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Switch Sides: From Supply to Demand in Treasury Services

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10 September 2021
Alenka Grealish

Wells Fargo Exemplar in Integrated Receivables

Treasury services is ripe for disruption, as evidenced by the onslaught of fintech and big tech players vying to capture traditional and new revenue streams. Banks can lead the disruption if they take a customer-centric approach and deliver not banking products per se but rather easier financial workflows, simple smart analytics, and actionable advice. Wells Fargo is an exemplar with its recent launch of an AI-powered integrated receivables offering built on DadeSystems technology. Wells Fargo made a strategic investment in DadeSystems in February 2020, harnessing the power of bank-fintech collaboration.

The traditional supply-side approach to treasury services will not be a winning one. Instead, a demand-side, customer-centric approach is the path to competitive differentiation and market share gains. A demand-side approach immediately recognizes that the repercussions of COVID-19 have catapulted working capital optimization to the top of the priority list at commercial customers. As paper processes screeched to a halt and the migration to work-for-home protracted the cash conversion cycle, the inefficiencies across accounts payable (AP) and receivable (AR) became glaringly evident. Banks that can remove these inefficiencies and power straight-through-processing stand to gain a competitive lead. AR as well as AP services are strong customer retention as well as expansion drivers because these services are embedded in clients’ critical financial workflows.

The biggest winners in treasury services will go beyond achieving operational efficiencies for their clients to delivering advanced data analytics. They recognize that the digitization of AP/AR workflows yields valuable data that can be used in machine learning models. Banks that can translate these data into actionable insights will generate a sustainable competitive advantage as well as revenue growth in traditional products. For example, a bank can alert a customer when the cash flow forecast shows a negative balance in two weeks and offer the customer options to avoid the shortfall, such as, a credit line.

Stay tuned…we are monitoring the news for additional exemplars.