The Next Generation of Treasury Technology

1. The Next Generation of Treasury Technology Brad Teaver Sr. Solution Engineer Kyriba

2. Today’s Discussion

3. History of Treasury Technology

4. Evolution of Treasury Technology On-premise Hosted-Private Cloud Cloud (SaaS) Vendor Hardware Vendor Company Separate install for each client Company 2 Company 3 Company 2 Company 3 Company 1 Company 1

5. What does the cloud mean for treasury? Functionality Specialized & Advanced Value proposition CFO enablement Delivery Cloud Functionality Cash and treasury (and a little risk mgmt) Value proposition Automation Delivery Internet Treasury as a Strategic Partner to the business Functionality Cash and treasury Value proposition Automation Delivery On Premise Treasury & Risk Management Treasury Management System Treasury Workstation Innovation 1990s – 2000s 20052017 2019

6. Benefits delivered by the Cloud Reduced Predictable Cost • Pay for what you need • No internal hardware or IT costs • No upgrade costs (external or internal) Disaster Recovery • Full redundancy: no single point of failure • Higher availability: across all time zones • Improved RTO, RPO for minimized disruption Innovation • Always on current release • Newest software tools; no obsolescence • Economies of scale -> vendor viability Implementation and Support • Quicker implementation; no need for IT • Ease of support; every client on same version • No individual configuration/support issues

7. Innovative Technology

8. The Report

9. Today’s Reporting Reporting • Rows and columns of data • Manual analysis: your eyes have to scan for exceptions • No drill down • No change on-the-fly

10. Data Visualization vs. Reporting What’s Different • Visualize information to find new conclusions • Multiple drill downs • Immediate update • Build yourself

11. What happens to “the report”? The future is visual, analytical, and voice driven Dashboards – rather than rows and columns Voice commands (e.g. Alexa, what is my cash exposed to?) Designed for performance reporting, KPIs, and quick identification of exceptions The report becomes the answer

12. Board level reporting automatically generated

13. Real-Time Payments

14. Real-Time Payments Real time payments • Immediate credit: The funds become available in the payee’s account immediately (within a few seconds) of the payment being initiated by the payer. • Irrevocability: Once the payer has initiated the payment, they cannot cancel it. • Certainty of fate: When the payer initiates the payment, they are informed immediately (within a few seconds) whether the payment has successfully reached the payee’s account or not. Over 25 nations have real-time payments live • Some examples: • Faster Payments- UK • FAST- Singapore • NPP- Australia

15. Real-Time Payments Use Cases Use Cases for Real-Time Payments • Cash payments ie. paying entertainers or staff at sporting events • Instant refund to a consumer with a service issue or a rebate to a customer • Student tuition refunds, high-risk vendor payments, internal payments between divisions across banks, patient trials, and same-day exception payments. • Ability to “request for payment”. Receive payments that are “ready to post” to their accounts receivable systems Research revealed more than 12,000 payroll exceptions annually, more than 3,000 of them made with expensive wire transfers.

16. Real-Time Payments – what to expect • CFOs will focus on the supply chain • Any technology that improves supplier & customer relationships will prove to be valuable • Real-Time payments will become the standard • It may take a few years • Question: via banks or via non-banks? • Need more banking APIs • Banking community is starting to expose bank portals via API • Required to have real-time payment and settlement

17. Real-Time Payments – what it means • RTP brings predictability • Knowing exactly when payment arrives = knowing when to send it • Low-volume payment pain points, such as payments that were cash-based or payments with unique timing requirements • Will also drive ‘request for payment’ in certain industries • Lower cost • Competition among banks & non banks • Less touchpoints for difficult payments (e.g. emerging markets) • Fraud concerns • Quicker payments = quicker settlement = inability to recoup losses • Increases the need for real-time payment fraud detection

18. API Connectivity

20. API Visual

21. APIs – what is happening? APIs are being introduced in finance and banking • Regulations in Europe/UK pushed banks to consider APIs in Europe – and globally • Some global banks want APIs to replace FTP connectivity • Many see opportunity to create ‘open banking’ here in North America • Banks are testing with TMS/ERP, often limited to pilots with a single customer

22. APIs – why do we care? Bank Connectivity • Move to API will eventually = real-time bank reporting • Choice: Banks that only offered SWIFT connectivity may offer APIs • Pre-built integration rather than unique file interface for each project • Reduces implementation time and cost • Standardizes onboarding and security • New Bank services eBAM via API

23. Cryptocurrencies & Blockchain

24. Cryptocurrencies So…is there a future for cryptocurrencies? Answer = yes, there are others besides bitcoin • Bitcoin is the most famous; but the least practical • Limited supply (prices like a commodity) • Effectively illiquid • Maximum of 8 transactions per second

25. Cryptocurrencies • What can we expect from cryptocurrencies? • Cheaper and faster cross-border payments. • Driven by Blockchain technology for speed instead of the old technology for wires. • Payment providers use their own cryptocurrencies to facilitate currency conversion. You buy JPM Coin not Euros. • Easier transfer of value in un/under-banked populations (see in Kenya)

26. Facebook and JPM Coin • Interesting developments happing in this space. • JPM Coin • Digital token that will be used to instantly settle transactions between clients of its wholesale payments business on their Quorum Blockchain platform on Microsoft Azure. • JPM Coin is redeemable for a single U.S. dollar, so its value shouldn’t fluctuate, similar in concept to so-called stablecoins. Clients will be issued the coins after depositing dollars at the bank; after using the tokens for a payment or security purchase on the blockchain, the bank destroys the coins and gives clients back a commensurate number of dollars. • Facebook Coin • Facebook's cryptocurrency will reportedly be a "stablecoin." Stablecoins are cryptocurrencies that are pegged to a stable asset like the U.S. dollar or a commodity (like gold) to minimize volatility.  • Allows users use digital coins to make purchases on Facebook and third-party sites • What's going to happen?

27. Blockchain & Cryptocurrencies What we need for success: • Better understanding by CFOs of Blockchains and Cryptocurrencies • A Blockchain “network” to support mainstream payment volumes • Solution for vendor risk (i.e. do I want to send money through this vendor) • Regulation; Consolidation; backing by banks

28. Artificial Intelligence & Robotic Process Automation

31. Robotic Process Automation (RPA) (More) Digital Transformation • Robotics, powered by AI, will be the next generation of automation for all software applications • Robotic software (“bots”) will take over much of finance and accounting • Reconciliations • Accounting entries • Cash management • Investment/borrowing decisions • Payment screening • Trade confirmation

32. AI/Machine Learning in Treasury • Limitation of today’s ‘bots’ is what can be programmed by a person. (Excel Macro) • Machine learning means: • Software applications can self-develop new capabilities based on data analysis and exceptions. Learning from the Cash or Accounting manager daily. • Replaces the “experience” of a person. Smart enough to make common sense decision. Like what category to put a unmatched transaction in or GL Account to book a transaction too.

33. Applications for AI in Treasury Fraud Prevention Detection of unauthorized payments How? Digitization of payment policy Payment channel optimization (ACH, RTP or Wire) Screening of policies vs. approved payments Development of new fraud detection rules via machine learning

34. Vision for financial technology The future of software is robotic process automation and machine learning FinTech platforms will be self-learning robots within 10 years Cryptocurrencies will become a standard Demand will start in emerging markets The report will evaporate Business analysis will be visual, voice and on-demand

35. Building a business case

36. Business approval for treasury technology Building a business case is a reality • Executive approval always needed • Justification may involve a mix of quantitative and qualitative benefits • Investments that generate value will be always be prioritized • Productivity isn’t enough

37. Collaboration is key Recommendations for successful collaboration • Know your internal landscape • Understand expectations • Keep in mind your project objectives

38. Internal Landscape • Know your internal landscape • Who’s listening? Build your army of project champions • Treasury and Accounting will realize the biggest benefit • Who are the impacted stakeholders? Include them • Treasury, Accounting, AP • IT for vendor risk analysis, project support and system replacement • Purchasing / Procurement (if they own contracts and new projects) • Understand timelines and who will approve the project • When is budget season? • What are IT & Procurement’s requirements and timelines?

39. Understand expectations • What type of analysis is needed • Detailed • Macro view • Do you need to incorporate a project plan? • What needs to be incorporated into the ROI • Soft Costs • Hard Costs • Who is the business case being delivered to? • CFO? Heads of Purchasing? IT? • It helps to know your audience • Typical Expectations

40. Stay focused on objectives identified Increase Productivity • Reduce time spent to focus on strategic value Improve Visibility • Reduce idle cash and improve forecasting, hedging, and payments Optimize Treasury Processes • What kind of new programs does treasury want to implement? Enhance Internal Controls • Reduce risk of fraud and improve operational audit & control • Keep in mind your project objectives

41. Alignment with RFP A good business case drives your RFP • Selection process • What capabilities you actually buy • Implementation priorities (during planning) • Reminder of what’s important (during the selection process)

42. Tips and Tricks Summary • Define your goals and be realistic on timing • Get buy-in from all parties that will be affected • Flexible budget that leaves room for additions, changes, customizations, etc • Name executive level “champion” (e.g. CFO) to support the project • Keep banks informed during the project (to avoid surprises = slow downs) • Don’t stop at demonstrations; look at the total company you are looking to partner with • Find your own references in addition to what vendor will volunteer • Ask your banks, ask your peers at Cash Adventure • Attend vendor user conferences, advisory boards, user groups, educational webinars

43. Thank You