According to data from the Association of Corporate Treasurers and Kyriba, fintechs have an opportunity to provide small and medium-sized firms with treasury management solutions.

Fintech can offer benefits to Treasury Departments of Private Firms

Globally there is approximately one third of treasury departments at private firms that are still using spreadsheets to manage treasury processes, analysis, and reporting functions. This is quite a staggering number considering the risks involved in using such legacy technology. 36% of all firms’ surveyed (332 in total) primarily use spreadsheets, which increases to 43% once firms with turnover of $10 billion and over are discounted. Having worked in this industry for some time now, I can say from experience this is realistic and quite frightening indeed!

Here are some more insights into the data from this survey:

Smaller firms are most likely to use spreadsheets. 

  • 55% of firms with $0-$100 million turnover primarily use spreadsheets.
  • 30% use Treasury Management Systems (TMS).
  • 5% use the treasury module of an Enterprise Resource Planning (ERP) solution.

A significant proportion of mid-size firms use spreadsheets. 

  • 46% of firms with a turnover of $500 million-$1 billion use spreadsheets.
  • 31% use Treasury Management Systems (TMS).
  • 10% use the treasury module of an Enterprise Resource Planning (ERP) solution.
  • The percentage of mid-size and smaller firms which use TMS is surprisingly (and worryingly) similar.

The largest firms are least likely to use spreadsheets.

  • Only 9% of firms with over $10 billion in turnover use spreadsheets.
  • 59% use Treasury Management Systems (TMS).
  • Only 9% use the treasury module of an Enterprise Resource Planning (ERP) solution.

Some Advantages and Disadvantages:

  • Using spreadsheets involves manual processing which is inefficient and expensive.
  • Using spreadsheets also increases the risk of human error and fraud.
  • The barrier to adoption of treasury management solutions among small and medium-sized firms has historically been cost as these solutions tend to require expensive infrastructure and supplementary services.
  • Now with the disruption offered by Fintechs, we are beginning to see a switch. Fintechs can now offer small to medium sized firms a treasury management solution that is cloud-based, which implies they don’t require new infrastructure for data storage and processing.
  • Additionally, the cost of developing these solutions has decreased which makes it economical to design products meant for use by small and medium-sized businesses. Hence, we have more and more Fintechs penetrating this lucrative and legacy based market.
  • However, as with many other solutions and technologies offered by such Fintech firms in whatever space, concerns around security, data management and privacy are still very much prevalent. This is probably one of the main factors for the slow adoption by smaller to medium sized firms globally.
  • Also, as most smaller to medium sized firms (plus large enterprises to a certain extent) use legacy based systems that are integrated within their business processes, it will require a lot more time, effort and additional cost to adopt a TMS. This could also be a major deterrent.
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