Because financial institutions are constantly affected by different external events, software systems that may have been exemplary a decade ago are rarely the best choices today. This is especially true for older types of self-hosted treasury management system (TMS) that predate today’s mature cloud-based software services.
Updating to a modern and more efficient treasury management system may help your bank achieve the benefits below:
1.) Better Reliability
The main benefit of newer treasury management systems is better reliability. This is especially true for cloud-based systems that are maintained by a specialized third party service provider.
The main reason for this improved reliability has to do with the way onsite and cloud-based systems are usually maintained. In older onsite systems, the bank’s own IT team is usually responsible for maintenance. However, there are several issues with this setup.
First, good finance IT specialists are extremely hard to find, especially project managers who understand both IT and banking. Secondly, IT teams may get frequently bogged down performing other critical tasks. Lastly, given their many responsibilities, IT personnel may not have the time or training to specialize in the TMS system, resulting in slower issue resolution.
By contrast, SaaS systems are maintained by specialized professionals who perform the same work for multiple organizations, resulting in better scale, efficiency, and reliability. The problems with onsite treasury management systems can, of course, be fixed if an organization is willing to spend the resources to optimize its TMS maintenance. However, this is usually impractical and going with an externally hosted cloud-based service is often the better choice.
2.) More Flexibility
This benefit is another feature more typical of newer cloud-based treasury management systems. Newer TMS software is typically more customizable. This makes it simple for any organization to configure their system to match their needs, rather than them readjusting to use a less-ideal setup. While this does not seem like much, across the entirety of an organization, it could save time, reduce the rate of errors, and simplify the onboarding of new users, thus reducing employee development costs.
Current TMS software is also designed to not only be easier to configure but also to be used remotely. This became very important in the first few months of the pandemic when many finance workers had to start working from home. Those working with newer generations of cloud-based TMS software had fewer problems transitioning to a new way of working.
3.) Better Integration With Other Systems
If the treasury management software is properly integrated with other systems used by the organization, it then becomes possible to leverage data from other systems in new ways. For example, a TMS linked to compatible marketing software and ERP systems can reconcile exchange rates and consumer behaviors in different overseas markets, potentially allowing the organization new insights on how to use its cash reserves.
Another area where better integration could be useful is during reporting. Better integrated systems can automatically send data from one part to another, saving time, reducing the amount of needed human input, and improving the accuracy and transparency of data sets. This kind of integration can also enable the organization to automate its use of cash far more effectively than would be possible with older segregated systems.
4.) More Savings
Newer generations of TMS just tend to be better at their core function, which is to help organizations automatically save money when doing day-to-day transactions. This is especially true of cloud-based treasury management systems, as they also require less to maintain when contrasted with most onsite setups.
Newer systems are also likely to employ artificial intelligence to help improve forecasts. This can help organizations to easily predict their cash position against other forecasts throughout different days of the week. Decision-makers can use these predictions to further reduce losses by timing their purchases at the best projected times.
5.) Improves Legal Compliance
New financial regulations come up every so often, and it can be hard to keep on top of all of them. Unfortunately, the older your TMS system is, the more difficult it can be to comply with all the newest legal and regulatory requirements. Fortunately, updating your software will make compliance with newer regulations more straightforward.
6.) Improved Data Presentation and Reporting
Newer systems typically come with powerful reporting features. While this may not seem like much, the ability to generate easily parsed reports quickly and effectively can have a major impact on the agility of an organization. When set up correctly and linked to other relevant systems, today’s treasury management solutions can generate complete reports in just seconds. This can allow decision-makers to make timelier, more thoughtful business decisions within minutes.
Using an appropriate treasury management system may be one of the most overlooked but most profound ways to make your bank more competitive. While all TMS software is similar, not all treasury management systems will be a good match for your organization. By understanding the more specific benefits of different TMS options, you’ll be in a better position to choose one that helps your financial institution reach its next stage of growth.
