Canadian Treasurer

February 17, 2011

Treasuries fall short on STP, survey claims

By Robin Arnfield

The use of Straight Through Processing (STP) for the efficient transfer of treasury information is being neglected by a significant number of treasurers, according to a survey by IT2 Treasury Solutions.

London, UK-based IT2 Treasury Solutions is a provider of treasury management software to corporate treasuries and financial institutions. The company’s North American clients include Costco Wholesale Corp., Marriot International, Office Depot, and Sara Lee.

IT2’s survey of 180 different organizations was conducted in October 2010 by an independent third party. Responses were received from 126 treasurers located in Europe, North America and Asia-Pacific. The survey found that only 51 percent of respondents were using STP automation to support work flow in their organisations and predicted that the number would rise to just 68 percent in the next three years.

IT2 Marketing Director Tatiana Liber Soudier underlined the benefits of STP in an email to Canadian Treasurer. “Treasurers today consistently state that their business priorities centre on achieving timely visibility of the enterprise’s cash and financial risk, so that they can optimise liquidity, reduce working capital and manage their exposures effectively,” she said.

“STP is a key technical support for achieving such visibility, as it automatically delivers processes that integrate the essential information flows with treasury’s analytical and reporting processes. STP eliminates isolated ‘islands of technology’ and provides secure automated workflows that remove unproductive manual operations, and enable treasury professionals to focus with confidence on their professional duties.

Liber said that, without STP, treasurers need to spend time and effort assembling and manipulating data, initiating and running interfaces, and verifying that the information they are using is accurate and up-to-date.

According to the survey, treasurers attach more importance to improving connectivity in other key areas of their treasury such as payments, FX trading and confirmations. Amongst respondents, 60 percent said they already had payments connectivity and this figure was set to rise to 84 percent in three years. FX trading connectivity was reported by 37 percent, set to rise to 72 percent in three years while confirmations connectivity was expected to rise from the current 29 percent to 58 percent in three years.

The worst areas for connectivity were commercial paper portals, where 10 percent had connectivity, followed by continuous linked settlement with 13 percent connectivity and money market fund portals with 35 percent connectivity.

“The application of STP makes treasury data more reliable, secure and up-to-date,” says Kevin Grant, CEO of IT2 Treasury Solutions. “Post-financial crisis, this data is under even greater and more regular scrutiny, so it is surprising to find that a significant minority of treasury departments are not automating their functions to make the most of the benefits that STP can bring.”

The survey asked treasurers about connecting to SWIFTNet, a global network which enables corporates to engage with their banking partners worldwide for the exchange of information such as payment instructions and electronic bank account administration (EBAM).

The results showed that 16 percent of respondents were already linked to SWIFTNet, either directly or via a SWIFT bureau, 29 percent were planning to become new SWIFTNet clients in the next three years and the remaining 55 percent said that they might connect later.




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