Nick Kurzel: We have definitely had a transformational 36 months in the treasury department in terms of automation and open mindedness to change.
Our legacy treasury systems were built using proprietary software which at the time were adequate to support our business requirements.
As the business began to diversify and offer a wider range of systematic strategies along with regulatory costs starting to bare their teeth on the cash management function, we realised that we needed to adapt our treasury operating model.
This was carried out in two phases, the first was to look to automate anything that was operational in nature. The second was to look to design flexible operating models and focus on value-adding responsibilities.
"As the business began to diversify we realised that we needed to
adapt our treasury operating model."
A good example of a treasury process that can easily be automated is the daily cash wire process. The model we have transitioned to is a hybrid between outsourcing and utilising an external fintech vendor.
We leverage off our relationship with our administrator and a fintech collateral management platform.
We noticed that there are synergies between what our administrator provides us in the morning in terms of net asset value (NAV), which has allowed us to outsource margin process functions and components.
The administrator reconciles portfolio data and filters directly into our treasury and management system and this system is also connected to our brokers.
"A good example of a treasury process that can easily be automated is the
daily cash wire process."
Essentially, we then have an automated system based on various predefined rule sets. This automatically runs and identifies breaks which our administrator reviews as part of their daily handover and responsibilities.
Assuming there are no breaks, all of our margin movements are electronically agreed and then sit in a queue for an investment manager to approve, as well as approve the associated wired movements.
The cash wires are then sent out to our custodians from the platform using swift connectivity, which is extremely secure and reliable.
The treasury function also receives top day margin reporting such that oversight review is conducted prior to approving any of those wires.
This process was an initiative that we implemented two years ago and saves us five hours a day which is almost the equivalent of a dedicated head count.
So, you can see that there is value in automation of this kind of nature.
"This process was an initiative that we implemented two years ago and
saves us five hours a day."
We also automated part of our money market fund transaction process by partnering with GSAM to automatically generate trades based on information we provided and applying payment instructions from a pre-agreed list.
The reduction in risk and time spent on manual tasks has really opened up people’s time and benefitted the day-to- day treasury function significantly.
This also allowed us to remove a separate platform from the workflow entirely and allowed automated reporting to be integrated into our existing systems.
It’s this kind of automation that helps us focus on further improvements and ensure the business is truly scalable.
The new treasury operating model that we have implemented has certainly allowed us to spend more time looking at external relationships that are more analytically focused.
"The reduction in risk and time spent on manual tasks has really opened up
people’s time and benefitted the day-to- day treasury function."
An example of a new relationship that we have is with another fintech company that offers margin, cost of trading, analytics, which I see as quite complimentary to the operational margin process we have automated.
This style of relationship allows the treasury team to think more about marginal optimisation and better allocation positions to look to reduce the operational drag and add some alpha back into the portfolio.
The biggest shift that I see in terms of responsibility and roles is the refocusing of your priorities away from manual operational tasks to spending more time adding real value.
