Welcome to Digital Darwinism for treasury

Welcome to Digital Darwinism for treasury

Technology has been changing and developing quicker than ever before. This rise of emerging technologies is applied in increasingly familiar guises, such as artificial intelligence, blockchain and machine learning. However, these can only be successfully deployed when implemented by people who understand the power of technology and are open to change. Applying technology is all about the combination of competences and mindset. What does that mean for treasury technology? It is time to explore the more human aspects in successfully deploying treasury technology.

In his Evolution theory, Darwin stated that all species on earth share a common ancestor. During millions of years, these species have changed over time and given rise to new species. The mechanism that Darwin proposed for evolution is natural selection. Life is about the survival of the fittest; in order to survive, we need to constantly adapt ourselves to the ever-changing world.

The concept of ‘Darwinism’ applies to the treasury function and the treasury professionals too. In the treasury function, it becomes crucial to deliver on the potential added value of treasury. If we remain too focused on the operational aspect of treasury, a large part of the treasury function can be amalgamated into shared service centres (SSCs) that are much better equipped when it comes to ‘in the box’ efficiency. With ‘in the box’ efficiency we mean process efficiency in a standardized, controlled environment and automated manner. So, we mostly use new technologies to achieve a higher level of automation. However, from the corona pandemic we have learned that we still need real people to help out in uncertain settings and where processes cannot be fully automated.

When the work-from-home era started, tech-savvy people could do everything online and all worked fine. This not applied for their professional lives in which Teams / Zoom meetings took over the normal physical meetings, but also in their private lives like ordering groceries online, virtual house viewings with your real estate agent. However, unfortunately there is also a large group of people who are not that tech-savvy and still rely for example in their private life on support from call centres or physical offices for assistance.

We see this kind of bifurcation in tech awareness in treasury operations too. Specific parts of the function are now fully standardized and automated. In other parts, however, we are still struggling to use technology and as a result we lose efficiency. It is like the 80/20 rule; the 20% that is not automated will take 80% of our time!

In Darwin’s theory, evolution took generations. In the digital era, the changes are more like a revolution, a Digital Darwinism. The different current generations illustrate the pace of Digital Darwinism. The so-called baby boomers, who were born (roughly) between 1945 and 1955, have been educated or trained with very limited use of technology.

Generation X, born between 1965 and 1980, have witnessed the use of PC’s and mobile phones at first hand during their youth. Generation X is followed by the next demographic cohort, Generation Y, born between the early 1980s and the late 1990s. These Millennials are tech-savvy young people who had their first internet experiences as a primary or secondary school student.

The next generation entering the workplace is Generation Z, born around the turn of the century. This is a generation who rarely know what a French franc, a German mark or a Dutch guilder is, and who look bewildered when a form requires you provide a fax number. As well as having the skillset to understand technology, we also need the mindset to change our ‘modus operandi’.

In the past year, all these generations had to deal with another revolutionary change when COVID-19 entered our world. More than a year later, we have learned some lessons to add to our (r)evolution; what was missing was a real trigger to change. According to a survey by Twillio, a cloud communications platform, COVID-19 accelerated companies’ digital communications strategy by six years. The article stated that “over the last few months, we’ve seen years-long digital transformation roadmaps compressed into days and weeks in order to adapt to the new normal as a result of COVID-19.” Of course, in the era before the pandemic Zanders had developed treasury technology roadmaps for its clients in which we listed and prioritized treasury projects to further automate treasury operations and capture the added value of the treasury function. But maybe our efforts were a bit lukewarm in this respect.

The pandemic has taught me that if there is real need to transform, we are able to raise the bar in terms of adoption of new technology. To survive Digital Darwinism, treasurers must embark on a real journey of treasury transformation. To thrive in the ever-changing landscape in which treasury operates, they must embrace new technology within their overall transformation strategy in combination with selecting the right digital-savvy team to implement the strategy. If you do not invest in both the technology and the people, your treasury transformation roadmap is a one-way ticket to Jurassic Park*.


*) For all Millennials reading this column, Jurassic Park is a movie released in 1993, the year that the Treaty of Maastricht was signed, and Bill Clinton was inaugurated as the 42nd President of the USA.