Treasuries and Technology: 2017 San Francisco Treasury Symposium

I recently had the opportunity to join more than 300 San Francisco Bay Area treasury and finance professionals at the 2017 San Francisco Treasury Symposium. The 28th annual treasury symposium, presented by San Francisco Treasury Management Association (SFTMA) and Silicon Valley Association for Financial Professionals (SVAFP), was a great opportunity to hear from treasury professionals who offered their perspectives on pressing issues impacting the industry.

I had the pleasure of moderating the treasury technology forum, titled How Treasuries Use Technology: Automating Processes, Mitigating Risks, and Increasing Controls. Joining the discussion were Priscilla Yip, treasury analyst for Salesforce, and Nicholas Zaiko, senior investment consultant for Bridgebay Financial. Special thanks to Priscilla and Nicholas for sharing their insights and responding to questions from the audience!

The technology solutions discussed during the forum were money market fund portals, investment reporting systems, and treasury workstations. Below is a quick review of our conversation.

1. Money Market Fund Portals

Both Priscilla and Nicholas noted that money market fund (MMF) portals are a crucial tool for investors who want to get back into prime funds. And many in the industry are doing just that. Since new federal regulations took effect in October 2016 (which initially caused many investors to step away from prime funds) MMFs have surprised investors by staying at or above the once-stable $1 price.

With an intra-day floating NAV, investors need the forecasting and reporting tools a MMF portal provides.

I do think that it’s really important with 2a-7 reform that companies have the necessary tools and resources before re-entering prime funds. And money fund portals make this possible,” Priscilla said.

Other thoughts about prime funds:

• Not all MMF portals are equally equipped to handle prime funds under current regulations, but most are adding capabilities to meet that need.
• To monitor prime funds, treasuries need portal capabilities like inventory method, book value, and C-level reporting.
• A MMF portal offers insight into potentially risky securities. It is a powerful tool to integrate different data points and look at true counter-party exposure.

2. Investment Reporting Systems

Automated financial technology is a great way to stay ahead of the curve when dealing with changing financial markets.

According to Nicholas, a recent example was the downgrading of IBM securities. Having an investment reporting system allows investors to look at all their stocks, cash, and positions in one place and determine concentration risk, particularly when there are multiple investment managers involved. Using multiple managers who operate on the same instructions is inefficient and increases the risk they will invest in the same securities. When Nicholas found out IBM was downgraded, he was able to check the investment reporting system and see how much IBM his clients owned right away.

The importance of an automated investment reporting system lies in the consolidation of so much data from different sources. Without it, Nicholas said he would rely on information from investment managers — which can be disparate and incomplete – or rely on custodian reports.

“I think having a system that kind of ties everything together, makes it easier to analyze — is really invaluable,” Nicholas said.

3. Treasury Workstations

While smaller treasuries may not find it so difficult to handle finances manually, a workstation can help a growing business with scalability, saving time and resources.

Salesforce implemented its treasury workstation in 2012, after years of relying on spreadsheets for everything, including daily cash reconciliation, Priscilla said. Payments were processed via individual bank portals and officials had to carry around bank tokens and remember passwords. It worked at the time because the company was smaller, but the team at Salesforce knew it was not scalable.

Salesforce’s current workstation has set up channels from custody banks to feed it transactions and bucket them into categories. The data is categorized and payments are processed, while the workstation handles daily reconciliation and automates controls.

More Challenges to Meet

I appreciated the opportunity to attend the San Francisco Treasury Symposium and learn from financial professionals. Special shout out to Priscilla and Nicholas for participating in the Clearwater forum, which I hope was helpful to others in the industry who are considering the future of their treasury solutions.

As companies come to rely more on these treasury technologies, they will also seek more capability from these systems. It is important to find technologies that meet current needs and are also evolving to meet the investment-related challenges of the future.