Challenges Treasurers Face with Bank Connectivity and How to Solve Them

Written by Jason Mountford
April 5, 2024

The central pillar of treasury operations is bank connectivity. The role of Treasury is to connect banking information from various sources into a central dataset that can be analyzed and managed. This was the case long before the invention of the Internet and online banking.

While the general concept may not have changed, modern technology has transformed the practical implementation of bank connectivity in recent years.

Treasurers no longer consolidate their banking information through paper documents transferred by bike messenger from a bank branch to company headquarters. Now, technology helps make this process faster and more accurate while gaining access to insights that are only possible with the use of advanced analytics.

Unfortunately, many treasury teams still haven’t entirely made this digital transformation. Continuing to use the ‘digital bike messenger’ of spreadsheets and manual data entry holds back treasury departments, limiting their ability to become a strategic growth engine for a company. 

Let’s examine how embracing modern treasury technology and enhanced bank connectivity can change that.

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The Need to Rethink Traditional Bank Connectivity

While we no longer rely on snail mail to get banking information, spreadsheets, and manual data collection still have many of the same inherent problems.

Time Intensive Data Collection

Collecting all the data takes a significant amount of time. Someone in the finance or treasury team must manually log into the banking portal, export the balances and transaction listings for every account, and then transpose this data into the master spreadsheet. 

Treasury teams must complete that process for every bank and financial platform the company uses, including payment providers like Stripe and WePay. For the most accurate overview, it must also be done at the subsidiary level for a multi-entity company. 

Eventbrite used to spend over 48 hours a month on this, and for Sealaska, it was over 50 hours a month

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Inaccurate and/or Outdated Data

By the nature of this process, the time taken to provide a consolidated report on the current cash position means that it’s always out of date. By the time the cash overview is ready for treasurers to review, days have passed, and potentially thousands of transactions have gone through the company accounts.

Not only that, but the manual transfer of data from one spreadsheet to another creates a situation where mistakes are almost guaranteed to happen.

The end result is a treasury team operating with one hand tied behind its back, forced to make decisions based on old or plain wrong data.

Limited Analysis and Forecasting Capabilities

Spreadsheets are almost infinitely customizable. You can build models and create datasets in just about any way you can think of. But that blank slate approach also means everything must be built from scratch.

Your financial model needs to be manually created, and formulas constantly updated and checked for errors. In addition to the time taken to collate all the current cash information, all of this needs to be added to the forecast manually each time.

The time-intensive model creation also makes it difficult to iterate and forecast multiple scenarios. Analysts need to build each of these individual models manually, and over time, version management can become a serious headache, too.

Lastly, analyzing all this data requires a person to sort through the numbers line by line and look for trends, anomalies, or points of interest. Without systemization of the analysis process, issues can be missed until a major problem is around the corner.

Automating Bank Connectivity With an API-First Solution 

Modern treasury teams can address all of these challenges by adopting an API-first solution. This single technology eliminates the need for almost every manual component of the banking data consolidation process.

So, what are APIs? It stands for Application Programming Interface, and it’s the primary way different software programs talk. APIs power a vast array of data connectivity solutions you use daily.

Whenever you log in to a third-party service using your Google or Apple account, APIs connect them. Booking a holiday on Expedia? APIs feed all the flight and hotel information directly from the airlines and hotels to the site. Playing a Spotify playlist through your Amazon Alexa smart speaker? APIs are behind that, too.

APIs are everywhere, and banking and financial services are no exception. The combination of APIs and the open banking framework allows your banking data to be fed directly into a central platform (like Trovata) that automatically aggregates all your data. 

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This API-first approach means building a central source of truth for your company’s financial data, making it available with 100% accuracy in real time.

All of that time Eventbrite and Sealaska spent gathering banking data every month? Down to zero overnight. Now, they can access all this data anytime, with no manual input required. That’s why it’s no surprise that a recent survey found that 42% of treasury professionals are actively engaged in implementing APIs. This trend hints at a growing inclination towards API adoption within corporate treasury and finance teams.

Recommended: Check out our recent episode of Fintech Corner as our very own Joseph Drambarean chats with McKenzie Knudson, Senior Treasury Analyst at Sealaska, about her team’s transition from spreadsheets to the almost magical experience of API-based treasury tech, and how it helped to centralize data, streamline reporting, and foster collaboration.

Transform Bank Connectivity To Transform Treasury

Digital transformation is one of the big buzzwords in the finance and treasury sectors right now, and enhanced bank connectivity through open banking APIs is at the center of it.

Having access to a centralized data bank (what we call the Multi-Bank Data Lake™) of your company’s financial information means treasury teams are freed from the daily grind of manual data collating. 

This opens up time and resources to focus on high-value, strategic work, which, too, is enhanced by technology.

bank connectivity

Because your financial data is consolidated, technology like AI and machine learning can help identify trends, anomalies, or details quickly and easily.

Let’s see an example of his change to bank connectivity in practice.

Example: Digital Transformation in Practice 

Accounting has just finished the Q2 close, and the company CFO, Laura, has noted that expenses were up 8%. She tasks senior analyst Tim with digging into the numbers to find out what’s going on.

Traditional process

Tim collects all transaction data across each entity, business unit, and region. The data is spread across multiple spreadsheets, and each entity uses a slightly different methodology for organizing this data. 

Tim first needs to normalize all of this data so that it can be easily compared. Then, he combines it all into a master spreadsheet containing all of the company’s expense information.

Now that he finally has all of the current numbers in one spreadsheet, he has to review each line item and compare it to previous quarters to see where the increase has come from. He finds that there has been a significant increase in software subscription costs.

However, the business has many different subscriptions; the cash flow statement doesn’t break them down individually. Tim now needs to complete the next step: pull all the transaction data and subscription plans the company has and review them to find out where the increase is coming from.

Eventually, Tim identified two subscription services that had jumped in price substantially during the quarter. As the number of users has increased, it has pushed them into enterprise pricing, which is more expensive to begin with but will remain relatively stable as the company scales further.

Tim can now report his findings to CFO Laura, and the task has taken two days.

Process after digital transformation   

Every piece of banking data is consolidated into a single treasury tech platform, such as Trovata. Tim doesn’t have to complete any data collating or normalization, as everything is fed directly into the platform, in real time, with 100% accuracy, thanks to open banking APIs.

bank connectivity

Using natural language processing, such as Trovata AI, allows Tim to find the answer to his question without the need to manually go through lines of data.

He simply types into the Trovata AI chat interface, “Why were expenses so much higher in Q2?” 

bank connectivity

Trovata AI analyzes the data to look for any expense items or transaction categories (such as a particular vendor) that increased in Q2 compared to previous quarters. It highlights two subscription services that both increased in Q2 above the trend line.

Tim manually checks that the increase in those subscription costs does represent a large proportion of the total expenditure increase, which they do.

He goes to CFO Laura with the same findings. The whole process took him less than an hour, including the manual verification of the AI’s suggestions (and a cup of coffee from the break room).

It’s easy to consider the talk of digital transformation as hyperbole, but the reality is that integrating modern treasury technology can save vast amounts of time. That’s time and resources freeing up your team to delve into the ‘why’ behind the numbers and to help maximize efficiency and improve growth.

Trovata – Enabling Digital Transformation Through Enhanced Connectivity

Trovata combines the foundation of open banking APIs to create a Multi-Bank Data Lake™, a central source of truth for all of your company’s banking and financial data, aggregated across every entity and business unit.

bank connectivity

The automatic normalization of this data, combined with customizable tagging and flexible search capabilities, makes it easier than ever to split, compare, categorize, analyze, and find data than with any traditional treasury or FP&A tools.

Topped off with machine learning capabilities and AI functionality that allows users to “speak” to the data, and you have a platform that can completely transform your treasury and finance operations. And it all starts with a new way of thinking about bank connectivity.

Book a demo today if you’d like to see how Trovata can transform your treasury operations.

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