Revolutionising treasury – the shift from an operational to strategic powerhouse

Corporate treasury is rapidly evolving so organisations can navigate and adapt to a rapidly changing environment. For treasurers across industries, understanding the essential building blocks for successful treasury transformation is crucial.

Treasury is transforming at an unprecedented rate. The role of the treasurer has shifted from transactional tasks to a key strategic function at the heart of business transformation. Treasury leaders must embrace new digital models, advanced technologies, and data-driven insights to lead corporate innovation.

Technology is the gamechanger in treasury transformation. Key drivers include the rise of automation, centralisation, and innovation in the payments space. Harnessing data for enhanced decision-making is critical.

Now is the time for treasurers to harness the power of technology, transforming treasury into a strategic force that maximizes shareholder value and propels the business to the next level of success and growth.

In a fast-changing financial landscape, treasury transformation is no longer a choice—it is a business imperative. Those who fail to act risk falling behind, facing higher costs and missed business opportunities.

Treasury transformation is a complex and challenging endeavour, and a high number of digital transformation projects fail to meet their goals. Successful projects often factor in:

• Objectives that are aligned with the company’s commercial ambitions and business strategy, defining the treasury’s role in enabling that vision
• A clear and holistic Target Operating Model (TOM), with simplicity and clarity at its core

A “building blocks” approach to TOM designing is critical, focusing on six key areas, regardless of industry or company size. Ensuring a comprehensive view across these areas and effectively communicating interdependencies to stakeholders is essential.

Although factors driving treasury transformation are often similar across industries, the journey varies based on each organisation’s unique context. The pace and direction are shaped by commercial ambitions, business strategy, and the existing capabilities of the treasury function.

A Treasury Maturity Framework (TMF) is a valuable tool to assess the status quo. It examines key areas such as governance, people, processes, technology, and risk management, identifying gaps and providing a foundation to the TOM.

The transformation process plan depends on the existing structure and the end goals. A nascent treasury setup may require foundational changes, while more developed functions often focus on fine-tuning and optimisation.

Treasurers can pursue three transformation paths, tailored to their organisation’s needs and goals.

Journey 1 – From transactional treasury to process-efficient treasury

Organisations with limited international presence or those in the early stages of developing a treasury function often operate transactionally. These functions are characterised by minimal technology adoption, manual processes, and less defined roles and risk management practices.

As these companies grow, a more efficient and strategic treasury function becomes critical. Key transformation drivers include the need for standardisation, process efficiency, and better risk management.

The journey toward a mature treasury begins with implementing standardised policies and adopting treasury systems that streamline cash positioning, enhance forecasting, and digitise processes. Embedding controls and enabling seamless execution and reconciliation of transactions will provide the foundations to scalable treasury transformation.

Journey 2 – From process-efficient treasury to value-adding treasury

Rapidly growing organisations often focus on expansion, sometimes at the expense of building a solid treasury structure. This can result in too many banking relationships, fragmented cashflows, disconnected treasury systems, and duplicated processes. Such inefficiencies can make treasury operations unwieldy as the business scales.

To address these issues, many companies turn to centralisation. The goal is to streamline banking partnerships, consolidate cash, and standardise payment processes to achieve cost savings and manage risk.

A key part of this transformation involves creating a centralised treasury entity. This new entity acts as a financial hub, facilitating transactions between subsidiaries and serving as a conduit to financial markets and banks. By netting financial flows across the group, this structure optimises capital usage and reduces external financial costs.

The potential benefits of centralisation are clear: lower external financial spreads, introduction of natural hedges, and better management of trapped capital. However, this journey typically unfolds in phases, each progressively more complex, as the company moves from basic centralisation to a fully integrated and optimised treasury model.

Journey 3 – From value-adding treasury to strategic treasury

Centralised treasuries are driven by strong governance, efficient processes, and robust technology. These pillars help businesses grow in a predictable, financially resilient way. However, a highly centralised structure can sometimes hinder agility, compromising the ability to quickly adapt to disruptive innovation.

To stay ahead, top-performing treasury teams must evolve beyond traditional centralisation and become data-driven organisations. Real-time decision-making, fuelled by data insights, has been instrumental in the success of many leading digital companies. By leveraging data, treasuries can move away from outdated practices like end-of-day processing and reactive risk management.

This shift demands that treasury teams embrace cutting-edge technologies and integrated systems. Emerging tools such as artificial intelligence, machine learning, open banking, and instant payment solutions provide new possibilities for real-time, data-informed decision-making. These advancements enable treasurers to act quickly, respond to market shifts, and optimise financial outcomes.

By adopting a data-led approach, treasury teams not only maintain agility but also become proactive contributors to innovation and strategic value creation within the organisation.

Treasury is evolving rapidly, and industry leaders must adapt. Redefining what "best-in-class" looks like is critical, as well as investing in the necessary skills to support the needed transformation. The future of treasury depends on the ability to embrace new capabilities, particularly in technology and data.

AI will revolutionise treasury, but skills are a barrier. According to HSBC’s Corporate Risk Management Survey 2024¹, 57% of treasurers expect AI to impact the function in the next five years. However, access to talent (62%) and implementation challenges (49%) remain significant hurdles.

Successful treasury transformation is an ongoing journey rather than a one-time effort. It requires integrating the right building blocks over time to ensure sustained value creation and alignment with business objectives. Treasury’s evolution can also serve as a blueprint for other functions, demonstrating how transformation can drive greater business outcomes.

The treasury function is well positioned to take on a more strategic role. Strengthening relationships with the C-suite and becoming a proactive business partner is key to unlocking broader organisational growth. By doing so, treasury leaders can extend their influence beyond their traditional finance universe.

Treasury transformation is a complex process and collaborating with the right external partners is essential. HSBC’s Treasury Solutions Group was established to provide dedicated support to treasurers on their transformation journey, sharing insights and best practices to ensure success.