Data. Generative artificial intelligence. Regulations. Cash forecasting.
If you recognized the chief financial officer in that series, you’re not wrong. If you saw the new world of the CFO as well as the corporate treasurer, go to the head of the class.
The only thing that has changed about the treasurer’s job is everything. In an era of rapid technological and data advancement, corporate treasurers find themselves at the forefront of change in their own roles and responsibilities. As two J.P. Morgan executives, Maria Chavez, head of payments for core middle market and specialized industries, and Janette Hutton, head of international payments for U.S. corporations, told Karen Webster, the cornerstone of this transformation is the increasing availability and use of data, which includes generative AI. The fundamental step of identifying available data and its potential applications is crucial for treasurers looking to use analytics for strategic decision-making.
“It’s all a matter of understanding the vastness of the data that exists within your own warehouse — the data lake of information,” said Chavez, who noted that once that data’s in hand, companies can begin to realize the various use cases that can be fueled by that data, optimizing days payable outstanding and other components of the cash flow cycle.
Cash management is the key to planning for uncertainty, buffering against exogenous shocks and managing inconsistencies across markets, while triaging counterparty risk, she said.
For treasury professionals, there’s value in helping client firms stay on top of best practices and understanding where tools and technologies can be used to improve operations and returns on investment for data initiatives, including generative AI, Chavez and Hutton said.
The goal, according to Chavez, is to “truly identify patterns in terms of your inflows and be able to get even closer to forecasting.”
This improved forecasting capability can lead to more efficient cash management and better-informed strategic decisions.
The common thread that runs through it all is maximizing working capital, Chavez said.
“It’s not just about the typical treasury workstations and ERP systems,” said Chavez, who added that “it’s about data analytics and business intelligence, robotics and AI.”
The workstations and direct feed into ERP systems, she said, will always continue to be necessary. But now they’re being augmented with real-time access via plugins and APIs. The result is that the volume of products and services is stripped down and streamlined so that virtual and notional pooling can replace the juggling of thousands of demand deposit accounts.
Harnessing that data and using it wisely has been a challenge for J.P. Morgan’s corporate clients, said Chavez, who added that her own firm endeavors to help those enterprises get the data in hand — and then learn what to do with it.
AI stands out as a prime example, said Hutton, who added that what AI can do for the treasurer has “completely transformed” the role away from transaction and task orientations — the hallmarks of the past. Now the treasurer has become a key decision maker, a nimble voice at the table to help craft corporate strategy.
AI also has helped build up fraud defenses, with the ability to keep fraudulent wires from moving overseas, avoiding the costs and time spent “pulling” back those funds once sent, by using advanced tech to constantly monitor outbound payments, ensuring compliance each step of the way — with real-time updates.
Generative AI is emerging as a powerful tool for treasurers. A series of research projects from PYMNTS focused on CFOs’ attitudes and use of generative AI, which is also relevant to the rest of the senior-level finance department. The studies found that most CFOs surveyed from firms annually generating at least $1 billion in revenue reported that implementing AI remains critical for their strategic planning. As of June, firms are increasingly using generative AI for medium-impact tasks, such as financial reporting and data visualizations, surpassing the share using it for more routine tasks. That type of use was the norm just a few months ago.
Despite this deeper integration, many CFOs reported limited return on investment from generative AI. Just 13% said the ROI was very positive. However, CFOs shared their commitment to investing in fully integrating the technology into their organizations.
The subject of ROI for generative AI was covered in Webster’s conversation with the two J.P. Morgan executives regarding applications ranging from fraud detection to regulatory compliance. Hutton highlighted the potential of AI in fraud prevention.
“If you look at fraud in and of itself, and just use AI from a fraud mitigant tool and build a business case on, if we manage to keep one fraudulent wire from going overseas and save the amount of money and time resources that it would take to pull that back, it’s exponential,” she said.
Chavez added that AI can be used for various treasury functions, including “analyzing buying patterns and spend patterns and product quality and balancing inventory levels.” This broader application of AI extends the treasurer’s influence beyond traditional financial management into areas like supply chain optimization. However, both executives cautioned that generative AI implementation requires careful consideration.
Hutton pointed out that securing funding for these technologies can be challenging.
“One of the key things we always hear is how do we get at the forefront of that technology budget,” she said.
To address this, treasurers are increasingly building business cases around specific use cases, such as the fraud prevention example or regulatory compliance.
The regulatory environment for corporate treasurers is becoming increasingly complex, especially for multinational corporations. For example, Hutton noted that J.P. Morgan is still waiting for clarity around new payment regulations in Canada and Brazil. Elaborating on the pace of regulatory change, she said, “At least weekly we’re getting updates on something changing somewhere in the world.”
This rapid evolution of regulations presents a challenge for treasurers operating in multiple jurisdictions. Hutton highlighted the inconsistency across markets.
“It’s extremely complicated,” she said. “Doing business in one market may preclude you from doing business in another market depending on your model and your infrastructure.”
Chavez emphasized the importance of understanding “the full dynamics of not just from an operating perspective and cashflow perspective, but then also from a counterparty risk perspective.”
“From a controls perspective, again, the regulatory landscape is changing,” she added. “So, knowing how those are going to impact the providers that you’re using within those markets, it could cause a big issue.”
Beyond compliance, Hutton pointed out that regulatory changes can also present opportunities.
“How are you staying on top of that, ensuring that you have straight through processing, ensuring you’re on top of the change in the regulations and taking advantage of them?” she said.
Chavez also touched on the different regulatory scrutiny faced by banks and nonbank providers.
“Banks and nonbank providers … they’re not on a level playing field in terms of like regulatory scrutiny,” she said. “Some could think that the banks are over scrutinized or overregulated, but then when there’s an event, you want that protection for sure at your fingertips and on your side.”
When discussing strategic initiatives with treasurers, both Chavez and Hutton highlighted the importance of adaptability and forward thinking.
Chavez said clients are looking to J.P. Morgan for guidance on industry trends.
“I think clients leverage us for education, right?” she said. “They want to make sure that they’re staying on top of the best trends, and they understand where the industry is going.”
This educational role is crucial in helping treasurers navigate the rapidly evolving technological landscape.
She said conversations often revolve around “maximizing their working capital” and ensuring accessibility and use of available resources. The focus on working capital optimization reflects the growing strategic importance of the treasury function in overall business performance.
Hutton posed a critical question to treasury teams: “How nimble are you?”
She emphasized the need for treasurers to quickly adapt to changing business conditions, whether it’s integrating newly acquired companies or responding to potential fraud events.
“We have to be nimble,” she said. “You have to be nimble. Everything’s changing so quickly.”
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