadmap. Four out of nine people pick that or identify that is extremely important. And four out of 10 picked, it is important. So you can see 84% saw this is important, extremely important. That’s so how that’s about the future. And then the historical delivery, is 39%. So it is extremely important and 49% is important. So when you think about the roadmap, you can’t build, you can’t build a reputation on what you’re going to do. Which is a great way to say, you know, you got to you got to have accomplishments, but you need both, you have to have accomplishments. And you have to have a robust future roadmap. And this is what, you know, the survey respondents are saying is we want both, they’re both, they’re both important. They’re both very important in different ways. There’s a notable drop off between the leadership and the vendors, the strength of the balance sheet. Some of those things become if you look at how many extremely important items are the balance sheet? Is the vendor profitable? What’s the revenue size? Those are in the, you know, low, low double digits, right 12 13%, of taping percent. Not that they’re unimportant, but you can see how they, they’re very much lower than some of the other ones. Jon, I, you know, as you look at these, I didn’t know if you had any comments on this particular slide, I think this is worth weighing in, if you had anything that you wanted to push out.

 

Jon Paquette  24:01

Yeah, I mean, I think to me, it just reflects that, like, you know, a lot of the technology that treasures are using or is changing right now, you know, and there’s a lot of like, sort of coming to market technologies that are starting to see their use cases that maybe aren’t like fully baked yet. You know, there’s open banking APIs and things like that, that organizations can begin using, but might not meet all of their use case needs. There’s AI and machine learning. And they’re sort of a mix of sort of folding that into existing software solutions. So like, if you’re out there today, buying software, the probably the most important thing to us just knowing that you got on the right bus, right, you don’t want to make a bad decision. You want to make sure you’re with a provider who’s going to see these technologies through and deliver on the use cases that you really see most valuable to the treasurer. In that respect. I think you’re seeing a lot of that infused through these results, like in terms of just like the focus on the roadmap, right is is this provider committed to investing in this product that’s important to me? Are they going to keep it modern? Are they going to keep the best in class? Are they going to kind of let it fall to the wayside and put their resources towards something else? You’re seeing a lot of that, I think just because of how much you know, the technology is changing in the market. So. So yeah, I mean, it makes total sense to me, especially the first four here, you know, I’m on here, and then it gets a little bit muddier. But I mean, at the same time, a lot of the software providers have private companies, you really get to know if they’re profitable, you’re really going to be able to go look at the balance sheet, you know, probably not so. But yeah, the financial strength of the company, obviously, people want to want to know that with a provider that’s going to be around for the long term, but it seems much more so they want to know that they have a good vision for what the future of treasury is.

 

Craig Jeffery  25:31

So yeah, it’s such a different model than it used to be more than a decade ago, right? The decade ago, it was they were installed solutions. There’s a huge upfront fee. Now everything’s, here’s a subscription. And so it’s a much smaller, not for making payments. But it takes longer for the companies to ramp up in terms of higher revenue, because they’re not, they’re not getting paid hundreds of 1000s or millions of dollars when they do a sale. It’s they’re, they’re getting a monthly subscription. And so it just tends to, to grow over time. Really good stuff. Jon, thanks for jumping in on that. Yeah, you’re up. You’re up on this one, too.

 

Jon Paquette  26:14

Yeah, that sounds good. Yeah. So I mean, looking at the top importance, you know, what’s most important to corporates here, so you know, 45%, this first graph, see here, the top limiting the disruption to our IT group while driving long term benefits for short term costs. So this is kind of the you know, the the top important factor here and actually measuring it for results two years prior is of 30%. I think this is something that we hear just all the time, every single customer prospect we talk to, they want to know what’s going to be the strain on our IT resources, is this going to sort of disrupt existing IT products in motion here, or will our product somehow gets sidelined, because we can’t pull in the right resources, we need to really be able to deliver this project. So no surprise to see this, this being so important. And I think, you know, also the, the buyer has every right to sort of expect this because the whole model for the software these days, SAS is a prebuilt solution, the software’s completely finished at the time you purchase it, it just needs to be configured in accordance with your expectations. And the cloud hosting model, it’s fully hosted. It’s not as if it has to be installed anywhere on premise, there should be virtually no IT resources really needed to implement these solutions, right. So I think that, you know, the good providers out there in the market can really deliver on that on that promise. There’s also just so much going on, from an IT standpoint, these days that most companies, I mean, the number of you know, cloud ERP migrations that we know of that are going on right now is huge federal organizations looking to take advantage of that migrate all their entities to a single ERP in the cloud, and take advantage of sort of the unification of financial operations that that comes with that, right. So you know, and just, you know, a lot of organizations really focused on that, that it resource topic is the main driver for success in their treasury projects. And then you have, you know, enrich formats, you know, for interoperability with existing systems, or just getting more information in the files that you’re receiving from your banks for different business purposes, maybe for reconciliation, or forecasting or analytics purposes, which looks like it was at the top spot two years ago. And it’s actually down from 41%. So it decreased by 1%. Am I reading that correctly? Here? I think so just so it’s more or less stayed the same, I guess, over the course of two years. But there’s just the it topic kind of jumped ahead of it right? Over the course of yeah, yes. But it looks like so. And, yeah, I mean, that’s still definitely in focus. I think that’s that’s definitely what we’re hearing in the market to particularly around I select some l migrations, a lot of companies are doing that just as they can get more information in the reporting files to increase their, you know, automatic reconciliation rates or hit rates on you know, sort of the the cash posting process, get real time confirmations for payments and things like that, right there. I’m really looking to use enrich formats. And yeah, I think this whole topic of the the data analytics topic is one that’s been a big one for the last 234 years, probably ever, I see this interoperability with existing systems. And, you know, I get the sense that, you know, the the respondents are indicating that they really want to have API connectivity between their downstream systems, and just to sort of unification of data to break down some of these legacy data silos where if you had multiple systems, the data was trapped there. It couldn’t be sort of analyzed, centrally shipped off to a data lake or into, you know, a TMS platform where it could all be aggregated, analyzed, normalized, right, for analytics purposes. And I think that expectations, probably still the same as it was three years ago and probably will continue to be the same moving forward. So and then, you know, not changing connections that are working fine or staying currently obviously don’t break, you know, what’s working for us already. That’s some major concern for organizations, particularly when they’re going through global organizations going through a finance transformation who might be a more of a decentralized model, because in most cases, you have probably certain business units that are ahead of on the automation curve in comparison to others and you want to move things to a global model, but you don’t want to break the good work that’s been done in certain, you know, regionalised processing centers and things like that. So it’s always something that we like to consider in the course of our projects as well. And I can see why it’s kind of one of the top concerns here.

 

Craig Jeffery  30:13

Yeah, there are some other surveys, Jon, the, the issue of what’s the big roadblock or impediment to implementing new technology, it’s, its management priorities, and its IT resources, those tend to be pretty big, and you know, IT resources is usually at the top there. So you can see that playing out here. It’s like, I’ve got 20 things to do. If five of them are working, what am I going to move them up from? Maybe they’re not optimal, but they’re pretty good. When I have other situations in tech, that’s, that’s pretty terrible. So those are, you know, pretty rational approach to what we have seen go on there. So we’re gonna pop with the next poll question and gonna give some instructions as well. So this is for expanding for new and expanding product development, what’s important to your organization, select all that apply, we assume that there’s at least one we didn’t say none. So you’ll have to pick which is the most important if there’s only one. If there’s multiple, you can select all that you have there. So I’ll let you do that. But there’s a couple of questions that came in, I’ll go ahead and answer those, or start to answer those as just to clear this out. So can you define payment factory? I think I sort of did that it looks like that came in maybe before I said it, that was it’s a system that takes information input, maybe from AP systems, could be treasury systems, could be admin systems, takes that information and can format the payments can do any type of validation that’s necessary, can establish the connection to confirmations, make the payments happen, deliver them, whether it’s through Swift, through a host host connection through API’s to do that. And that would be a subset of what we refer to as treasure aggregators. That’d be the payment side. So I’m going to type that on a list that offers that that’s been described. If there’s more, feel free to type it in. On the another question came up. What are the benefits of using a treasurer aggregator if you are already using TMS and I think there’s a couple of different forks in the road there. If you have a couple of your banks, let’s say you have five banks are already connected. Why would you use a treasure aggregator? I think you can make some reasons for that. But that would be harder to justify. But let’s say you’re connecting, you have to connect 10 or 20. Banks, and you’re not just using them in a TMS, using that data in a recon platform. Maybe you’re pumping that information into a data lake. So how do you how do you do that design of the data matters. And that’s where you see an increased value in in having a treasurer aggregated, the more complexity, the more number of connections back into your back end systems. makes it bigger, a bigger deal. If you have one bank you’re connecting to? Do you really even need a TMS you just look at the bank portal? So how do you simplify your structure? Those are a couple of things there. Jon, did you want to jump in on that?

 

Jon Paquette  33:08

Yeah, maybe a little bit. I mean, the other thing on the treasury aggregator is the flexibility if it’s built into the TMS then you know what if you decide you want to move to a different TMS or a different, you know, strategy for your treasury applications down the road, you have to rebuild all your connectivity somewhere else, where if you kind of have it sitting outside of that, outside of the TMS, you can swap your applications in and out, you can bring in a new TMS hook into the aggregator bring the bank data data in that way. And of course, you’re enabling all other parts of the business to leverage that same bank connectivity. So the ERP systems, the payroll systems, anything else that might need to leverage that bank connectivity can go through that one unified channel. And I think the other trend that we’re seeing is that, you know, the Treasury aggregator is the entire business’s conduit to the banks, it’s the way all of the all the companies, all the departments of the companies, whether it be AP payroll, accounting, or Treasury access the bank relationships, and you know, so having that externally is is a benefit for Treasury because Treasury doesn’t want the TMS to be that because they don’t want the whole business in the TMS. They want the TMS to be Treasury’s application and really being used for treasuries day to day. So if you’re doing things like evaluating, hey, a payment file failed, or I got a negative response from the banks, it’s nice to have that sitting in a system that’s external and away from treasuries applications, too. And there’s a bunch of other benefits too, but those are just two the kind of jumped into my head there, so.

 

Craig Jeffery  34:31

Thanks for that. So now we have the results of the poll here. Jon, you want to start? I’ve got a few things I can say too, but I’ll give you a first crack.

 

Jon Paquette  34:42

Yeah, I mean, the fraud detection, which I think actually we have some some results coming up here and in a slider to the kind of the kind of echo that response there’s is that being a top sort of emphasis point for a lot of companies wanting their software developers to invest in forecasting has been I mean, I think for the last 18 In months, maybe one of the biggest topics, if not the biggest topic in treasury management, everybody’s talking about Cash Forecasting, the unpredictability. You know, people are seeing day to day on cash flows. Let me economic downturn, rising borrowing costs, all these things they’re filtering into, you know, just Treasury organizations spending a lot more attention on the forecasts and want to be able to more proactively manage cash versus just create sort of forecast reports. So I can definitely see why that one’s up there. APIs. That one’s it’s been a popular topic for the last three, four years and seems to be continuing to maintain momentum. It’s definitely something that um, you can, you can clearly see the Treasury practitioners in the market see the benefit of and want to see, you know, advanced bull by the banks in the, in the in the FinTech companies. So, now, it’s all three definitely makes sense to me. kind of quickly scan the rest here. Got to know, Craig, is there anything that kind of jumps out to you here as a as a surprise?

 

Craig Jeffery  35:55

Well.

 

Jon Paquette  35:57

AI is low. It’s just kind of a surprise, I guess, you know?

 

Craig Jeffery  36:01

Which is low?

 

Jon Paquette  36:03

AI and machine learning.

 

Craig Jeffery  36:05

Yeah, I think this is this is this is that it does seem low. To me. The other is platform as a service. You know, I think most of the people on this webinar are probably Treasury experts, not necessarily technologists first. And so, you know, the some of the language we use here is not not as attainable, I guess, what is Platform as a Service mean, if you ask people that it’s like, that’s harder than a payment factory, like, what does that mean? What is platform as a service, if we if we spent some time describing that to say, you know, the use of like AWS and Azure, where it’s fully scalable system, like the entire platforms there that you call those services, utilities and develop in there, and that that’s in combination with SAS, and SAS doesn’t necessarily have to follow the platform as a service. So that one was a bit of a surprise. I think things like natural language search, and the utilization of AI and machine learning, those tend to be easier to do when you’re writing on a platform that that’s inherent in what you can do in that platform. And so I think, I think, as we grow as a grow and learn as a profession, and pick up some of the newer Tech, I think these are going to shift over time, because are you not going to want that? I think everybody’s going to want that, you know, AI and machine learning. Sometimes that becomes that’s too much. It’s too much hype. But there’s, you know, I think we’re seeing the rapid growth of it, and it moves from being ineffective to quite useful to extremely effective. So it’s just, it’s just really good to see this snapshot, just like a survey a snapshot on, you know, the poll is quite good.

 

Jon Paquette  37:51

Yeah. And that ability to benchmark performance, that’d be an interesting one to dig into more to, I know that there’s a big appetite from corporates on that on the bank fee analysis fortune where they want to be able to benchmark their fees through their analysis bank, the analysis tool against some of their, their peers to understand what they’re paying in comparison to them. But I wonder if that extends beyond that even to like, say, forecasting solutions that we forecasting as accurately as some of our peers and things like that. Right. So.

 

Craig Jeffery  38:18

It does. It does, you know, we, we use quite a bit of data for helping companies benchmark usually people want to know, tech firms want to know, because they’re building products for it. And everyone else wants to know what’s going on. What are others doing? Where are we against other so that’s a you know, 37 percents, all that is important. Yeah, some some good stuff here. Thanks for your comments, John. And just so you know, in the chat box, we had asked for 150. We kindly asked for 150 people type in TIS or poll or Paquette.  We’re 30 to 31, short of that number. So I don’t ask any more. Just maybe you guys can just type it in. It’s fun. We love it. All right. Jon, that brings us to product development. I know that’s near and dear to your heart.

 

Jon Paquette  39:12

It is. Yeah. And I think this is the result that I was alluding to in the last in the last poll there where you know, currently the most important, you know, Product Development Initiative for most corporates out there is fraud detection. 76%, kind of indicating that right? So makes a lot of sense. I mean, there’s a ton of fraud risk out there in the market today. BC business email compromised is still out there. Still, there’s still rising success rates of BC attacks, which is crazy, but it’s because those threats are getting more sophisticated. The criminals have better knowledge, you know, through through internet and through through sharing and are even incorporating an AI and machine learning and things like that into those attacks to be able to kind of make them look more realistic. And then you know, AP department supply chain departments are under attack constantly through the fake invoice attacks, fake wire instruction change requests, attacks that are coming Coming into those departments all the time, there’s internal threats, there’s collusion, there’s social engineering, there’s just so many threats for corporates to keep an eye on these days. And it gets to the point where even just having sort of really good financial controls payment controls in place within your organization just isn’t enough. And you can clearly see the market looking for something that’s going to backstop all those processes and help them detect anomalies, potential fraud, stop it before it goes to the banks, and you know, sort of really help be that sort of firewall between between the corporates and the bank. So, you know, looking to top expected growth and importance, you know, important, both important to us now, and will be important, soon, expanding ecosystem of partners. So I thought this was interesting. So, you know, 23% now and then 40%, in the future, I tried to sort of wrap my head around this results, I don’t know if trigger if you had any thoughts on this, but you know, I’m thinking like, you know, bring in your ecosystem partners into your treasury management application. Like, if we were to think about a business that’s looking to do real time cash management, obviously, there’s a lot of different partners that might be involved in making that happen. So you know, your positioning and your forecasting, and one tool might be bringing in your bank balances might be bringing in your cash investment balances, it might be with one of your partners might be contemplating what you have on revolving line of credit, might be contemplating what kind of offers you might have in the supply chain finance facility to pull in some cash early or something like that all these kind of make up, you know, sort of different opportunities and different, you know, aspects of a company’s total liquidity and access to funds these days. And if you really want to, like really manage things real time, in that respect, I think you need a partner ecosystem or platform that’s able to bring in all the different cash management services that you’re you’re really using, you know, to get to kind of run your treasury department. So, but I don’t know, Craig, if you had other thoughts about what might be driving the sort of the increased importance in that in the sort of near term outlook?

 

Craig Jeffery  41:51

Well, this is largely speculation. So for those of you who read the more detail report, it doesn’t tell us this. But here, here’s what I think the the expectation around embedded treasury, embedded banking, whatever you think about is, you want a more seamless experience. You don’t want to be thinking about like, when you get ride share now like, it’s no longer I call on a phone, I keep calling to find out where things are, I get in there, I have to figure out about pain. And I got to save her seat and submit it. Now, that would drive you insane. Today, you just like, it’s embedded that the map that shows where the driver is, what the rating is, what their name is, all of that the embedded payment, the receipt, the invoicing that comes and manages, it’s all embedded. And that just is like it’s not, because it’s so awesome. It just removes all the headaches and friction. And so I always think about the expanded ecosystem partners, the use of API’s, these are things that help reduce that friction, you know, for that environment. So I see these as similar. That’s how I look at it. Yeah, but I don’t know that we can really see, you know, what everybody thinks in their minds. Like, why is that important? We, we asked 50 questions, if we asked all? Yeah, I’d ask 110. But it’s, people want less friction. I know people want less friction. And so these are two things that lower that friction. And so that’s why you see growth of like, more than double for ecosystem and essentially double for APIs.

 

Jon Paquette  43:26

That makes a lot of sense. Yeah, I think I think you’re exactly right, that sort of consumer experience, everybody has gotten so used to about everything, just like pop up notifications, your driver is going to be there in two minutes, these types of things that just make your life so much easier. Now, maybe they’re expecting a lot out to get into the finance applications as well, which makes a lot of sense that people are trying to be more proactive about, you know, how they’re managing cash and how they’re managing these operations on a day to day basis.

 

Craig Jeffery  43:48

So well, we’ve got all our poll numbers. That’s awesome. Now we’re looking at our thin cuts our final poll. So a little bit of sadness, we announce that what’s, what emerging technologies you think will be the most beneficial to your organization? We’ve got five examples. You can select all that apply use of machine learning AI for fraud, fraud detection, or security, use of ml AI for forecasting, open banking API’s for real time cash visibility, real time payments, embedded finance, which is an umbrella organization, in the chat box, you’ll see follow ti s and LinkedIn and follow strategic treasure and LinkedIn, we would really encourage you to click those links and follow the commands that’s a way for us to stay connected. It’s also fun, though nobody else needs to type in T is in the chat box. There’s, we have we are well over 150 So thank you for that. And Brian while everyone’s answering that if you could also drop in the the CTP credit LinkedIn group, that would be great. Just And a lot of people here are CTPs. That’s also a good way to get notification. So, all right, we ready to share the results here. Nothing like a poll on a survey results webinar. John. This is embedded finances has fallen off the chart, everyone’s pretty close from 51 to 62%. I don’t know. Any any quick comments on this, Jon?

 

Jon Paquette  45:27

Yeah, I mean, I think, you know, it seemed like just perception that AI machine learning kind of overtook open banking API’s in terms of like the big buzz sort of term for 2023 and comparison to 2022. So if I had to guess I would have said that use of AI and machine learning for forecasting would have been tops. So I’m a little bit surprised that open banking is but yeah, it’s good. I mean, you can clearly see the corporates really want banks and fintechs, like I said before, to deliver on open banking API’s and some of the use cases around that. So but yeah, and embedded finance being so low, it’s, it’s interesting, but maybe that terms, maybe that’s not as well understood as some of these other terms. And yeah, so that that could be driving some of that as well.

 

Craig Jeffery  46:08

Yeah, certainly, technology firms. And banks are talking about embedded finance and APIs very regularly. Thanks, everyone, for responding to these polling questions. Thanks for your comments to Jon. That brings us to AI and machine learning, Jon, you’re up again, on this one and on payments.

 

Jon Paquette  46:25

I know. And I know, we’re kind of running out maybe a little bit long here. So I might move kind of quickly through these next two. But yeah, machine learning, like I mentioned a lot of interest in these topics. And I think you can clearly see from conversations from survey results from, you know, sort of any of the industry publications out there that the two biggest categories that people see a lot of promising are forecasting and fraud detection for AI and machine learning. So no surprise there. And then there’s other areas where people see there’s potential benefits for that, you know, I think, you know, receivables, cash applications, automation, and some of these other aspects of probably good use cases for it as well. Certainly a lot out there, it’s gotten a lot of attention, particularly since the launch of chat GPT kind of made AI and machine learning sort of more in the in the public forefront. So I’m definitely seeing it applied in both cases here forecasting and fraud, you know, at least starting to be within solutions itself. And then you know, the the sort of the difference between small and large organizations in terms of how important it is, you can see, it’s much more important for large organizations, it looks like here, definitely important for both. I mean, I guess, large organizations, on one hand, they have more data to analyze. And so, you know, really AI machine learning, and forecasting is supposed to help the treasurer pick out those trends, those abnormalities as opportunities, and ways they might not be able to just be as you’re sifting through such a massive data set. So it gives you like those more tuned in insights that might not be available at the surface level. So I think that might be part of it. Other part of it might just be that large organizations, for reasons we talked about the beginning, or just further along in the technology curve, they adopted forecasting solutions earlier, right. So it’s more natural for an organization that is in sort of a place where they’re forecasting processes automated today, to want to take it to the next step and apply AI and machine learning, or small company who might be on Excel, they might not have the forecast model, they probably don’t have the data to really make good use of AI and machine learning. And so that could be driving some of the sort of, you know, I guess the difference there and importance. And then, you know, at the bottom here, this is actually this kind of AI that you know, the differences in views of the importance of AI machine learning for fraud detection. 93% in Europe versus 71% in America. And I saw that that caught my attention, I was trying to figure out why that might be and, you know, kind of what jumped to my mind immediately might have been some of the services that are available in North America that aren’t available in Europe, such as Account Validation services, like early warning, which is, you know, I don’t know if everybody’s familiar with early warning, but that was sent at a syndicate of banks reporting their account information, it can be used for Account Validation of beneficiary payment structures and things like that. Services like that don’t really exist in Europe today, because of data privacy, GDPR regulations and things like that. So you don’t have that resource that you can use for fraud detection purposes. And also in North America, we have a lot of these integrated payables programs and virtual card ACH plus, that actually don’t require the corporates to eat and maintain wire instructions within the ERP system make payments, and that removes a lot of fraud risk as well. Right. So, and a lot of that stuff’s not as not as typical in Europe, people are more storing more instructions in the ERP, putting them in the payment file sending them off, right. So I guess from that respect, it’s harder to detect fraud in Europe. So it doesn’t surprise me from that point that they’re looking for more advanced tools to assist with that fraud detection process versus in North America. But Craig, I don’t know if you have any other view on that. Otherwise, I thought that was pretty interesting though.

 

Craig Jeffery  49:54

Yeah, when we see a difference, you know of more than 10 or 15%, by region or by size says it’s worth noting, I think calibrated exposures is useful. There’s quite a bit of information that the full report is available for download, I encourage everyone to get it, you can share it in your company, or just encourage people to get the link. I know we’re winding up quickly here, Jon, if you could cover the wire payments, I’ll take asset classes after that.

 

Jon Paquette  50:20

Yeah, that sounds good. So, you know, in terms of companies, you know, what sort of functions I think this is what they have in place, right? They currently have for these particular functions, 2021 versus 2023. So you see growth in, you know, basically everything here except for account validation services, which is kind of interesting. But you know, you can attribute a lot of this say, you know, confirmation of, of delivery instructions from the bank, maybe to migration, ISO XML, where you automatically get a confirmation back from your bank that the payment file has been accepted or rejected, right. So naturally, you’re gonna see that get, you know, more and more, grow more and more over the years is just ISO adoption grows to validation of bank information is good, you know, tools out there to be able to do that today, probably the Swift ref directory, which is incorporated into a lot of, you know, SAS products these days is a great source for that. confirmations, checks formats, like Greg mentioned, that probably indicates adoption of payment hub type products that are able to do that on your behalf. But validation of account information kind of goes back to that point that I made about early warning, and some of these Account Validation solutions. And I’m wondering if you’re not seeing the growth necessarily, because this is a global survey. And those solutions really are only really available today in the in the North America, US market. So that could be some of what’s driving that to be a little bit stagnant, too. So the other thing that caught my eye validation of sanctions that’s shot up big time 11%. But I have to think that you can attribute that to the Ukrainian conflict and the constant shifting of sanctions, you know, beneficiaries that were sanctioned individuals, banks, and sort of how that jumped into the forefront of a lot of organizations minds when, when that sort of all unfolded. So. But yeah, those are kind of the key things I noted, I think on these these results.

 

Craig Jeffery  52:03

Right. And another item we asked about what were the where were the exposures, what, what are the exposures that people face? And what’s changed? Do you have the following significant asset class exposures or exposures? And risk? What popped up? If you go from left to right, we went from 49% Identify interest rate risk as a significant exposure to 63%. So a solid 14% Drop chump. Europe had the lowest identify that as the lowest interest rate risk exposure. Europe on the FX side, not totally surprised me Europe at the highest FX exposure at 83%. Yeah, when you look at 2021 to 2023, the gap there was pretty much flat it was a 3% shift, which is I would say it’s probably within the margin of error. We look at cash flow risks, that’s that’s declined. From a few years ago, so few years back, you guys probably remember COVID concerns about payments and flows, we are a bit in the throes of COVID. And the repercussions there, that’s dropped by nine points across the whole environment. One of the things that surprised me, John, and I’m just gonna say this as as biased opinion. Counterparty exposure falling from 39% to 33%. It makes me think about 2021, we didn’t really have banks, a good filing for bankruptcy or becoming insolvent being seized by central banks. We do have that this year, we’ve had a number of cases. So when I think about counterparty risk, and Counterparty exposure, oftentimes that’s with our large financial institutions, but also it could be on trading partners as well. So I don’t necessarily understand why that has dipped. We didn’t ask questions about it. We can all freely speculate, but maybe he’s got some great ideas about that, type them in the chat box, so we can come up with a good reason. So there we go. So as we go to final thoughts, a couple ideas. I’ll draw your eye back over to the chat box, if you can find that there’s the report link that Brian loaded. There’s also the CTP group, so click on that link to CTV group and request to join we’ll get we’ll get those approved today. That’s for those who like CPE credits. That’s another way of getting attention for that. So please do that. That helps us out. It looks good. And then download the report. We have more information. John certainly talked about what are some of the differences between Europe and other areas? What do they have? So we can we can pull some more data out to test these hypothesis but But John, if you could, if you could cover the first two pillars, I’ll cover the last two.

 

Jon Paquette  55:06

Yeah, happy to do that. And definitely, you know, these are all key themes, I think throughout the survey results. So payment security is definitely a top concern, you can see that through the way people are investing in technology, implementing payment hub type products, just to sort of put better controls better standardization, around their payments processes, but also through their interest in fraud detection tools, you know, you saw that throughout the results as well. And you know, the role of AI and machine learning, I think, and the fraud detection process. Now, that can be sort of a valuable instrument for the treasurer as well, you know, you can clearly see that frauds not going anywhere, if anything, it’s ramping up success rates aren’t aren’t, aren’t declining on the fraudster side, either based on the survey results we’re seeing, they’re still having a lot of success, so remains the very top of mind topic. And then the The Rise of the Machines here, which said, I love that title. But um, you know, that the, you know, the the use of AI and machine learning is starting to make its way into, into a lot of different Treasury products, probably most predominantly into a lot of Cash Forecasting solutions these days trying to try to leverage AI machine learning, as well as, you know, beginning to make its way into fraud detection solutions as well to be able to give another weapon in detecting those anomalies and your payment activity. The one thing I’ll say about this, there are some corporates that are of the other mindset as well just you know, they’re looking at AI and machine learning being sort of a largely unregulated market right now. And, you know, do I really want to give something that’s unregulated and learns autonomously access to my most critical financial data that makes some people nervous. So there are people kind of sitting on the sidelines of this at the moment to, or others that are certainly going full steam into this. And I think you can clearly see, and I think that, you know, the FinTech providers are obviously investing heavily in this just to be able to deliver on the use cases that corporates are looking for, for these technologies, and how it can kind of make all these solutions better.

 

Craig Jeffery  56:49

Well, after the Rise of the Machines, there’s certainly the rise of the product roadmap, that content we talked about before, as you can’t build a record on what you’re going to do. But you do build upon what you’ve done. So what the tech firms have done, if they’re achieving success, this is very important. It shows proof of delivering on the commitments and commitment to products and solutions over time. And, you know, having a vision for the future, helps the company see where where the company’s plan are going. Is there good alignment, and this is vital for anybody who’s investing in the different types of tech, you want a product, you want a partner, that that asset is going to increase in value over time, not stay stagnant, not decline, but grow in value over time and growing in mind share having a well developed, historical and future roadmap, ask about roadmaps when you’re talking to people talking to the vendors. On the risk management side, we just spoke about that FX and IR exposure, how important that is. And I mentioned about counterparty risks, the idea that we have companies that are concerned about them 1/3 have certain significant exposures, where there’s a significant exposure that should be managed and should be monitored. And to this presents other opportunities that excellent. Treasury folks will work and manage. With that, Jonathan, thank you. And I also want to thank Brian. But thank you, Jon. We’ll turn it back over to Brian. Thanks, everybody, for joining.

 

Announcer  58:38

Thank you, Craig. And thank you, Jon. Thank you, everyone for joining us today. The CTP credits, today’s webinar slides, and the recording of today’s webinar will be sent to you within five business days. And for more in depth analysis of the 2023 Treasury Tech Survey, be sure to download the survey report by clicking the link in the chat box. Thank you, and we hope you have a good rest of the day.