Treasury
Management
Systems
Guide

2017

Treasury's greatest challenges and opportunities in 2018

Bob's Guide to TMS 2017

About to invest in a new TMS system? Read this first

BOB’S GUIDE TO TREASURY MANAGEMENT SYSTEMS 2017

Earlier this year we launched a survey among bobsguide readers who were in the process of procuring a treasury management system, or have worked with vendors to implement one. Nearly 200 of you responded – thank you again for your time – giving us illuminating insight into your experiences with treasury management systems and the evolving challenges you face as a treasurer.

Here we share the findings from the survey, and explore the issues it has uncovered in a series of articles aimed at helping you with the TMS procurement process, including how to select the right system for your organisation and what you should consider before making your decision. Respondents to the survey included corporate and banking treasurers, though we also received responses from many consultants, analysts, and vendors. The findings that follow reflect the attitudes of the entire sample. On occasion in this article, we have referred to respondents as a whole as ‘treasurers’ for simplicity.

Being a treasurer today

The majority of respondents to the survey have a TMS. Of the remaining 40% who have not invested, slightly more than half (21%) plan to in the next 12 months, but 19% have no plans at all. Larger companies are more likely to use a TMS: while less than half (45%) of smaller companies (those with an annual revenue of up to $500m) have a TMS, 79% of larger organisations (taking more than $5bn a year) do. Smaller companies are also, unsurprisingly, far more likely to say that they have no plans to implement a TMS than their larger counterparts; 28% and 4% respectively. As regulatory pressures and shifting economic conditions promise greater volatility in the near future, and TMS providers develop offering that are perhaps more suited to the pared down needs of smaller organisations, we’ll be interested to see which way the needle moves in coming years. Overall, satisfaction with treasury management systems is high. 82% of respondents to the survey said that they are at least ‘somewhat satisfied’ with their TMS, while the remaining 18% say they are either ‘not very satisfied’, or ‘not at all satisfied’ with theirs. Meanwhile, unsuitable functionality, difficulty of operation and need of an upgrade are some of the most common reasons for dissatisfaction with a TMS. Treasurers also cited systems not being fully utilised, limited capabilities, and difficulty learning to use as reasons for their dissatisfaction.

Treasurers’ concerns

When it comes to buying a new TMS, treasurers worry most about the potential difficulty of integrating their new solution with existing systems. Of the four options we presented, this was selected most frequently – by nearly two-thirds (62%) of respondents. However, treasurers are almost equally worried about the cost of adopting a new system – 58% of respondents selected this as one of their premier concern.

In fact, cost was by far the most cited reason among those who have not invested in a TMS for not doing so. 67% of non-TMS owners said that investing in a system would be ‘too expensive’, while the next most common reason for not investing, 30 points behind, was finding spreadsheets are sufficient for the needs of the organisation, selected by 37% of respondents. Other concerns the survey identified included perceived complexity of the treasury management system. One respondent said that their greatest concern was being able to use all of the system’s capabilities – if your organisation is investing a lot of time and money into a solution, it’s important that you can take advantage of everything it offers. Treasurers are also concerned about possible disruption to their everyday business processes during the process of implementation, how long the implementation might take, and not having the adequate and appropriate resources to do so. We asked respondents to select up to three of their greatest concerns, and found that not far behind ‘lack of cash visibility’ (cited by 51% of respondents), and ‘FX risk/exposure (41%) was ‘regulatory compliance’, cited by 39% of respondents. With PSD2 and GDPR on the horizon, ensuring compliance with these regulations and avoiding fines will be high on treasurers’ agendas over the coming months. In the next article of this series, we’ll explore what organisations need to comply with different regulations, and how a treasury management system might help weather the changes. What do you think of the survey findings? Does anything resonate with your experiences? Did you find anything to be unexpected? We invite you to share your comments with us at alex.hammond@contentive.com.

Bob's Guide to TMS 2017

How to tell if it’s time to invest in a TMS.

BOB’S GUIDE TO TREASURY MANAGEMENT SYSTEMS 2017

Since the financial crisis, the treasurer has taken on a more strategic role, meaning they must know at a moment’s notice the financial standing of their business. Treasury management software gives treasurers a way doing this with real-time reports, and visibility of the flow of transactions within their organisation.

But given the cash and time investment required for successful implementation of the TMS, are they right for every business? For many years, spreadsheets have proven sufficient for the job, but according to bobsguide’s treasury management system survey, conducted earlier this year, 33% of treasurers are concerned about spreadsheet errors. With greater regulatory pressures and ever-shifting market conditions, how can treasurers determine whether it’s time to invest in a TMS? In this article of the bob’s guide to… treasury management systems series, we’ll look at the different capabilities of the market’s many treasury systems, what they could do for organisations of different sizes, and what businesses need to consider before they invest in their own solution.

How popular are treasury management systems?

Before we look at what a TMS might achieve for an organisation, let’s refer to the main finding of our survey from earlier this year. Three-fifths (60%) of treasurers are using treasury management software in their organisation. Of those who are using a TMS, 82% are at least ‘somewhat satisfied’ with the software’s capabilities, citing full automation, centralisation of all treasury positions, efficiency and good connection to banks as reasons for their satisfaction. However, nearly one-fifth (19%) have no future plans to invest in treasury management solutions, and nearly half (45%) of all the organisations that took the survey rely on spreadsheets ‘to a great extent’, or ‘fully’. Cost and perceived difficulty of integrating the new solution seamlessly into existing solutions emerged as the top two concerns about implementing a new TMS, or augmenting it. But could there also be a case of fear of the unknown – as there are many different systems with many different functionalities available. How to determine which system is right for the needs of the business? First, it’s important to understand what a TMS lets the treasury function achieve.

What should a treasury management system allow treasurers to do?

So, broadly speaking, what’s the main purpose of treasury management software? “It allows treasurers to sleep well at night,” says Dimos Dimitriadis, partner and founder of Treasury Technology Associates, a UK-based treasury technology consultancy. “Having a system allows you to control things better,” he adds. “You can set it up in such a way so you know the flow of activities within the treasury – it’s all captured somewhere – and that is a very powerful tool to have.” These are perks that aren’t just office-based, too. As Dimitriadis explains, with some systems, it’s now possible to access your TMS via mobile or tablet, and review the situation in real-time. “There are two things that a treasury management system should do,” says Lars Schroeder, senior engagement manager at consultancy SkySparc.

The first basic requirement is an automation of processes, from front office to back office and accounting, and the second is a centralised place to store data, he adds. “You can then also run data analysis and use this to make more strategic decisions, such as investment decisions.” Dimitriadis continues: “A TMS gives you quick access to information, because everything is in the same place. The treasury information is at your fingertips. You’ve got the full lifecycle of a trade, of a deal and provided that your system has a good reporting functionality, you can access this information in an instant, which means that you can then react to anything.” For example, if a business is looking to acquire another, they know exactly how much is in the bank, and how to fund the acquisition. If the business is being taken over, it’s possible to show what its position is to the interested party. And if the business is being monitored, it can prove that its treasury works in a robust way, Dimitriadis says.

Having all of your data in one place is key to overcoming challenges with regulation

Lars Schroeder

What are the key differences between all the treasury management systems on the market?

There are many different treasury management systems on the market – in the bobsguide directory, it’s possible to browse more than 300. Which system, however, would best suits the needs of a particular business? “There is a TMS out there to suit any budget,” Dimitriadis says. These systems run the gamut from simple and easy to implement, to complex systems that take more time to integrate into the working practices of a business, and these tend to track with price, Dimitriadis says, quickly adding: “Just because something is cheap, it doesn’t mean that it’s not good, because every TMS out there will suit a particular treasury.” The three main differentiators between the systems, according to Dimitriadis, are user-friendliness, functionality and coverage, and whether the solution is truly software as a service, a point that has caused some confusion. Schroeder identifies out three main different types of treasury management software. Some have a “high level of completeness”, and can be used by corporate treasuries, central banks or asset managers. Other systems are specialised in many different ways, or have certain functionalities for specific tasks, Schroeder explains. Another type covers the full front to back automation, but are developed for specific industries. It’s also important to consider the demands when it comes to hosting. Schroeder adds: “The simpler systems have some limitations and the complex systems have more flexibility, and the demands when it comes to hosting, whether it’s on site or not, make a difference.”

How can a TMS help me overcome challenges present by a volatile market, or new regulations?

Along with shifting market conditions, treasurers and the banks they work with will soon also be subject to new regulation, including MiFID II and PSD2. How can a TMS help treasurers cope with these new challenges? “Having all of your data in one place is key to overcome challenges with regulation,” Schroeder says. “It is very helpful to have it in one system rather than spread over multiple systems, because usually what is connected to the regulation is a lot of reporting requirements,” he adds. Treasurers need to combine the different types of data from their system to meet those requirements laid down by the regulation, and they need to be able to access it quickly. Dimitriadis adds that a TMS can also help treasurers cope when there is a change to regulation that affects the banks.

Is now the right time to invest in a TMS?

The decision of whether to invest in a TMS is personal, and will be different factors to consider for each organisation, but there are a few considerations that might help. As we found earlier, the top two reasons for not investing in a TMS are cost, and difficulty of implementation. Certainly, the process of implementing new treasury management software does take time – from three to 18 months depending on the system, the business, and where it started – and it does carry a large cost, which may not be entirely clear at first. But the investment now may save a lot of difficulty in three to five years’ time, when most systems will be automated and the need for instant reporting intensifies. According to Dimitriadis, the cost of a missed payment, such as an interest payment on a loan, which might have been avoided with a more efficient system, could be enough to cover the cost of the TMS. It’s a big step to take, but working with an IT specialist or external consultant may allay any fears. Later in the bob’s guide to… treasury management systems series, we’ll walk you through the process of implementing a TMS, and what to expect.

Bob's Guide to TMS 2017

How to ensure your TMS is a perfect fit.

SO YOU’VE DECIDED THAT IT’S TIME TO INVEST IN A NEW TREASURY MANAGEMENT SYSTEM. WHAT NOW?

Investing a great deal of money into new technology, and implementing the system in a process that could take up to 18 months is a daunting prospect, made worse by the fact that it’s likely no one within the business would have undertaken such a project before.

Choosing a system that aligns with the needs of the business while streamlining everyday processes is just the first step of this journey. But how do you ensure you choose the right one? Over the last few months, we’ve been speaking to experts in treasury technology about how to get the TMS selection and implementation process right, and making the process as manageable and efficient as possible. We’ve boiled down what we learnt about the process into the following four steps:

  1. Assemble your team
  2. Settle on the system requirements
  3. Meet with the vendors, and test the systems
  4. Make your selection, and put it into place

ASSEMBLE YOUR TEAM

Each step in the TMS procurement process should prepare the treasury function for implementation, the most important stage. Although it’s a step that comes much later in this process, in order to get it right, treasury teams must ensure they have the right people on board from the outset.

Treasury is becoming an integral and critical point in any organisation, therefore the effort to design the future scenarios must be a team effort

Enrico Camerinelli

Who should be involved?

“Treasury is becoming an integral and critical point in any organisation, therefore the effort to design the future scenarios must be a team effort,” says Enrico Camerinelli, a senior analyst from Aite Group.

According to Richard Warren, a senior manager from Brickendon, many different areas of the business need to be consulted at the beginning of the TMS process. These include: Treasury department, and its related investment teams, such as foreign exchange and money markets, both front office and back office. “Consulting with the risk managers will provide an understanding into the day-to-day activities, workflow management, current limitations and any particularly problematic areas that need to be addressed,” he adds, such as complex spreadsheet processes that currently fall outside the ability of the existing system. CFO, CEO and company strategy team, so that you can understand the future direction of the company and possible new areas of research, says Warren. “This will enable the firm to plan for scalability in the event of growth and/ or acquisitions, whilst ensuring transparent and comprehensive reporting.” IT development and implementation teams, to understand the required level of integration, the feasibility of timelines, and to determine the current skill level of employees that will need to support the implementation, Warren adds. IT security and audit/compliance teams, Warren continues, should also be involved to analyse the authentication and the fraud prevention capabilities, and put a value on the level of risk and possible reputational damage.

This final point is a serious consideration for emerging fintechs, he adds. Each of these teams should also be involved during the implementation process, but in varying amounts, Warren says. “A delegate from each team should be involved in all the stakeholder meetings to provide transparency to their wider teams for each element of research,” he adds. “It is essential that all parts of the business, including the IT and change departments, are involved to ensure the company’s infrastructure and employees can support the new system,” Warren adds. Ken Lillie of consulting firm Lillie Associates recommends including key personnel from treasury, accounts, and IT, but warns against making the team too big to manage. Nominating a project manager for the treasury and project management experience, as well as getting backing from stakeholders, is also recommended, he says.

One of the common pitfalls when selecting a new system is to think either too big or too small

Richard Warren

SETTLE ON THE SYSTEM REQUIREMENTS

After assembling the project team, it’s possible to create a list of functions that are required from the treasury management software. This list should reflect the needs of each of these teams, and will help the team determine what is most important, so the business doesn’t invest in functions it does not need. In 2014, research by software provider Bottomline Technologies and treasury consulting firm Strategic Treasurer found that just 28% of businesses investing in treasury management software use 80 to 100% of the modules they purchased, and nearly half use less than 60% of the modules they acquired. This was due to a variety of factors, including not just buying modules that weren’t needed, but also misunderstanding the functionality, lacking the resources to implement the services in a timely manner, or failure to train staff on how to use the module. If staff don’t know how to use the system, they’ll fall back on old ways of working, rendering the new system useless.

How do I work out what features I need from the software?

“One of the common pitfalls when selecting a new system is to think either too big or too small,” Warren continues. “This results in either the adoption of expensive systems, which as well as being confusing a difficult for users, leaves much of functionality redundant, or an inadequate system that isn’t scalable.” He says that it crucial to have full knowledge of the current day-to-day functions employed by the treasury team in order to understand the business requirements of a TMS. Camerinelli recommends mapping the organisation’s ‘as-is’ processes, and defining the desired or expected configuration of the system. “The organisation should operate by scenarios, selecting a technology solution that can accommodate multiple possible outcomes,” he says. The arrow goes the other way, too. As well as understanding the treasury function’s processes back to front, it’s important to understand what the TMS can offer, Warren says.

“The understanding of what a TMS can offer is a great starting point for analysing the synergies between the business’s current processes and system architecture.” He advises running a series of team workshops to determine the TMS requirements, ensuring that all key members of the business are consulted and listened to. “It is also important to involve the CEO and CFO to ensure any decision is in line with the direction the company is moving,” he adds. Lillie continues: “Take a step back and review all of your current treasury processes and how technology is currently employed.” If budget allows, hire an experienced treasury consultant who can take an objective view of the existing environment, he adds. Lillie also recommends building a Requirements Definition document, detailing everything the business will want from a new TMS, distinguishing essentials from nice-to-haves.

These systems can be very expensive, so suppliers are keen to conduct demonstrations based on the use-cases of their anonymised existing clients

Richard Warren

MEET WITH THE VENDORS, AND TEST THE SYSTEMS

By now, the treasury team should have a shortlist of possible systems that are right for the company. The next step is to meet with the vendors, and run the prospective systems through their paces with a test run. Meeting with the vendor is a chance to ask questions about the system and determine whether it can handle business(-critical?) operations in a more efficient way, serving the needs of the company now and in the future, which can take the form of a presentation. Enrico Camerinelli, says that the vendor must show knowledge of treasury operations and have done similar implementations in the past. He recommends that before meeting, the buyer prepares a set of business scenarios, so that the vendor can present how their solution will address those issues, and resolve them differently from how the company currently does.

What questions should I ask the vendor?

“The vendor presentation agenda should be set by the buyer and agreed with the vendor,” says Ken Lillie of treasury technology consultancy firm Lillie Associates. “Ask questions about functionality as listed in the requirements definition, [and] ask about implementation resource requires, [such as] time scales.” Richard Warren, a senior manager at consultancy firm Brickendon, recommends that during the meeting with the vendor, buyers ask the following questions: Is the solution customisable to the workflows of the business, or will the business have to re-engineer existing flows and retrain staff to fit the TMS software? “An extensible solution for all workflows is a must and ensures the system is easily upgradable for future requirements,” he says. Are the support staff available 24 hours? Check the support line staff, Warren says. Do they answer when the business calls with a problem or query, and can they help? Also, and even more importantly if the business operates around the world: Is the support available in your language? Where else has the TMS been deployed and are there any similar use cases or workflows and operating models? “If the vendor can articulate an understanding of your business it is likely that they have similar clients already successfully using their software,” Warren says. If this is the case, it may be possible to learn from these companies, and how they work with the system.

Can I learn from how others have used the system?

There is no need to go into this process blind. With some research, treasury teams can see how other similar businesses use their treasury software and acquire an understanding of leading industry practices. Lillie says that although such information, beyond vendor-sponsored case studies, is not publicly available, it may be possible to obtain by speaking to colleagues and associates in other companies to understand their experiences. Buyers might also consider working with a specialist consultant, who should have experience with a number of implementations – on a no-names basis, he adds. Buyers can also get this information from the Request for Proposal and Request for Information processes used when evaluating potential suppliers, Warren says. “These systems can be very expensive, so suppliers are keen to conduct demonstrations based on the use-cases of their anonymised existing clients.” He adds: “Setting one-day workshops with the company’s key stakeholders is a great way to see and challenge the processes and functionality. To maximise the value of the vendor-selection process, scoring should be applied by an internal team with experience and knowledge of the business and functional requirements.”

Can I test drive any transactions?

After an initial meeting with the vendor, and during a second more detailed workshop, when the shortlist of vendors is down to two or three, buyers can ‘test drive’ some transactions in their prospective systems, Lillie says. Camerinelli says that test driving some transactions in the vendors’ systems will give buyers an idea of how flexible and adaptable the system is. “The company cannot expect to have all the problems solved during the demo sessions, but the level of appreciation of the flexibility of the system must be ensured within the user community,” he says.

MAKE YOUR SELECTION, AND PUT IT INTO PLACE

By now, buyers should be in a position to make an informed decision about which treasury management solution to invest in. Meetings or workshops with the vendor will give an idea of how long the implementation will take, and internal discussion within the company will determine who should be involved in the process. But how much will it cost? Our research found cost to be treasurers’ second greatest concern when it comes to implementing a TMS. 58% of survey respondents selected ‘cost’ as one of their greatest concerns, putting it not far behind the top concern, ‘difficulty integrating new solution seamlessly with existing systems’, selected by 62%.

So how can buyers get an idea of how much a new treasury management solution will cost before implementation starts?

The cost of the system can depend on a number of issues depending on the individual supplier, Lillie says, but initial conversations with vendors will give buyers a guide to costs. He continues: “The system may be modular so you pay for the modules you need, complexity of instruments used, accounting requirements (e.g. hedge accounting), connectivity to TMS (banks, market, rates, dealing systems, etc.), number of users, etc.” The system may be “bought” for a one-off licence upfront, with ongoing maintenance and support fees as a percentage of the original cost, or rented for a monthly fee (typically the case for SaaS solutions) after an initial set up cost, Lillie says. “The vendor will also charge consulting fees for implementation at a daily rate or for a fixed price so discuss these at the outset.” It’s worth remembering that no single system can do everything the business needs. This is why getting the selection process right is so important – the key is picking the best possible one.

Bob's Guide to TMS 2017

How to avoid disruption during TMS implementation.

BOB’S GUIDE TO TREASURY MANAGEMENT SYSTEMS 2017

The importance of ensuring a new treasury system is properly implemented cannot be understated. Get it wrong and not only might the new software make everyday operations more cumbersome and less efficient, but the treasury team will be driven back to old systems, and the time and resources taken to install the solution will have been wasted.

Good communication and a prepared client – vendor team can resolve and smooth out most bumps on the implementation road

Mathilde Swanson

“You might have chosen the right system, but if it’s mis-implemented, or ill-implemented, then your user won’t be able to use it. They’ll go back to the spreadsheet,” says Dimos Dimitriadis, partner and founder of consultancy Treasury Technology Associates. It’s a concern shared by many of you when it comes to TMS implementation. In our treasury management systems survey among bobsguide readers, conducted earlier this year, ‘difficulty integrating new solution seamlessly with existing systems’ emerged as the top concern about implementing a TMS, with 62% respondents selecting it, closely followed by cost, at 58%. By working closely with the vendor, and a consultancy if necessary, treasury teams can ensure their new system is optimally configured for their everyday operations. But during this transitional period, which calls upon many different players with many different roles, how can treasury teams avoid disruption to their day-to-day operations? The first step is preparation.

How can my treasury team prepare for the TMS implementation process?

Before implementation even begins, treasury teams must organise which personnel are going to be involved, and who will work closest with the vendor during the process. We covered assembling a team in an earlier instalment of this series. The next step is establishing a relationship with the vendor. Patrick Cannon, head of professional services and customer success for SaaS provider Reval, says that the key to successful implementation is to involve the vendor’s professional service team early – in the pre-sales process. “Engagement starts with an understanding and alignment of the client’s vision,” he says. Corporate treasury teams need to have better alignment internally as well, he adds. “[They need] a clear understanding and commitment to achieving the business goals in a deployment, top to bottom. “Where projects succeed or fail is measured by the organisation’s clarity of vision and designation of an executive sponsor – there needs to be an internal counterpart to the vendor who works in step to achieving value in the relationship.” Mathilde Sanson, chief client officer at cloud treasury solutions provider Kyriba, says that assuming evaluation of the TMS is complete, and that an extensive list of requirements was identified during that stage, the implementation process will be smoother, guided with clear business requirements. To prepare for a TMS implementation, she says, “a treasury team should understand the strategic functions of the organisation that they wish to automate, where in their workflows they would benefit from increased financial controls, security, auditability”. She continues: “Having their requirements understood by the implementation consultants will help to ensure the project is completed according to plan.” Cannon suggests a straightforward way of confirming mutual understanding of the project, and what it is expected to deliver: “If I were part of a corporate treasury team, I would want professional services to articulate my vision back to me to make sure they understand what I want to achieve, and leave no stone unturned when it comes to functionality and what the system can do.”

What are some setbacks we need to be prepared for?

With so many individuals from different teams involved in TMS implementation, and many moving parts in the system itself, it’s expected to hit a few obstacles on the journey. What should treasury teams expect, and how can they prepare for any setbacks? “Many project risks can be identified during the discovery process and mitigation plans can be made,” Sanson says. “Good communication and a prepared client-vendor team can resolve and smooth out most bumps on the implementation road.” For Cannon, sticking to project best practices, including open communication, regular status reports, and strong governance, is crucial for keeping the wheels moving. “Don’t underestimate the commitment to getting this right,” he says. Depending on the complexity of the system, and the nature of the organisation, it can take six, 12, even up to 18 months to fully implement a TMS. There’s a risk the project will lose momentum, that the project will take even longer, that it will be disruptive, and treasury teams could lose enthusiasm. Sanson, like Cannon, recommends executive sponsorship and regularly scheduled status calls to ensure there is ongoing triage and prioritisation to meet goals. She continues: “A treasury team should expect to have a clearly defined process with key milestones and checkpoints identified to recognise progress and maintain quality controls.” Lars Schroeder, senior engagement manager at consultancy SkySparc, says that working with a consultancy can take some of the load off the treasury team during TMS implementation, particularly when it comes to testing. “We help with implementing the new system, by allowing our clients to learn the new system but without doing all the testing which can be boring for them,” he says.

Five tips for avoiding disruption during TMS implementation

Sanson has five tips for treasury teams looking to minimise disruption during TMS implementation:
Establish your team lead and main point of contact
“This person should be able to validate processes against the state requirements.”
Ensure the initial discovery phase is a priority for your internal stakeholders
“Having all the requirements agreed upon up front will greatly reduce day-to-day disruption.”
Communicate frequently and clearly about reaching check points and expected milestones
“Ensuring everyone on the treasury team understands what should be done and when will keep the project on track.”
Set aside a time in the day that you can dedicate to the implementation
“If you do this proactively, your meetings will be predictable and according to your schedule. If you cannot free up your staff from day-to-day roles then an external consultant should be hired to have the project move forward.”
Enable your vendor’s implementation team to become your trusted partner
“Not only will this increase productivity, but you will also gain more out of the process.” Schroeder says that the key to avoiding disruption is involving the vendor in a “smart” way, “but it will depend on your size and ambition, and how much you want to outsource. If you are smart you can outsource the boring stuff and have your key people be involved in the interesting part”. As is the case with many things, preparation is key to minimising disruption during a TMS implementation project. Success in implementation will depend on assembling the best possible team, ensuring everyone on the team has a defined role, and good communication with the vendor throughout the project.

 

Bob's Guide to TMS 2017

How financial professionals can prepare for GDPR.

BOB’S GUIDE TO TREASURY MANAGEMENT SYSTEMS 2017

The countdown has started. From 25 May, 2018, any company that holds personal data on EU residents will be required to comply with the General Data Protection Regulation (GDPR).

The GDPR updates the 1995 EU Data Protection Directive for the digital age, and is designed to give EU citizens more control over their personal data by governing the way organisations handle data. It also expands the definition of personal data from names and addresses to include any data that can be used to identify an individual, such as IP addresses and internet aliases. “Any information that has the potential to identify a specific individual must ensure it is compliant with the GDPR legislation,” Nathan Snyder, partner at Brickendon Consulting, told bobsguide. The penalties for non-compliance are high: any breaches incur a maximum penalty of 4% of the organisation’s global annual turnover, or €20m, whichever is more. But many studies have shown that many organisations are not aware of the fines they could face after GDPR comes into effect, or lack the technology to allow for compliance. So, with less than a year to go, how can financial professionals ensure they do not fall foul of the regulation? How might banking treasury systems, or corporate management systems, help treasurers comply with GDPR?

The important thing with GDPR will be to think ahead when building IT systems and at an early stage address questions such as what data do we need, why do we need it, how long will we need it for and who will process it for us?

Nathan Snyder, Partner at Brickendon Consulting

What does GDPR obligate financial professionals to?

“All companies, including corporate treasurers, that handle client data now have clearly defined obligations, including appointing a Data Protection Officer and notifying the authorities should a data security breach occur,” explains Snyder. GDPR also requires that organisations can locate, control and dispose of information should they need to. Individuals will be entitled to know how organisations are using their personal data, why they are using it and with whom they might be sharing it. While the penalties for breaches are high, GDPR doesn’t have to be a purely compliance exercise for financial organisations, as there are benefits to be had from good data management. According to Elizabeth Denham, information commissioner at the UK Information Commissioner’s Office, by getting data protection right, organisations can see a “real business benefit”. “The benefit for organisations is not just compliance but also providing an opportunity to develop the trust of its consumers in a sustained way… Because I think it’s clear that a lot of people feel they’ve lost control of their data,” she said in January. As Catherine Moore, European president and MD for JP Morgan Merchant Services told bobsguide, complying with the GDPR requirements will help merchants get to a more standard operating procedure.

Are organisations ready for GDPR?

Despite GDPR being such a wide-reaching piece of legislation, affecting any business that handles personal data, and carrying hefty penalties for non-compliance, many organisations aren’t entirely prepared for it. According to research by YouGov and UK law firm Irwin Mitchell, less than one-third (29%) of the more than 2,000 businesses surveyed have started preparing for the GDPR, and just 38% of senior decision makers of those businesses are aware of the new GDPR rules. The research also found that more than two-thirds weren’t aware of the penalties for non-compliance, and, perhaps most worryingly, four in 10 businesses would have to let staff go or fold if they suffered the maximum fine. Research by data management company Veritas, published in April 2017, also highlighted concern about the reputational cost of non-compliance, and the impact it might have on the brand image if a breach is made public. The Veritas survey also found that 32% of respondents are concerned that their organisation lacks the technology to manage data effectively, which is crucial for GDPR compliance.

How should treasurers be preparing for compliance with GDPR?

In an April 2017 report, PwC explains that instead of an “add-on” or “afterthought within business operations”, protections for personal data should now be designed “into the very fabric of data processing systems, meaning that entities will need to re-examine how they approach the use of technology in their organisations”. The report continues: “Technology is… the principal problem that data protection law is trying to solve. As such, it is obvious that, as well as being the problem, technology must provide the solution.” While technology is an important component in ensuring GDPR compliance, it makes sense for organisations to take a wide view of how the legislation will affect their business, and engage different teams. “Firms will need to embed a mindset where data privacy is at the heart of the company culture and not seen as a regulatory-imposed burden that slows down the business,” Snyder says. “The key, as with any upcoming legislative changes, is to ensure you know where your business is now, decide what areas will be affected, what needs to be changed and how you are going to facilitate the changes,” he continues. “The important thing with GDPR will be to think ahead when building IT systems and at an early stage address questions such as what data do we need, why do we need it, how long will we need it for and who will process it for us? “If you can answer these questions, you are part of the way towards compliance.” It will also be important to remember any third parties that might have access to any personal data held by the business. Snyder adds: “Corporate treasurers should also ensure that all partner contracts have a clearly defined minimum set of data protection requirements and a clear outline of roles and responsibilities.”

Do I need a treasury management system?

A flexible TMS will help an organisation comply with GDPR by providing access to the data and helping implement business rules, Snyder says, adding: “A good TMS will make the task of accessing the customer data to action the data privacy rules that GDPR has set forth (e.g., removing or obfuscating personal data upon request) easier without relying on upstream systems.” Organisations don’t specifically need treasury management software to comply with GDPR. But “if the TMS does not allow an organisation to be compliant with GDPR, that system needs to be either updated or replaced”. While the right technology has the potential to help organisations comply with GDPR, good data management will require efforts from throughout the organisation. Kuan Hon, a consultant lawyer for Pinsent Masons in London, wrote in Out-Law.com: “While it is important for organisations to be able to identify and map or track the personal data that they process at a more granular level, GDPR compliance is not just a technology issue. “It will be essential to involve not just IT but also legal, risk and compliance functions, and compliance will involve people, policies and processes, not just technology.” With all hands on deck, 12 months may indeed be enough time to prepare for GDPR. And with a greater understanding of the potential benefits compliance offers, perhaps organisations will be open to the change of mindset needed to realise these benefits. By next May, we’ll know.