Why Banks Should Manage Cashflow with a Data-Led Mindset

Hey, everyone. This is Daniel Litwin, the voice of B2B. Welcome to another episode of in the cloud, where we explore various high level topics, trends and technologies in the broader technology industry. Again, I’m your host Daniel Litwin.

Thanks for joining us and onto this episode of Up in the Cloud, we’re going to be talking the state of cash management technologies, strategies and investments across the globe as well as how financial institutions should be weighing these solutions for either internal or external use, especially in the context of the global cash flow solutions marketplace, poised to ride a growth rate of about 25.5% and poised to reach a market valuation of 1.56 billion by 2026, that’s according to Market Research Future and one of it’s fresh reports.

So here joining us to give some context for the conversation today is Joseph Drambarean, he’s CTO of Trovata, which is a real time cash flow management solution that provides oversight for quick forecasts, liquid cash assets on hand and strategic financial decision making.

And they’re currently partnered with banking institutions like JP Morgan, Citibank and Bank of America. Joseph,  how are you doing today? Great to have you on.

I’m doing great. It’s great to be on.

Yeah, real pleasure sourcing your thought leadership today. So thank you again for joining us. So we’ve got some big picture stuff to set the table a little first. Let’s start with some COVID context.

It’s a bit unavoidable but coming out of COVID and it’s three emphasis on making important company effecting decisions based on actionable insights, just kind of across the board as well as in the context of a global financial crunch.

I’m curious how our financial companies weighing the data gained from their cash flow against other important metrics in their operations. Do you see it getting the same attention? Why? Or why not? And ground your response with some examples?

Yeah, absolutely.

I think that the first thing is that cash has always been came, that has never changed.

I think that COVE it as a scenario when… when many of the corporates that had to face with, you know, first of all, sending their staff home, having to completely unwind their operations and re kind of invent them from the ground up introduced this new problem space of how can you distribute financial insights across the completely remote work for us in a secure way and in a way that can be reproduced week over week, month over month?

And it exposes a lot of gaps in their data infrastructure, whether it meant connectivity to the banks, whether it meant the different aspects of software that they may use in their life. Cycle? And last year brought all of that to a painful attention.

As cash of course, was stressed with a lot of companies whether you are an eCommerce or manufacturing, having to face the harsh realities of stopping production, having to lay off staff and having to scenario and model out what that might look like from a cash flow perspective. And it really caused an innovation opportunity. But also it costs a lot of pain along the way.

And what we’ve seen the best companies do along the… the past few quarters is approach the problem not only from a short term perspective but thinking through the data transformation from a long-term perspective, putting in foundations to enable their workforce to work in a completely different way utilizing cloud technology, utilizing a rapid analysis tools, utilizing machine learning and AI modeling, and ways that maybe wasn’t used before.

And all of this is built on the foundation of real time, the availability of real time data that has been exposed through banks such as JP Morgan, Bank of America giving access to data and ways that didn’t exist five years ago. And really, it’s just kind of a holistic view at how to operationalize your cash and to use it for business decision making.

Well, many of the big banks that you partner with actually including JP Morgan, are currently trying to strategize over how to break into some outside markets in one big outside or market.

Today is the UK which is dominated by UK based lenders like lloyds, net, west, barclays, et cetera.

And according some reporting from reuters, the banks including JP Morgan are strategizing around tech investments to be that differentiator in the UK market that included JP Morgan’s, purchase of digital wealth manager, nutmeg, for example, as I’m curious where you see cash management solutions fitting into this ecosystem either for the companies back end or offer it as a forward facing service to try to differentiate in these new markets, right? How will this play into some strategies in your opinion? Or how should it play into their strategies?

I think it definitely should.

And it’s actually a… a highly dynamic thought when you think about it holistically because at the end of the day, cash powers decision making in a lot of downstream systems, whether it’s the ERP, whether it’s month end close systems, whether it’s analytics and business intelligence solutions, having cash as a functional operator that flows in a way that is met, a data Rich that is real time is actually pretty foundational to the rest of that been ecosystem if you will. And where I see a lot of opportunity and banks are seeing it as well.

Isn’t playing a, an important role in being the primary data pipe that feeds a lot of these systems with met, a data information and information that is real time.

Now, the issue of course, is that not every single organization is ready to be able to consume these types of API is whether it means, you know, the infrastructure to be able to handle it or the staff to be able to consume it.

So where Trovata kind of leads in to help with some of that is to help kind of create turnkey solutions for adopting some of these technologies so that you can take advantage of them downstream.

This has actually created a lot of opportunity for some of these organizations to rethink how they interact with their operating software.

Some of the most Avant garde organizations have started to hire their own engineering staff internally to build their own custom apps.

Once you have a clean pipeline that gives you cleanse data, resilient data, globally redundant. It’s available.

In many different scenarios, you can start to build foundational applications that are custom tailored to your specific workflows. And I think that’s where the Bank see the opportunity if they can be the pipe that power is a lot of this downstream functionality, whether it be through a system like Trovata or internal applications that are built from scratch, that’s where the next generation of financial operating we’ll go, it will be highly tailored solutions built for Real-time built for met a data Rich environments so that you can get those AI in inmail functionality they couldn’t possibly get with legacy formats.

I want to focus the conversation now on a different industry to try to draw some potential strategies or insights for the financial industry.

So we’re gonna look at for example, the big tech players that are dominating and both the consumer as well as the commercial enterprise space. We’ve got apple, Microsoft, Google, Amazon, right?

All of these companies deal with a Torrance of cash flow from multiple channels both again consumer and commercial. And all of them have really made it their business.

Sometimes figured at least sometimes quite literally to emphasize data for strategic business decisions.

So, do you have any insights there on how big tech companies have approached their cash flow management and subsequent data gleaned from it? And what learning lessons can the financial giants take from how big tech has manage their data at scale?

Yeah, that’s a phenomenal question.

I think when thinking about companies like Amazon, an apple and Google, you can’t avoid discussion about their platform approach to any technology business use case.

And it’s because of the leverage that you get when approaching from a platform perspective, instead of focusing on one use case, you… you focus on platform which enables thousands of use cases.

And you may not even know all the different types of interactions that you may enable by creating a holistic foundational approach.

And I think that’s where we have seen a lot of the innovation especially when thinking about it from a data perspective because once you have a great data foundation, you can enable various types of interactions.

Hi, there, it’s a real time kind of just in time business analysis that allows you to nimbly react to Real-time market conditions and then enable payment solutions whether it’s in real time as well, which is also coming online from a banking perspective.

But I think that platform approach is something that you have seen both from a consumer perspective with apple, Amazon and Google, but also from an enterprise perspective as they create their own in house solutions.

It’s important to have a foundation that gives them leverage to build their… their own future if you will, and not be tied specifically to one software provider over another… another. And that’s where the leverage a platform comes into play.

If you own your own data, if you don’t get your own… your own infrastructure, you can swap out different technology solutions, nimbly to react to the different market conditions or opportunities, give, you know, the… the very basic truth of the fact that our technology today is not the technology we’re gonna use 10 years from now, what might be innovative and interesting today API, you know, microservices might be extremely boring.

10 years from now, when we moved to, you know, streaming a blockchain technology using solutions that maybe we don’t even envision today. And that’s why platform is so important is because it gives you that nimble approach to continuous evolution of your data strategy and being able to rebuild it from the ground up every decade without having to completely overhaul your business to do it.

Other tech player that I think we could use framing to understand where the financial industry shouldn’t… shouldn’t be investing in these systems is looking at smaller but still leading tech companies in the finance space specifically like Square, which are understanding the importance of the entire financial services ecosystem.

What Square has done is bringing cash management systems as well as payroll systems into their in house services, a personal finance management and digital payments solution. So really just integrating all those solutions into one in house package.

So, I’m curious what we can glean from those investments and how do you think the spread of services has benefited Square for example, and it’s competitive advantage. And what can the rest of the financial industry take from those investments?

Yeah.

I think that what squares doing a super interesting because they are democratizing best practices if you will from a small business perspective, instead of having to figure out your cash management, figure out your inventory management, being able to balance your books, have a website from an E commerce perspective and have to stitch together with various fragmented services.

Square has created a turnkey solution that gives it to you kinda from the day one boot up of your business.

And I think that… that is a trend that is going to be true across the mid market as well because there is a tremendous amount of opportunity to create standardization from a best practice perspective by enabling technology solutions that give you that they won, whether it’s reconciliation or whether it’s being able to… to gain insights about different cash flows of your business and react to them in a way that gives you advantage one planning when doing forecasting a, from a business growth perspective or from understanding where maybe you’re… you’re blind sides are a lot of that can be automated and a lot of it is based on established financial principles that have not really changed over the last decade.

And the only thing that has been a differentiator is how you can implement these best practices and the fragmentation of the existing services. So similar to how square has kind of tackle this problem.

There are companies like Trovata that are trying to approach it from a kind of a turnkey approach perspective where you get not only the platform that gives you continuity from a data transformation perspective, but you also have award winning software that will give you a user experience that gives you day one experiences that you might have to put together by hand if you had different solutions.

And I think there’s a trend to getting that kind have automation leverage where the… the level playing field if you will is a great business practice. It’s… it’s… it’s best practices.

Last question I’ve got for you is looking at an international perspective, seeing how that’s also influencing some of these decisions.

So the CBIRC which is the banking regulator out of China, drop some new rules on cash management, wealth management companies recently which included banning products, are those products specifically that, you know, that our cash management, wealth management solutions preventing them from investing in stocks and convertible bonds, which you right now, the wealth management product market is represented at about one point one five trillion dollar bye.

Let’s see the end of March that was according too Chinese banking, wealth management registration and depository center. So I know there’s just some big numbers thrown around there.

But basically what we’re seeing is regulatory action from an international perspective, dropping the hammer a little bit on how wealth management and specifically management of cash wealth can be managed, add an international scale. So I’m curious if you think this changes the playing field at all for cash management companies and do you think it’s signals any potential trends or changes to how they should way something like a cash management solution in the financial ecosystem?

I certainly do.

I, and I think that the writing has been on the wall for a while against monolithic approaches to cash management.

I think that more componentized infrastructure that can nimbly reacts to these different types of regulatory conditions, will, when the day having solutions that can be at a micro service level configured and component ties to such a degree that you can fulfill the different regulatory requirements within whether it’s a pack or a Mia, or… or different regions.

And without having to completely, you know, destroy the experience that you might have as a solution.

And only, you know, thing that I can think of as… as a possible step is whether or not the linkage of these services have to be separated out at an entity level.

Whether or not you have to break up a company to represent different services that might be interested to keep an eye on one of the things that we’ve been keeping an eye on as well as the regulatory conditions of data hosting and how they data storage solutions may have to follow the… the… the principles that are laid out, you know, per region, whether it’s in Europe with PSD too, China has been putting in regulations restricting data access as well as data storage. So that’s another interesting thing to keep an eye on as… as the different regulatory conditions are put in place for data and data continuity and storage globally.

Hi, Joseph. On that note, I think that does it for our conversation.

Thank you so much, Joseph, dream, Marion cto of Trovata for joining us on this episode of in the cloud, Joseph, the folks want to find out a little bit more about Trovata, how it fits into this ecosystem and how you’re already supporting big players like JP Morgan Citi and Bank of America. How can they get in touch? How can they learn a little bit more about your company?

Absolutely.

Feel free to… to go to Trovata dot IO our website to find out more about our product. We’d be happy to schedule a demo and walk you through how Trovata can enable your digital transformation and cash operations.

Fantastic, Joseph. Thanks again for your time. We’ll chat again soon.

Thank you.