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How the digital revolution is powering real-time business

If you doubt the importance of digital transformation for businesses today, then just look at the senior management team of almost any major business. Alongside the Chief Financial Officer, Chief Information Officer, Head of Human Resources and Business Heads, you will now invariably find a Chief Innovation Officer or Head of Digital Innovation directly accountable to the CEO for driving digital transformation of the business.

This is in response to several major trends including the ‘Uberisation’ of commerce, sharing economy, data as a business and the rise of platforms.

Enabling real-time transactions

Digitisation is enabling businesses to connect to suppliers and clients in new and more direct ways. At the same time, customers are demanding more of a real-time experience, challenging firms to come up with faster and more efficient ways of delivering products and services to them, both in the business to consumer (B2C) and business to business (B2B) spaces.

This ‘e-generation’ asks: Why can’t I buy business products and services online? Why can’t a business process be completed in seconds rather than days or weeks? Why can’t I get the information I need instantly?

To succeed in this new reality, businesses need new tools: real-time FX pricing engines to price locally when selling cross-border, alternative payment methods that are popular with customers to purchase online, and application programming interfaces (APIs) to connect bank and corporate systems to support the instant processing, reconciliation and settlement of transactions.

As a result, businesses can capture new markets, offering clients additional services, opening new distribution channels, and executing transactions faster and more efficiently. Some are driving transformation projects aimed at digitising existing processes whilst others are developing entirely new ways of doing business.

Financial services innovation

The same drive for digital innovation is reshaping financial services where the potential market size for successful new entrants is enormous. By some estimates there are more than 25,000 fintechs across the world vying for a slice of banking and finance related services. Some are focused on supporting enabling technology such as blockchain, big data, or robotic process automation (RPA) which can be applied to a broad range of financial processes whilst others are seeking to disrupt specific markets or services such as domestic and cross-border payments, debt capital raising or trade finance.

Banks have responded by embracing APIs, digitising their own processes, joining market platforms, and either partnering with fintechs or developing new ‘fintech’ services of their own.

The relevance of all this innovation to business is that there is now a raft of new financial services and tools that allow businesses to interact with their customers and suppliers in new ways, especially to support online and real-time transaction processing.

Cash management solutions

Customised cash management solutions to support digitised processes is on the rise, and these solutions are tightly integrated into core business processes and systems via real-time APIs. New cash management solutions have a number of common elements including multi-market payment gateways, dynamic FX pricing and execution, and real-time end-to-end processing.

Driving business outcomes

These new cash management solutions will help to power new real-time, digitised business processes across a range of different business scenarios. The challenge for most treasurers, however, is that these new solutions go beyond traditional cash management services and require new skills and knowledge to effectively support the business. Treasurers need to bring ideas to the table and actively participate in the ideation of new business models and digitisation of the supporting processes.

This requires a strong working knowledge of areas such as alternative payment methods, mobile and online commerce solutions, API integration and new services from banks and fintechs so Treasurers can become effective advisers to the business.