What are the 6 essentials to transform treasury management?

Treasury management is at a crossroads. Economic pressures, new competitors and technology realities are forcing treasury management to modernize, become more strategic and ultimately provide greater value to financial institutions. Long relegated to back-office administrative support for commercial loans, the role of treasury management must evolve into a revenue driver that empowers banks to compete with Fintech startups and retain relevance in the digital age.

Evolution might feel like an identity crisis, but savvy leaders recognize it as an opportunity to prove and enhance treasury management’s value. Follow these six steps to transform treasury management and realize its full potential as a sales driver for your bank.

1. Advocate

Many FI employees don’t understand the value treasury management adds to client relationships and the entire organization, so the first step toward transformation is advocacy. In other words, you need to show your financial institution why treasury management is a compelling product that can increase deposits and grow revenue while it supports other banking initiatives.

Educate

Treasury management leaders must educate both staff members and bank leadership on what treasury management is, what its duties are and how sales-oriented treasury management can drive revenue.

Today’s Fintech startups cherry-pick the most profitable portions of treasury management and bundle them into salable financial products, yet many banks ignore treasury management’s potential as a marketable product – despite the fact that it would be impossible to land major accounts without robust treasury management services.

It’s time to dispel the notion that treasury management is little more than a support mechanism for other banking departments and instead demonstrate how it can be positioned to spur sales. Competing with – and beating – Fintech startups hinges on your bank’s willingness to recognize treasury management’s new role and elevate its status within the institution.

Share success stories

Transforming treasury management takes more than a shift in thinking; it also requires new resource allocation. Getting buy-in from bank leadership is much easier if you can prove treasury management’s value with real-world success stories.

Treasury management leadership must document wins with individual clients and share them alongside quantifiable business results. Broadcast successes across your financial institution to help change the perception of the treasury function. Encourage treasury staff to share successes so employees at every level recognize their contributions to the organization, and relay those same stories to commercial customers to demonstrate the value treasury management offers their businesses.

Define success

Of course, it’s much easier to share success stories when you know exactly what success looks like. Define what “success” means with treasury management metrics: more deposits, increased revenue, client retention and attraction, for example. Treasury leadership should implement business intelligence systems to capture data and measure treasury’s impact on the financial institution over time.

When you can prove treasury’s direct impact on top line and bottom line results, you can confidently request the additional resources necessary to grow treasury management into a profitable financial product.

2. Elevate

Treasury management services and its contributions must be visible within the organization so you can secure buy-in from senior leadership. Elevating treasury’s status goes hand in hand with advocacy; as you increase visibility, you increase your ability to command more resources for treasury functions.

Address treasury goals

Tie treasury management goals directly to corporate strategy and illustrate how treasury management can increase deposits and fee income. Show bank leadership how treasury management can retain and attract more customers through targeted customer segmentation and product development.

Create sales incentives and compensation structures that motivate staff and reposition treasury management as a priority financial product within your institution. Highlight how treasury management can do more than simply support other departments, and how it can blossom as a truly autonomous line of business.

Influence organization decisions

Treasury should play a key role in organizational decision-making, so work with senior leadership to secure a seat at the table. Doing so will grant the opportunity to share success stories, quantify the impact treasury has on the bottom line and enable you to assess and react to corporate strategic decisions that impact businesses and clients.

By elevating treasury’s status, you’ll be better positioned to request the resources needed to take treasury management from a back-office support function to a marketable, profitable, value-added service that boosts banking revenues.

3. Collaborate

Treasury management sales depend on cross-functional assistance from other departments, so it’s imperative to foster a culture of collaboration. Work to integrate treasury management into other departments – and to educate leadership and staff about how treasury management is a vital function – to develop relationships that benefit the entire organization.

Work with leadership and staff

Educate lenders about how and when to engage with your treasury management team. Demonstrate the importance of treasury management and how it can help them achieve their goals through additional services and client retention. When others view treasury management as a compelling product rather than a post-sale back-office function, clients tend to enjoy better service, and your financial institution may enjoy greater profitability.

Form relationships with all departments

Treasury management should permeate all levels of your organization so staff and leadership alike understand its potential to create value. Understand that treasury management evolution means helping other departments achieve their goals; in turn, they’ll help you achieve yours.

Help commercial relationship managers, banking operations, IT departments and executive management identify and design new solutions, deliver on business objectives and support client growth. Be the credible business partner they need to succeed.

4. Hire and retain

Hiring and retaining talent must be a top priority, especially when your bank is competing against Fintech and other financial institutions – and even other industries – for a limited pool of younger workers. Attracting today’s workforce presents new challenges, and successful treasury management teams will adapt to bring talented employees on board.

Reinvent employee culture

Fintechs offer ping pong tables, flexible working hours and even craft beer. That’s hard for traditional financial institutions to compete with; and while no one is suggesting you install a kegerator in the breakroom, it stands to reason that cultivating a new, innovative culture will help you attract and retain top talent.

Assess your strengths and weaknesses

Maybe you can’t compete with the Fintech cool factor, but you can offer things competing companies cannot. For example, you can establish a formal mentoring program that enables your bank to compete with Fintech and other industries for the brightest young minds. Outline a clear path for knowledge sharing and succession that makes it easy for prospects to see a lucrative career with your financial institution. Promote your strengths aggressively to attract the best candidates to your treasury management team.

Create a product management group

Create a treasury product management group that’s responsible for strategic development and pricing. This will enable you to lead revenue-generating initiatives that add value to your bank and improve its competitiveness in the marketplace. Dedicate sales and marketing efforts to bring your products to light and pitch them to bank leadership and customers organization wide. A product management group empowers your team and lends a sense of ownership that makes it easier to attract a young talent pool that wants to make an immediate difference.

When hiring and retention are priorities, you can cultivate a culture of success and succession that lends itself to a self-sustaining treasury and helps you compete for – and win – top talent.

5. Innovate

Innovation is critical to survival in today’s digital ecosystem and one of the top challenges of treasury management. That’s why you need to invest in technology solutions that enhance the customer experience and internal culture. Innovative solutions empower you to compete for market share, especially when you adopt a customer-centric mindset.

Know your customers

Many treasury leaders invest more time in vendor selection and integration processes rather than product development and customer experience. This could jeopardize your ability to truly reach your clients with innovative products designed to meet their needs.

Start by fully understanding the desired experience for treasury management customers. What are their needs? What do they want? How can you make their jobs – and lives – easier? What is the customer journey, and how would they like services to be delivered? Armed with this information, you can develop a technology roadmap to deliver products that perfectly align with your client base.

Understand and accept an evolving client base. Tomorrow’s decision-makers expect an intuitive digital experience and seamless technology solutions, and it’s your job to deliver.

Document the customer experience

No matter how big (or small) your bank is, you have the ability to document all aspects of the end-to-end client experience. Document everything onboarding to back-office servicing, which will help you prioritize innovations to better service your customers.

Look for bottlenecks, product pitfalls, sales shortcomings and delivery failures. At what point do potential customers jump ship? At what juncture do they commit? The more you document, the better you can understand and improve the customer experience, and that will help you develop solutions that foster valuable, long-term and loyal customer relationships.

Create a product development roadmap

Once you understand your customers, you can create a product development roadmap to deliver innovation solutions that meet their needs. Many banks are focused on the following four areas:

• Customer experience, from onboarding to daily activities
• Payments, including real-time, international and integrated payables capabilities
• Platforms, including developing APIs and enhancing mobile and online platforms
• Targeting industries with sector-specific solutions

Your product development roadmap should be unique to your bank and your customer base; however, it’s worth noting that research has led other FIs to explore these four initiatives. Keep in mind you’re not just developing products to satisfy customers for today, but also tomorrow: This is a critical mindset if your treasury management department will survive digital dwarfism. Conduct independent research with your own customer base to identify a product development roadmap your clients will follow now and in the future.

6. Sell

Treasury management should be marketed as an independent service with its own value prop, but that’s a challenge when even treasury management teams do not understand the vital role their service plays within the organization. However, when you prioritize sales and treasury marketing, you can transform treasury management into an operation with a potentially beneficial impact on your bottom line.

Teach staff to sell

Many team members are too close to the solution and struggle to translate the tremendous cost and time savings treasury management brings to a business. Thus, selling starts with educating your own team about the impact treasury management has for customers and your financial institution.

You also need to educate leadership and other departments, especially commercial lending and others who can “hand off” leads to your team. Treasury management staff need to do more than deliver services; they need to be able to close sales. It’s a major reason why some banks are hiring treasury management staff who can both manage accounts and sell. Many others are hiring dedicated treasury sales teams.

Partner with marketing

Your team won’t get a chance to close if potential customers aren’t aware of the value treasury management offers. That’s why you need to partner with your financial institution’s marketing team to promote treasury management as a standalone, value-added product.

Gone are the days when placing a banner at an event is enough. Banks should aggressively market treasury management services and their benefits to businesses. Specifically, your marketing team needs to communicate the advantages of choosing your bank over competing solutions. That encompasses everything from brand building to direct marketing.

When marketing and treasury collaborate as strategic partners, treasury management can grow through:

• Product marketing that communicates the benefits of complex treasury management solutions
• Brand awareness, both inside and outside your financial institution
• Targeted prospecting and lead generation
• Lead nurturing and delivery to sales teams via marketing automation and customer relationship management (CRM) tools

Selling treasury management services depends on communication, both internally and externally, and proper communication depends on marketing partnerships that funnel prospects to an educated sales staff capable of closing. When you can do that, you can transform treasury management to add significant value to your financial institution.

There’s no doubt financial institutions need to rethink treasury management, but that doesn’t mean you need to go it alone. Deluxe offers a suite of services designed to modernize your financial institution and foster revenue growth, boost deposits and manage risk, including remote deposit capture, integrated receivables and treasury management onboarding. 

The information provided in this blog does not, and is not intended to, constitute legal or financial advice.