By Bob Stark, Global Head of Market Strategy, Kyriba

Today’s CFOs are facing increasing levels of market uncertainty that can have a major impact on their ability to stabilize or grow their business. Compounded by operating in a fast-evolving digital banking landscape, there is no end to the number of business decisions finance leaders must make. Fortunately, innovative technology can provide critical insight and empower CFOs and their teams to prioritize data sets and evaluate outcomes based on a variety of scenarios.

Knowing what decisions to make when the stakes are high is a key differentiator. With the right tools, teams can gain essential visibility and control to achieve greater productivity and inform the many choices they face in weathering difficult times and implementing an enterprise growth strategy. Here are four areas CFOs and treasurers should focus on this year as they navigate the latest trends in digital banking and, most importantly, determine the best path forward for their respective organizations.

Data Unification and Intelligence

Every industry is digitizing. In the digital banking industry, real-time cash management is essential in order for multinationals to reduce the impact of inflation, interest rate, and currency volatility on corporate balance sheets and income statements. By doing so, corporations are able to better understand their financial past, present and future from having instant access to cash and liquidity data and dynamic scenario-based analyses. With the power of visibility, finance chiefs can know where cash and liquidity is, including visibility into the impacts of economic sanctions on cash and liquidity.

Finance chiefs that have made the switch have already reaped from the benefits, whether via increased revenue or profitability. In fact, according to a survey by Broadridge, 71% of leaders are seeing increased revenue as a result of digital investments, and 51% are seeing increased profits.

Furthermore, according to an IDC survey, 51% of leaders that have opted into modern enterprise technology and marketplaces can produce a consolidated view of cash and liquidity in under one hour compared to 8% of the less equipped companies. Finance teams that want to achieve this form of competitive and profitable future must work with best-in-class operators who offer developer support for the creation of custom apps and opportunities to connect existing apps or platforms. This kind of marketplace for new applications allows CFOs and treasurers to accelerate their digital transformation projects and quickly connect existing resources. With a unified and fully connected ecosystem of applications, CFOs and treasury teams can more effectively manage liquidity and unlock value across an enterprise.

Application programming interfaces (APIs) are a great way to stimulate data movement between applications and across ecosystems. This results in reduced costs, improved efficiency and an overall better experience for customers. The opportunity to develop bespoke solutions for specific tactical needs or fully integrated solutions across Finance, HR and Sales has never been more possible thanks to new developments in Open APIs.

Open APIs enable the development of faster, prebuilt connectors to transfer data between systems, reducing implementation times, standardizing onboarding and security, and providing users with access to data from internal and external systems. API-connected solutions and automated processes allow financial decisioning to be seamlessly communicated to business leaders to improve transparency and alignment among teams. CFOs can reduce expenses, improve decision making and uplevel the finance team from tactical to strategic through the use of Open APIs. This has led corporations to standardized bank and payments connectivity while making the payment journey from ERP to bank more secure, automated, and economical.

AI and Machine Learning

CFOs are shifting their attention to artificial intelligence (AI), in combination with other apps and technologies, to achieve modernized insight and data intelligence. Tools such as AI help teams rapidly gather copious amounts of data, grant data integration, and allow treasury to quickly build global cash forecasts as well as plan for disruptive scenarios.

An insightful system of intelligence can also measure the vulnerability of an organization’s income statement to currency volatility, hedging currency exposures, billing, or supply chain business process changes, and factoring in historic gains and losses due to currency headwinds and tailwinds. Therefore, AI-based tools can help CFOs and treasurers better manage currencies with the use of predictive analytics to anticipate market movements.

Furthermore, it is crucial for CFOs to improve the efficiency of liquidity forecasting and reduce vulnerabilities to payments fraud. AI and Machine learning can do this by identifying suspicious payments and comparing outgoing payments against historical payment patterns, as well as flagging them for further internal review, which improves predictability and exception identification.

Payments Fraud and Security

As payments become more organized via Open APIs and take advantage of new delivery channels, such as real-time payments and, in some cases, cryptocurrencies, CFOs realize they need better protection.

According to a 2021 AFP report, 75% of organizations across all areas of business were targeted for payment fraud with 90% indicating fraud was as bad, if not worse, than the year before. The rise of faster payments and non-bank payment channels delivers instant payment processing, meaning that payments settle immediately out of corporate bank accounts. This heightens the need for the detection of fraudulent payments in real-time. Payments governance and internal compliance cannot slow the initiation, approval and remittance of payments; otherwise the differentiating benefits of digital payment strategies are wiped out. If executed well, APIs can integrate capabilities such as sanctions list screening, bank account validation, and adversarial network AI, unlocking cost efficiencies while increasing resilience against fraud and cybercrime. In fact, according to IDC, 79% of leaders have already implemented very effective payment fraud prevention, 69% of leaders have also effectively hedged to protect their liquidity. CFOs and their teams require unified data and agility to make these real-time data-driven payments decisions and support their organizations to find easier solutions under one connected ecosystem.

ERP integrations also allow finance chiefs to spot any data inconsistencies through the consolidation of data and financial information. These ERP integrations provide a series of screening, monitoring, and compliance actions on top of sending payment files to banking partners. Previously, ERP-to-bank integrations would lag due to project management challenges, on-the-fly development, and extensive back and forth testing with banking partners. Nowadays corporations save time and energy compared to the alternative of supporting antiquated, manual processes that leave room for human error, such as the use of spreadsheets for data management and payment processing. In time, the automation of these legacy processes will prove its ROI as it will foster teams to prioritize other value-added projects, increase security, and increase the opportunity for innovation.

Cash, Liquidity and Forecasting

Liquidity management is a top priority to CFOs and their finance leaders as they navigate 2022, against the backdrop of supply chain risk, rapid inflation, rising interest rates, and turbulent currency markets.

With political and macroeconomic challenges continuing, CFOs and their teams must have effective risk management strategies to understand the impacts of market disruption and quantify the vulnerability of their balance sheets, income statements and cash flow to adverse changes. The rising cost of capital will stress organizations that have relied on short-term borrowing to drive liquidity. Multinational organizations with substantial payables and receivables will see volatile movements in currencies as well as sustained gains and losses in currencies that are tied to political conflict, oil, or both. Unifying financial data through APIs composes digital systems that enable the CFO to make data-driven decisions from systems of insight and intelligence.

As we continue through 2022, the key to achieving success in digital banking for finance chiefs is to invest in tools and systems that manage data in real-time to enable greater effectiveness in decision-making. CFOs should also be collaborating with other C-suite executives like CIOs to unify systems across the organization to deliver data intelligence and, as an added bonus, unlock automation that can drive great efficiencies in productivity and business continuity. While these challenges continue to progress, CFOs who are resilient will have the resources to be creative and drive positive growth for their company.

About the Author

Bob Stark is a subject matter expert in treasury, payments, and risk management with extensive expertise in cloud solutions and security. Bob has provided technology consultation and thought leadership to help finance leaders at the world’s leading organizations optimize financial outcomes with technology for more than 20 years. He is a regular speaker at major global treasury conferences such as AFP, EuroFinance, ACT and others. Mr. Stark has a BBA in Finance and Marketing from Simon Fraser University.