Treasury redefined: how fintech is rewriting the narrative

Traditionally, treasury departments might have been considered rigid and conservative, but fintech innovations are rewriting this narrative. Fintech solutions inject agility, efficiency, and strategic alignment into treasury operations, challenging old norms. Imagine a world where cash management happens in real time, risk analytics predict the future, and cross-border transactions occur seamlessly. Fintech is reshaping the…

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Traditionally, treasury departments might have been considered rigid and conservative, but fintech innovations are rewriting this narrative. Fintech solutions inject agility, efficiency, and strategic alignment into treasury operations, challenging old norms.

Imagine a world where cash management happens in real time, risk analytics predict the future, and cross-border transactions occur seamlessly. Fintech is reshaping the treasury function, becoming a hub of innovation and value creation within businesses.

In this editorial, we investigate the transformative role of treasury in driving innovation within the financial industry. We delve into these topics with Calle Sundin, Head of Treasury at Zimpler, who shares his insights into the intersection of fintech advancements and treasury strategies.

Let’s start by unpacking the latest trends.

Treasury transformation: the industry trends.

Recent fintech trends are reshaping cash management and treasury operations in profound ways.

For example, embedded finance, which integrates financial services into nonfinancial institutions, is expanding rapidly, offering new avenues for cash transactions and financial management. By 2026, it’s projected that $576 billion worth of transactions worldwide will utilize this option, a significant leap from $120 billion in 2021.

Additionally, the growth of cross-border payments underscores the importance of managing international liquidity effectively. This surge in money movement translated into even greater cross-border revenues, which escalated by 17% to $240 billion. In 2024, cross-border payment trends are poised to evolve significantly, with a focus on enhancing efficiency and security.

As these trends continue to evolve, treasurers must adapt to navigate the changing landscape of cash management and financial operations enabled by open banking, being mindful of the crucial relations with the existing banks. 

Calle comments: “I believe that bank integration will be paramount in treasury operations. Zimpler functions as an open banking player, and we have comprehensive open banking integration capabilities with various banks, making A2A payment effortless. With real-time data we can make faster decisions.”

How do recent financial trends and emerging dynamics within fintech challenge the traditional view of treasury?

“At Zimpler, our approach to treasury differs significantly from the traditional model. Our primary need is near real-time data on balances within our system. This necessity contrasts with today’s standard view on treasury operations, focusing on APIs, instant transactions, and real-time balance updates. While these features are nice-to-have for many, for us at Zimpler, they are a must.” 

Rethinking treasury.

Given the current environment of high-interest rates and inflation, treasurers must optimize their fundamental working capital operations, recognizing that leaving money on the table is no longer viable.

Historically, inefficiencies weighed down international payments—high fees, slow processing times, and a lack of transparency were the norm. However, the digital revolution has introduced a new era of global financial connectivity, fundamentally altering how businesses and individuals engage in cross-border transactions.

Technology enables businesses to introduce payment innovations and growth strategies, such as instant cross-border transactions. These innovations address liquidity challenges globally scalable businesses face, including the need for access to localized currencies and centralized liquidity management.

Calle comments: “Looking forward, Zimpler wants to contribute to the continued innovation in technology that will further democratize access to global markets, making cross-border transactions more accessible, affordable, and secure for all.

For small to medium-sized companies, achieving favorable spread rates with banks has been a persistent challenge. While the market trend is towards reducing these spreads, which benefits all parties involved, we can leverage our bank infrastructure to provide added value to our clients.”

The new influencers. 

Treasurers have the opportunity to enhance the visibility and accessibility of cash by harnessing existing technology solutions. They can play a crucial role in identifying and executing organizational growth strategies, given their unique skill sets and expertise.

Calle shares: “In treasury, the absence of questions, doubts or concerns can often suggest success in all our operations: if no one approaches you, everything is functioning smoothly. Traditionally, the treasury’s role has been to manage liquidity and financial risks, and interactions occur when issues arise.

However, the current trend is transitioning towards a closer alignment with business objectives, evolving treasury into more of a strategic ongoing business partner as we move forward.”

Treasurers possess a distinct set of skills and expertise crucial for identifying and implementing an organization’s growth strategies and adaptations. 

Calle comments: “Payments are inherently a treasury product, so within a company focused on payments, everyone collaborates with the treasury department. This synergy involves significant business development, which is personally one of the most fun parts for me. Business development identifies new opportunities, forges strategic partnerships, and explores innovative solutions to meet evolving business needs. The dynamic nature of these challenges keeps the work engaging – at least for me!”

With their in-depth understanding of financial markets, risk management, cash flow optimization, and capital allocation, treasurers can be considered the real influencers of fintech. This expertise allows them to provide valuable insights and guidance on financial matters that directly impact the company’s bottom line.

Calle agrees: “In an environment marked by high inflation rates, international tensions, and the threat of recession, the treasury team faces mounting pressure to demonstrate to the board and management that all aspects are under control. This encompasses maintaining liquidity for both short and long-term needs and the decision-making ability regarding investments. But when the market is disrupted, making many people risk-averse, it actually opens up interesting opportunities. Both for businesses like Zimpler, but also for our customers. The treasury serves as the financial advisor, providing critical guidance and insights to navigate these challenging economic conditions.”

Navigating market trends and regulatory shifts: what will happen next?

Regulatory changes, such as PSD3 in Europe or EU directives, also influence treasury operations and the broader payments landscape.

Calle responds: “Adapting to changes involves two key elements: staying updated on market trends and remaining compliant with evolving legislation. Often, valuable information becomes available relatively early on, presenting an opportunity to proactively adjust strategies. The beauty of adaptation lies in its inevitability—it’s not a matter of choice but a necessity.

Embracing this mindset makes the process much smoother. The prospect of having nothing to do and nothing to anticipate is far less appealing than being in a dynamic environment where the path forward isn’t always clear. Indeed, navigating uncertain terrain can be the most interesting aspect of the journey.”

Over the last five years, the surge in electronic payment transaction volumes has consistently outpaced the growth in payments revenue. This trend reflects a notable shift in payment preferences towards lower-fee options and highlights the decreasing margins that come with greater scale.

To this, Calle adds: “You can’t capitalize on something that’s meant to be free, such as cross-border transactions. Payment is a necessity that everyone must engage in, and for cash transactions, the cost is already zero.

Instead, we focus on offering additional value-added services to our merchants, distinguishing ourselves in ways beyond basic transaction facilitation.”

Relations are the currency of the future

The trajectory of the treasury function has undergone notable shifts in recent years. This trend is expected to accelerate, with increased innovation and consolidation anticipated from both technological advancements and operational enhancements.

The question then presents itself, how do we balance the need for agility and innovation in payment solutions with the importance of maintaining strong relationships with traditional banking partners?

Calle: “Establishing and nurturing good relations is crucial. Communicating effectively with banks is essential to ensure they grasp the intricacies of our business operations.

As they comprehend how risk can be mitigated and the potential benefits of collaboration, they’ll view us not as competitors but as partners. It’s important to recognize that banks also desire to transform the ecosystem, and often, we can collaboratively develop innovative solutions.

We have the opportunity to revolutionize the payments landscape together.”

Francesca Portoso avatar