Jukka Sallinen, CEO of Finnish fintech Nomentia, speaks to TMI about the benefits to the corporate functions of treasury, finance and IT working together to navigate their way through the hype surrounding emerging technologies.
Ben Poole (BP): Treasurers strive to ensure that their cash management processes are efficient. What are the main roadblocks to achieving this today?
Jukka Sallinen (JS): Lack of collaboration between different functions within the organisation is one of the significant hurdles. There should be more roadmapping and alignment between treasury, finance, and IT. Many solutions provided by software vendors have grown into do-it-all monolithic systems. That, unfortunately, often leads them to be mediocre at best and none of the three departments is entirely happy to work with them. In addition, while there has been lots of talk about open banking and standardisation to improve the efficiency of cash management processes, most of these promises have remained unfulfilled.
I believe treasurers want more flexible and fast solutions that can solve their specific challenges and integrate well with their core treasury management system (TMS) and other systems. While it is obviously everyone’s responsibility to look at the big picture, maintaining the growing number of systems and surveying the providers’ landscape is often left to IT. Greater collaboration would be preferable.
BP: How have these challenges evolved over the past decade? And how can treasurers look to address them?
CFOs and treasurers’ key challenges are cash visibility with flexible cash flow, liquidity reporting, and payment centralisation. Surprisingly, this situation really changed over the past decade, showing that previous-generation monolithic solutions and the multi-banking jungle, where most mid-sized and larger companies spend their lives, remain significant challenges to solve.
The TMS space adopted the software-as-a-service (SaaS) ‘revolution’ quite early on, which unfortunately also means that most of the products are more of a ‘second act’ to a long-running on-premise performance. They lack the scalability, flexibility, and better management for IT that cloud-native solutions should offer.
The key for treasurers is to start with the question, ‘What do we need and why?’ No one needs a TMS or enterprise resource planning (ERP) system for the sake of having one. Still, there are goals, aspirations and challenges in an organisation that treasurers and the whole company want to overcome. Some of these goals might be more specific to one company while several businesses share others. One might need a cash management solution with a flexible treasury reporting module, while for another the burning issue could be commodities or trade finance. Finding the right solution and maintaining that vision as a company’s targets evolve is vital.
BP: What do developments such as instant payments and open banking mean for treasurers?
Real-time data offers great promise and would clearly benefit many businesses. However, I would still advise treasurers and cash managers to keep their eye on the ball and focus on their needs. If they have to manage a multi-banking and multi-country environment, will they receive the same service from all their banks? Or for all their cash management products? Or in all countries? And if the answer is going to be ‘no’, then does it matter?
BP: How important is it to review treasury processes with a digital mindset?
Simply moving existing processes onto the latest technology is often not a clever idea. It is also unrealistic to expect that everything can be modernised in one go. I believe that companies which continuously develop their skills to renew and regenerate will prosper. This also applies to people, whether they work in the marketing department or in treasury.
BP: Treasury leans on IT to provide the tools to improve treasury processes. What is your role as a solution provider in this dynamic? Can you help bridge the knowledge gap between the two functions to deliver excellence for both treasury and IT?
Finance, IT and Treasury should collaborate closely to find the best business solutions. Nomentia’s role as a solution provider is to catalyse and facilitate this dialogue to find the best solution in all cases. We like to work closely with our customers, and our motto is that ‘we deliver what we promise’.
BP: There is much hype around a number of ‘emerging’ technologies and the implications these could have for corporate treasurers. What is your outlook on the future of treasury and cash management?
Some emerging technologies are already fulfilling their promise, while others are still just that – merely a promise. The hype around machine learning (ML), for example, has generated unreasonable expectations. ML cannot, and should not, be used to solve all problems. Still, when applied correctly it can also help treasurers with, for instance, more accurate reporting, the ability to run alternative simulations, or produce extended and more accurate forecasts. It will also be exciting to see what blockchain, cryptocurrencies, and central bank digital currencies can bring to the table for companies and treasurers.
BP: And in terms of the future for Nomentia, what is coming down the line on your product roadmap?
We have just finalised our five-year investment and development programme to largely re-write all our applications to meet the requirements of the 2020s. We call this second-generation cloud or the cloud-native version of Nomentia. The new solution was not introduced with a ‘big bang’, but we have migrated customers to the new platform on the fly. I sometimes compare this to fuelling an aircraft during flight. But what we did was closer to switching passengers to a different jet while up in the air. This approach has enabled us to continually collect feedback, listen more closely to customer requirements, and introduce innovation and new features faster than ever. One of the most exciting tools we will announce soon is a new engine for payment anomaly detection, which I hope will help to guarantee both our 2,000-plus existing customers and our new ones a groundbreaking safe payment process.
In addition to our constant product development, we are delighted with our acquisition of TIPCO Treasury & Technology. Our combined product portfolio is the most powerful offering currently on the market. With new office locations in Austria, Germany, and the Netherlands, we are ready to accelerate the adoption of Nomentia cash and treasury management solutions in these markets and in the Nordics.