How Fintechs and Banks Drive Corporate Treasury Transformation

As a growing number of corporations engage in digital transformation to meet the evolving needs of the marketplace, treasury teams are similarly focused on adopting digital technologies to support business objectives. This environment has created fertile opportunities for fintechs, who are bringing important innovation to the financial services space.

This is evidenced by the rapid growth of these technology-focused startups. A recent report found that as of February 2021, there were 10,605 fintech companies in the U.S. alone. The events of the past 18 months have only served to accelerate the transformation happening in corporate treasury, further fueling the fintech space.

Another factor in the rise of digital treasury innovation has been the increase in global merger and acquisition (M&A) activity, which has reached an all-time high as companies look to grow, scale and broaden their capabilities. Reuters reports that as of August 2021, 35,128 M&A deals have been announced, representing a 24% increase over the previous year.

This spotlights the imperative for treasury professionals to gain insights into the changing technology landscape and better understand how banks and Fintechs are partnering to deliver game-changing solutions.

Leveraging the Advantages of a Fintech/Bank Partnership

One trend that has emerged is that banks are increasingly partnering with fintechs to bring greater innovation to financial services offerings. This is proving highly advantageous to organizations. Organizations can rely on their banks, who have developed a keen understanding of their pain points and business needs, to act as a trusted advisor.

Further, fintech/bank partnerships provide them with the best of both worlds. They are able to depend on their banking partner to guide them in understanding the latest options available in the market. At the same time, they can take advantage of the innovative, fast-to-market, cutting-edge nature of fintech solutions.

An additional benefit for corporates is that fintechs that have partnered with a bank have already been vetted by the financial institution, providing a measure of reassurance about their soundness on a number of fronts, including technology and security. With so many new entrants to the financial services marketplace, some fintechs will inevitably go by the wayside. Those that have partnered with banks have already proven their viability and will likely be in it for the long-haul.

Solving Treasury Challenges Through Innovative Digital Solutions

Today’s fintech/bank partnerships are addressing some of the most pressing cash management needs faced by corporations. Next-gen technology solutions are focusing on the accounts payable and receivable processes, with the mission of removing cumbersome, manual paper processes. These innovative treasury solutions are bringing next-level automation to the corporate back-office.

Amongst these digital solutions are tools that capture data from invoices, which are then routed for approval based on preestablished rules. Similarly, check-based payments can also be digitized for greater processing efficiency. The range of new treasury solutions emerging today are highly scalable and far more economical.

And as corporations expand operations globally, the need for more cost-effective cross-border payments, as well as real-time payments is becoming increasingly important. New fintech/bank partnerships are helping corporates navigate the complexity of new payment models that find more and more customers paying with EFTs, cards and digital wallets. There is an opportunity for corporates to embrace new platforms that hold the potential to change the trajectory of internal financial processes, making them more efficient and effective.

Meeting the Needs of a Changing Digital Landscape

As today’s workforce is rapidly dominated by digital natives, it is more important than ever that corporates meet the needs and preferences of these next-gen employees. New payment channels and mobile access to treasury functions is fast becoming a necessity for businesses in the fast-evolving digital ecosphere. Fintechs and their banking partners are leading the charge, developing solutions that allow treasury professionals to collect B2B payments and transact B2C payments remotely. Beyond empowering remote field operations that eliminate the need to execute treasury functions from the office, these innovative solutions are also contributing to business continuity and disaster recovery capabilities.

The future of treasury is a digital one and the ability of corporates to embrace change will be crucial to ongoing success. Utilizing solutions achieved through fintech/bank partnerships creates opportunity for treasury teams to take advantage of the latest technologies, while ensuring cash management needs of the business are being fully supported. For savvy corporates, turning to a trusted banking partner to find the best fintech solutions is a path to treasury transformation success. To learn more, contact your Fifth Third Relationship Manager, Treasury Management Officer or Find a Banker.