Five ways for bank treasurers to drive growth and optimize working capital

With the Association of Financial Professionals conference set to kick off on October 22, it’s a good time to check the agenda. And one of the session tracks that caught our eye was “Understanding the Treasury Professional.” We would like to take that “understanding” a step further. We see two distinct audiences when the group meets in San Diego: corporate treasurers and bank treasurers. There are important differences in the job remit, and these differences translate into unique strategic priorities. 

In terms of liquidity management, bank treasurers have a more complex job as they ensure all the bank’s various financial obligations and maintain a clean balance sheet. Bank treasurers also interact with a wider range of internal and external stakeholders, ensuring that all financial practices and processes are transparent and compliant. In short, the bank treasurer plays a pivotal role in maintaining financial stability and driving strategic growth. 

Asset Liquidity Management (ALM) systems, which assess as well as predict cash positioning, are crucial for managing regulatory liquidity and reducing risk, but treasury faces even greater challenges in meeting fiduciary obligations to bank stakeholders. As treasury teams navigate the complex financial landscape, it's critical to identify and prioritize key initiatives for the upcoming year, and the AFP conference can jumpstart that process. This roadmap will outline five essential strategies that a bank treasurer should focus on, with a particular emphasis on leveraging cash visibility and technologies to achieve these objectives.

Enhancing cash visibility: A critical first step is gaining a clear and comprehensive view of the bank's cash position. Treasurers need real-time insights into available funds and liquidity across all deposit, debt, and investment accounts, including those held at other banks. These insights should produce informed strategic decisions drawn from a real-time consolidated view into the ALM system. To achieve this level of cash visibility, treasurers should look for systems that provide tools, integrations, and analytics that facilitate the management of day-to-day operations and respond swiftly to financial challenges.

Optimizing liquidity management: Effective liquidity management is paramount for banks, as it ensures they can meet short-term financial obligations while maximizing returns on excess cash. Managing effectively in today’s economic environment is a balancing act between liquidity and profitability. Bank treasurers can improve their liquidity forecasting and optimization capabilities by leveraging a central repository combining liquidity, accounts payable, and fees due. In turn, this protects the bank against unexpected disruptions and economic fluctuations.

Strengthening cash forecasting: Unquestionably, accurate cash forecasting is a cornerstone of financial planning, and developing a robust process to anticipate future cash flows and allocate resources accordingly is key for treasury teams. By implementing analytical tools that use current and historical data across the entire capital structure of the bank, treasurers can refine their cash forecasting models to help make more informed decisions and strategically allocate their capital.

Timely implementation and cost efficiency: Of course, time is of the essence in today's fast-paced financial environment. Technologies with rapid implementation and low cost of ownership will present significant advantages. Whether you’re a local community bank or a bank with international operations, treasurers should seek solutions that help them get up and running quickly. Those solutions need to minimize disruptions to existing operations and offer solid integration and automation capabilities to facilitate payments, move money, and combine data from multiple internal systems. As a result, bank treasurers can allocate resources more efficiently to core treasury functions and strategic initiatives.

Elevating into a strategic role: Treasurers are uniquely positioned to contribute strategically to a bank's growth and stability. Adopting innovative technology can empower them with data-driven insights and automation, freeing valuable time and resources. This, in turn, allows treasurers to take on more strategic roles within the bank, such as advising on investment opportunities, optimizing capital allocation, and managing risk effectively.

In conclusion, the role of a bank treasurer has unique needs and opportunities. Their role is essential for maintaining financial health and driving strategic growth. By prioritizing these five strategies, treasurers will be armed with the tools they need to navigate the next 12 month’s challenges successfully. Efficient cash visibility and treasury systems serve as powerful allies in achieving these objectives, providing the tools and insights necessary to excel in the dynamic world of banking. As bank treasurers embark on this journey, they can shape the financial future of their institutions, ensuring stability, growth, and resilience in an ever-evolving financial landscape.