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Treasury plays a unique and critical role in the financial ecosystem. With countless transactions and payments moving between businesses, financial institutions (FIs) and other organisations all at once, treasury helps to keep everything and everyone on track. How can the role of treasurers be preserved amidst changes and challenges across the ecosystem, and what do the next five-to-ten years look like for treasurers?  

To learn more about the treasury landscape Trade Finance Global’s (TFG) Annie Kovacevic sat down with Colleen Ostrowski (CO) at Sibos, Amsterdam 2022.  

To start, please provide a bit of background on who you are and your role at Visa.

CO: As treasurer of Visa, I’m responsible for our global treasury function including global cash management, capital markets, insurance, financial risk management, and settlement operations. I’m also general manager of treasury as a service, a business within Visa’s New Flows division. 

I started my career at Pfizer, where I fell into treasury by chance. It happened to be the first rotation assigned to me, and I was immediately hooked by the dynamic nature of treasury. 

My job is different every day; I need to know not only the business I work on, but have a great understanding of the external environment, as well. Following that initial rotation, I ended up staying at Pfizer for more than ten years in a number of treasury roles across treasury operations, treasury centre and the pension investments and finance group. From there, I served in treasury roles at ITT Corporation and Mylan before joining Visa. 

While my background is primarily in industrial manufacturing and pharmaceuticals, what attracted me to Visa was the opportunity to be in the business of money movement, and the scale we have to offer our customers in order to help their end clients.

How do you view the role of treasury within the financial ecosystem?

CO: Treasury plays a critical role in the broader financial ecosystem. There are countless transactions and payments happening between businesses, FIs, and other organisations at any given time. 

Treasury is tasked with the job of managing the flow of funds for a business and ensuring payments are both made and received correctly and on time. 

Treasury, within the ecosystem, helps keep businesses on track and making the best use of their working capital to help grow the business while ensuring they have the funds needed to meet current obligations. 

On a macro level, how has the role of treasury changed? Where has treasury been historically and where is it now––what precipitated this change?

CO: Treasurers historically––and when my career began––were seen as more of a passive entity within an organisation, as a custodian of cash and the balance sheet. 

Now, this role has shifted to being a strategic partner to help unlock the growth potential of the business. A lot of this shift is a result of changing needs and expectations of businesses that we’re seeing across the payments ecosystem, and common challenges with speed, cost, and transparency. 

Keeping speed, cost, and transparency in mind, what are the issues treasurers should be looking out for?

CO: You’ll see challenges related to speed, cost, and transparency manifest across four key areas; liquidity management, reconciliation, foreign exchange (FX), and payments automation. 

Starting with liquidity management, the challenge is that cross-border payments can take 3-4 days to complete. The working capital that is tied up for those 3-4 days could be a lifeline for small- and medium-sized enterprises (SMEs), and the difference between a going concern or going out of business. 

Now, cross-border payments can be more efficient and, even in some instances, can be effectuated real-time. This greatly reduces the speed of the process and therefore improves the efficiency of capital. 

If we think about the reconciliation process, FIs and businesses operating internationally have to manage many inbound and outbound payments at any given time. 

These cross-border payments are complex with different currencies, senders, purposes, and even different payment rails. Reconciling these payments can be very manual, time-consuming, error-prone, and costly. 

However, with the trend towards virtual accounts we can now automate this reconciliation by assigning different accounts for different scenarios.

Moving on to FX; FIs or businesses operating internationally have to manage payments and obligations in different currencies. Some of it is planned (e.g., payment due at a given point in the future), some unplanned.

Since currencies shift in value, institutions need to be able to manage the financial risks associated with these fluctuations and do that in a cost-efficient way. By automating FX trading with coverage across tenors and real-time execution we can help reduce the need for the client to manage FX risk.

Finally, payments automation has been a huge trend replacing manual payment processing which can be time-consuming, error-prone, and costly. Payments automation delivers speed, accuracy, efficiency, and overall better user experience.

Transparency is key across all of these areas where we are seeing real movement. The ability to provide enriched data is paramount, as it enables the treasurer to have all pertinent information about the payment or receipt, alongside knowing the exact cost. 

When looking toward the future, how do you expect treasury to evolve within the next 5-10 years?

CO: Given the treasurers’ risk-averse, methodical nature, ten years is not a long time. That said, I do expect there to be a few key developments in that time. 

While we’ve made great progress in this area, we’ll see treasurers as true strategic business partners. I think we’ll also see treasury operations automated, which means more time and resources spent on fundamental aspects of the business that impact the balance sheet, in addition to asset management that promotes and accelerates growth.

Finally, we’re already seeing fintechs as a critical part of the ecosystem, and they will continue to provide an important role in innovation. With the proliferation of new platforms and Visa’s reach, scale, security, we can help re-imagine experiences and catapult the treasury function.