Future Needs of Your Treasury Operating Model

3 Ways to Anticipate the Future Needs of Your Treasury Operating Model

In a typical operating model review engagement we consider the future needs of your treasury operating model, and also provide estimates of capacity. We analyse the requirements of the future target operating model in multiple dimensions. We look at pre-config workflows by asset class, and within those the functions in the trade lifecycle. We look at the way each market is changing. We consider the strategic platform goals and mission requirements of the client. And we look at the benefits of transforming your operating model, to future threats and error rates.

Considering all of these factors, we can create a matrix that shows future capacity scenarios. This matrix is based on forecasts, market conditions, and infrastructure investments. Our client gains valuable insight on planning for future staff numbers and the trade-off between system investments and capacity growth.

1)     Scope

We need to accurately map and align future treasury service operating capability, activities, and definitions across all core-operating units including Investments, funding, risk management to middle, back office and finance.

Keeping it simple and accurate, we use a standard level 1 to 3 service hierarchy framework structure (Foundation, Capability, and business) for an elevated view. Involving potential future suppliers and vendors in this exercise ensures the future model is not assumption based or incorrect.

Sometimes this will include many parties and providers. We also perform a loopback with the internal stakeholders, working groups and/or design council. Finally, we recommend highlighting any optional service extras and if future vendors can deliver these capabilities in a single drop or phases.

2)     Capacity Measurement

Producing an operating platform ‘load balance’ report using capacity measurement per instrument type or per operating unit always helps treasury firms get a better understanding of their current capacity and how to invest for the future.

Typical methods include calculating the average daily transactions per instrument type over a recent quarter, plus events and open positions. Then apply FTE inputs and track daily workload processes to calculate number of transactions processed and reports generated per instrument type and or operating unit.

Using this data, we calculate and display a trading, funding, or trade processing unit cost per instrument type and for each operating unit. Then, apply the same process for the future target operating model, however, perform a loopback with internal stakeholders and suppliers to confirm accurate future volumes and process automation inputs.

3)     Scenario modelling and visualisation

We conduct capacity comparison analysis using inputs from other similar external treasury firms or users of the future operating model supplier’s technology or services. These comparisons include unit cost trade processing (STP), risks and performance and finance capacity charts.

An elevated view of treasury operating capacity via visual aids serves as invaluable tools for structuring data, creating a more digestible narrative of the current and future operational state, and enabling our clients to make a balanced and informed decision and recommendations via data. (See our previous blog Visual Aids in Analysing Treasury Operating Models (Part 1) – Prodktr)

Our recommendation

The best way to measure and compare capacity within treasury operating models will vary depending on the specific firms and need. However, by using one or more of our methods listed above, your firm can get a better understanding of your current capacity and how to plan for future growth.

If you are enjoying our weekly treasury operating model blogs, please do comment and reach out if you need help.