In today’s rapidly changing business environment, treasury and finance are stepping into a transformative role. No longer just gatekeepers of cash or risk managers, these leaders are now pivotal in shaping their organisations’ long-term strategies. Recent research from DBS reveals how treasury and finance functions are evolving to meet economic, technological, and regulatory challenges.
The Evolving Role of Treasury and Finance
Traditionally, treasury and finance were seen as reactive departments focused on backend support. However, they are now integral to decision-making and business model development. According to the DBS survey, which included 570 senior leaders across nine sectors and 15 markets, the influence of these functions is stronger than ever.
Key Findings from the Research
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Strategic Partnerships: Six in 10 corporate strategy respondents view collaboration with treasury and finance as vital for achieving shared goals.
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Globalisation: A similar number agree that these teams are essential for navigating the complexities of the new wave of globalisation, particularly in European and high-growth Asian markets.
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Sustainability Initiatives: Over 90% of respondents indicated their treasury teams help shape corporate strategy, especially concerning sustainability and decarbonisation efforts.
Sugandha Singhal, Head of Treasury at Indian chemicals giant SRF Limited, shares that their treasury department now interacts more with marketing, sourcing, and logistics. “We help navigate business strategies through risk hedging and negotiating financing and payment terms,” she explains.
A Shift from Reactive to Proactive
This shift from a reactive to a proactive approach allows treasury and finance teams to lead in several critical areas:
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Supply Chain Management: They play a crucial role in reconfiguring supply chains to ensure resilience against disruptions.
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Financing Strategies: Securing diverse sources of financing is now a priority to mitigate risks and support long-term growth.
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Market Adaptability: As companies expand globally, particularly in Asia-Pacific, treasury and finance are at the helm of managing value creation amidst uncertainty.
Embracing Diversification
In a world of foreign-exchange and interest-rate volatility, diversification is essential. More than three-quarters of executives surveyed reported innovating new products and services to adapt to changing market conditions.
Julain Prevost, Director of Financial Management at Lidl & Kaufland Asia, noted how recent European market developments impacted their Asian operations. “We’ve become more dynamic and flexible in our approach, launching new initiatives to prepare for future disruptions,” she says.
Treasury as a Driver of Innovation
Treasury and finance are also driving innovation within organisations. For instance, Jindal Stainless has diversified its product mix to mitigate risks associated with its revenue streams. They source scrap materials from various regions, helping them respond quickly to market demands while managing forex and commodity risks.
Anurag Mantri, Executive Director and Group CFO at Jindal Stainless, explains, “To manage the volatility of nickel prices, we’ve developed a natural hedge in our system to maintain consistent margins.” This proactive approach ensures that they can pause unprofitable contracts if needed.
The Role of Digital Transformation
DBS’s research highlights the crucial role of digitalisation and data-driven business models in modern treasury operations. Teams are increasingly adopting generative AI and digital tools, shifting their focus from transactional tasks to strategic activities.
Marie Hong, Head of Treasury, Asia, at Manulife, states, “Our teams feel more valued by business partners as they engage in transformative projects.” The cultural shift is as important as the technological one.
The Future of Treasury and Finance
As we look ahead, the evolving landscape of treasury and finance presents both opportunities and challenges. Here are a few key considerations:
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Cultural Shift: Adopting a proactive and strategic mindset will require a significant cultural transformation within organisations.
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Continual Learning: Treasury teams must stay updated on market dynamics, technological advancements, and regulatory changes to remain relevant.
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Stakeholder Engagement: Building strong relationships with internal partners will be crucial for driving success in this new era.
Conclusion
The findings from the DBS report underscore the growing influence of treasury and finance in shaping their organisations’ futures. By embracing innovation, diversifying operations, and driving sustainability initiatives, these functions are becoming essential partners in achieving long-term business goals.
In this new reality, treasury and finance are not just managing risks; they are leading the charge towards strategic growth and transformation.
