How to Improve Treasury Liquidity Visibility Across Different Asset Models

A 2024 Perspective

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Managing treasury liquidity has gotten pretty complicated, especially for firms juggling different asset classes across public, private, and digital markets. In this article, we’ll dive into the current challenges of treasury liquidity visibility and explore some practical steps to modernize your operations.

Fragmented Operating Models:

Many firms are stuck with outdated technology and regional operations that only handle specific asset classes. This creates a tangled mess of trading platforms, post-trade relationships, and various regulatory requirements. Even when digital fintech solutions come into play, they often add more complexity rather than simplifying things.

Tactical Fixes and Diminishing Returns:

Firms often use quick fixes for trading, operations, and compliance issues, but these can increase risks and lower profit margins. Even with significant tech investments, high-volume flow products aren’t delivering the returns expected. As a result, firms are feeling the pressure to find better investment opportunities in a tough market.

Integrated and Modernized Approaches

How can firms move beyond these challenges?

Adopt integrated, robust operating solutions by shifting to a comprehensive, modernized operational vision. Key strategies include:

  1. Centralized Governance and Data: Enhance global cash visibility and efficiency
  2. Real-Time Cash Visibility Tools: Use APIs for real-time multi-bank connectivity
  3. Optimized Liquidity Management: Implement liquidity overlays like notional pooling

Considerations and Insights for Overcoming Common Obstacles

If you are facing these common challenges in implementing effective treasury liquidity capabilities, here are some approaches to consider:

  1. Dispersed Liquidity Ownership: Centralize for efficiency.
  2. External Party Liquidity Needs: Standardize data for better monitoring.
  3. Collateral Management: Automate to reduce risks.
  4. Complex Legal and Business Structures: Simplify to avoid ad-hoc processes.
  5. Talent Management: Invest in niche expertise.

 

Treasury Advisory Service

How to tackle these challenges effectively? Prodktr’s treasury advisory service offers a comprehensive Transformation Review to help firms redefine treasury services, modernize operating models, and plan for growth. By partnering with Prodktr, you can enhance visibility, control, and efficiency in your treasury operations.

Contact Prodktr for a detailed discussion on enhancing your treasury operations.

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References

J.P. Morgan. (2024). Treasury optimization: Quick-wins to achieve greater visibility & control.

J.P. Morgan. (2024). Five steps for corporate treasurers to optimize liquidity.

Boston Consulting Group. (2024). Enhancing the Strategic Potential of Treasury.

KPMG. (2024). The Structure, Role, and Location of Financial Treasury Centres.

J.P. Morgan. (2024). The Centralized Treasury: Different Paths to Improved Control.