The Evolution of Emerging Treasury Technologies
The phrase “emerging technologies” has become commonplace within the past decade to describe innovative — and potentially disruptive — digital software, hardware, processes and services.
Over the past few years, four such technologies have risen to top of mind for treasury professionals: artificial intelligence and machine learning (AI/ML), blockchain, predictive analytics, and robotic process automation (RPA). In parallel, the need for greater security and fraud prevention has given rise to new authentication methods that may also change the face of treasury.
While it’s certain that these technologies will continue to evolve, they are no longer the future of treasury: they’re here today, and they’re here to stay.
Emerging Technology Relevance – Ranked by Treasury Professionals
Earlier this year, we conducted a treasury trends survey among Fides clients and partners. One question asked participants to rank four emerging technologies in order of relevance to treasury over the upcoming 12-24 months. Predictive analytics and RPA narrowly edged out AI/ML to take first and second place, with blockchain coming in a distant fourth.
- For treasury, AI/ML can be used to monitor operational risks, counterparty credit risk, and optimize cash management. AI can be used to speed up manual tasks such as reconciliation, spotting patterns to be able to quickly identify and flag anomalies that may be a sign of fraudulent activity. Machine learning uses large quantities of data to identify deeper patterns. However, without enough data, predictions may be biased, as learning is limited to the data and patterns the AI experiences.
- Predictive analytics is an application of AI/ML, helping treasury analysts dive deeper into data than ever before to produce sophisticated risk scenarios, liquidity modeling, and cash forecasting.
- Then there’s blockchain, much-touted a few years back as the base for cryptocurrency. Decoupled from cryptocurrency, distributed ledger technology has the potential to streamline supply chain management, payments, cash management and positioning, as well as power robust Know Your Customer (KYC) and anti-money laundering (AML) processes. SWIFT opened up its gpi payments network to blockchain rails last year.
- RPA takes automation to the next level, streamlining repetitive processes and reducing manual work through use of an AI-powered bot. Life insurance giant Allianz turned to RPA several years ago after “realizing that it’s impractical, costly, and time-consuming to invest in traditional API-led integration to achieve the same result.”
Even with the advances in API development driven by open banking and the desire for open finance technology ecosystems, APIs too still sit firmly in the emerging technologies category.
Right now, APIs may only add to the complexity for corporates juggling multiple decentralized bank connections. Ultimately, they will open the door to the exchange of real-time data and real-time payments. But the current lack of API standards presents a significant challenge: each bank, financial institution, fintech and software provider may have a slightly different format, so true “plug and play” capability doesn’t yet exist. That being said, we expect API adoption to continue to rise, and fully support the channel with Fides APIs for banks and partners.
It’s now increasingly rare to have a password as the only form of authentication for access to any system that may house personally identifiable data. Even when IT makes password changes mandatory at set intervals, users forget their new passwords, write them down, use the same password in multiple places, or use passwords that are easy for hackers to figure out. As cybercriminals become more sophisticated, new technologies are emerging to make authentication even more secure.
- Driven in the business space by IT governance and security postures, and in the consumer space by online ecommerce fraud, tools such as 2-factor authentication (2FA) or multi-factor authentication (MFA) — where in addition to a password, users must also enter a code generated upon each login and sent to them via text message or email — have become more commonplace. Fides requires two-factor authentication for access to the Fides Multibanking Suite, Fides ARS, and Fides EFT and is evaluating additional technologies to add in future.
- Passwordless authentication removes the need for the user to remember a password at all. Instead, they login using a public key (for example, a user name) and a private key (such as a token code generated by secure software installed on the user’s phone, a fingerprint, or a text message). While similar to MFA, this eliminates password-based risk altogether.
- Biometrics involves using voice recognition, a fingerprint or iris (eye) scan as proof of identity. Many mobile devices, apps, and retail banks now offer fingerprint recognition as an option for bypassing the need for a password or passcode.
- Facial recognition takes biometrics one step farther, removing the need for any action on the user’s part. Facial recognition technology maps facial features from a photograph or video and matches them with a database of known faces — an example of this is the auto-tagging of photos on Facebook.
There are many potential fintech applications for authentication that may impact treasury systems and processes. For example, in the payments space, Incode is using facial recognition technology to offer verification for both online and in-person payments, banking, onboarding, and a new platform for workplace health and safety that can use technology to detect whether the user is wearing a mask.
The Fides teams actively follow market trends, news, and emerging technologies. We regularly engage with our clients to learn what is most important to them, and with our partners to see where we can work together to deliver new, relevant joint solutions.