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18-03-2021 13:28

Redefining the treasury through automation

Automation is a strategic opportunity for finance and treasury departments to move closer to the business in their companies and drive innovation. FX automation is one clear place to start.
Robot and eye

Treasury and finance departments want a seat at the strategy table of their businesses.

That’s been a key finding in Nordea’s annual research report surveying finance and treasury departments across the Nordics, according to Johan Trocmé, Director of Nordea Thematics.

“Nearly all large corporate treasuries here in the Nordic region want to be a strategic partner to the business,” says Trocmé, who spearheads the annual report. “One way to earn that position is to show they have a role to play in how to digitalise the business.”

In their latest survey, Trocmé and his team decided to see how far Nordic treasuries have come on their journey to the strategy table. It turns out they still have a way to go.

Trocmé et al. asked roughly 300 respondents from Nordic and international large corporates if the treasury is involved in the digitalisation of the business already today. The answer: yes, but only slightly. When asked whether the treasury or finance function is seen as a strategic partner for how to digitalise the business, the answer is also yes, but only by the CFO and not really anyone else.

“That journey to become a strategic partner to the business and get closer to the business remains ahead of the treasuries. They are not quite there,” Trocmé says.

An urgent need for digitalisation

Trocmé recently presented the survey’s findings on a Nordea webinar that took a deep dive into the theme of FX automation. He noted that when asked about their level of involvement in different areas of the business in 2025, treasuries expect to be more involved in everything across the board, from managing working capital to risk analysis as well as being a strategic partner for management.

“Without a big capacity addition in the treasuries, in order to be more involved in everything, they will need to find that capacity addition somewhere else, and the only place they’re going to find it is by automating. So here there is a pretty urgent need for digitalisation in order to be able to fulfil this ambition,” Trocmé says.

Yet little has happened in the way of automation over the last two years, the survey found. While treasuries still expect the level of automation to increase significantly by 2025, their level of ambition has dropped significantly since 2018.

“It seems we have a pattern here that there have been a number of pilot projects and initiatives to try and automate, where there have been perhaps greater challenges than anticipated to begin with and where the complexity has forced a reality reconnect for the treasuries here,” Trocmé says.

FX among the top automation priorities

Trocmé did note that FX is among the top three areas when it comes to automation expectations among those surveyed.

His team also asked treasuries about the top skills needed in corporate treasury departments, both today and in five years’ time. The top five for today’s treasury come as no surprise: cash management, risk management, FX, capital markets funding and financial reporting. When it comes to the “rising star” skills that will need to be added in the next five years, the unifying theme is technology: data analytics, financial reporting, system integration, IT security/fraud prevention and business development.

The survey also asked both the finance and business development respondents to rank which technologies will change the companies’ business models the most in the coming five years. The one that stands out is large data analytics, which 98% of corporates in the Nordic region expect to be implemented in their business by 2025.

“So there’s a lot of things happening there, huge change pressure, and a need to do a lot on the digitalisation and automation side for the treasury function itself,” Trocmé says.

There’s huge change pressure and a need to do a lot on the digitalisation and automation side for the treasury function itself.

Johan Trocmé, Director, Nordea Thematics

Nordea’s FX automation journey

To help treasuries on this automation journey, Nordea has focused on developing a suite of FX automation solutions, known as AutoFX. The journey began back in 2015 when Nordea built the first version of its liquidity management robot, allowing users to automatically sweep excess liquidity or top up negative balances on their currency accounts.

While most large corporates were in a wait-and-see mode back in 2015, by the beginning of 2020, 300 customers were using the tool. By the end of 2020, there were 600 customers using it, and now a few months into 2021, the number tops 700. The customer portfolio ranges from smaller startups to the biggest pension funds in the Nordics. Some have automated the entire process while others have automated smaller flows and recurring tasks.

“It’s up to you whether to do the full monty or small subsets or something in between,” says Kristoffer Jansell on Nordea’s FX automation team. He notes in addition to helping companies cut down on nagging, time-consuming tasks, the currency robot can also mean significant cost savings, allowing companies to avoid unnecessary interest rate costs and borrowing costs.

In addition to AutoFX Liquidity Management, Nordea has also recently launched AutoFX Hedging in Sweden, Norway and Denmark, allowing companies to automate their FX hedging according to their own hedging policy. The bank has also unveiled AutoFX IQ, a new FX advisory tool that helps companies analyse and forecast their currency cash flows for smarter decision-making. The solution has been rolled out in Denmark and Finland, with other Nordic countries to follow. That’s alongside a host of AutoFX APIs, which allow companies to fetch relevant data such as FX market rates and historical trades, as well as execute FX trades when something happens in their own system.

Want to know more about our automated solutions or just get started? Get in touch with us!

Phone: +46 8 407 91 00
Email: [at] (markets[dot]se[at]nordea[dot]com) 

Phone: +45 3333 1933
E-mail: [at] (markets[dot]dk[at]nordea[dot]com) 

Phone: +47 2248 7860
E-mail: [at] (markets[dot]no[at]nordea[dot]com) 

Phone +358 9 369 49 090
E-mail: fxflowfi [at] (fxflowfi[at]nordea[dot]com)


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