APAC family offices unlock treasury automation

In an age of market volatility, high interest rates, rising operational costs and persistent cybersecurity threats, family offices face formidable challenges. Today, more than ever, the need for highly automated and seamlessly connected treasury operations is critical.

Digitizing and automating the treasury function reduces middle-office costs, minimizes operational risks and bolsters cybersecurity measures. Indeed, operational excellence hinges on end-to-end automation. But why is this so crucial, and how can family offices achieve it?

An outdated approach to cash management

Family offices are an increasingly important part of money center economies in APAC, with Singapore alone now boasting more than 1,100 registered family offices.

However, many of these family offices rely on increasingly outdated systems, including manual processes to reconcile bank accounts and calculate daily cash positions. Due to the effort and costs involved, most only forecast their cash once a week, unless they have mark-to-market exposures requiring daily cash movements.

Cyberrisks, such as phishing attacks, also pose significant risks to manual systems. Globally, more than a fifth (21%) of family offices in a survey by Dentons say they have suffered a cyberattack in 2023. Manual entry and inefficiencies also increase the likelihood of errors, complicate dual authorizations and make approval logs more cumbersome.

Transitioning from legacy systems to a digital treasury can be daunting, often seen as disruptive and costly. Despite these challenges, modernizing treasury operations can yield significant returns on investment and interest revenue over time.

What a digital treasury entails

A digital treasury solution utilizes advanced, scalable solutions to perform traditional tasks like cash management more efficiently, as well as newer treasury responsibilities, such as cyberfraud mitigation and systems security optimization. Drivers of a digital treasury function include API integration, real-time connectivity and cloud access.

Integrating purpose-built workflows with an ecosystem of banking, accounting and investment platforms eliminates the need for manual data entry and reconciliation, allowing operational staff to shift their focus towards high-value tasks.

So, through automation, a family office can complete the entire treasury management workflow with optimal efficiency to increase revenues, lower costs and remove both operational and cybersecurity risks.

How to modernize and optimize treasury operations

Here are six areas family offices should consider as they modernize their treasury operations:

1. Automate cash management
   With automated tools, family offices can monitor multiple bank accounts, view transactions and manage cash balances efficiently. Additionally, integrating invoicing systems with investment and accounting platforms facilitates data-driven decision-making and enhances visibility, resulting in improved cash management and increased interest revenue.
2. Streamline payment processing
   Automation helps to transform payment workflows by replacing labor-intensive manual entry with seamless electronic processes. Family offices can efficiently set up recurring payments, batch-process invoices in multiple currencies and use real-time payments platforms for better visibility of incoming and outgoing payments. Implementing structured processes with embedded approval controls also reduces the risk of errors, fraud and cyberattacks.
3. Execute hedging transactions in real time
   A unified treasury management solution allows for real-time modeling of investments and debt, integration with market data and risk platforms, and access to external investment information. Continuous monitoring of interest rates, exchange rates, equity markets and credit risks not only cuts decision-making time, but also ensures compliance with risk limits and investment strategies.
4. Accurate, timely reporting
   Accurate and timely reporting is fundamental for family offices. Modern treasury systems simplify the reporting process by consolidating data from multiple sources, eliminating the need for manual entry and becoming the single source of truth.
5. Efficient accounting
   Complex entity structures with diverse tax treatments make accounting tasks cumbersome and expensive for family offices. But a modern treasury solution models all entities and generates journal entries to feed the accounting system directly, reducing time, expense and errors.
6. Enhanced IT security
   To combat cybersecurity threats, family offices need the latest solutions to improve data security, privacy and system stability. As cyberattacks become more sophisticated, there’s a growing reliance on technology providers to continually enhance their infrastructure and controls while complying with global information technology standards.

Family offices are playing a critical role in the provision of capital in APAC and across the world. The wealth they bring to the economy can lead to numerous benefits, including job opportunities, more venture capital for local companies and philanthropy for social causes.

But family offices must keep pace with the wider market in terms of digitalization and system optimization. With the steps outlined above, they can achieve operational excellence and achieve it fast, paving the way for cost reductions, big efficiency gains, more business and revenue growth, and less operational and cybersecurity risk.

Money lifecycle: Money in Motion

Intro sentence: FIS digital treasury enables funds to flow easily and accurately.