Building a successful treasury strategy

Resilience is one of today’s major talking points for businesses. Mike Rigby assesses whether companies have the capability to navigate the next economic storm, become sustainable and if they have the right talent now and in the future.

Regulating disruption

It’s not just our customers but also our regulators that are asking us what steps we are taking in addition to establishing standards, guidelines and governance frameworks to deliver a resilient service offering.

One of our regulators – the Prudential Regulation Authority (PRA), has set out its expectations for the operational resilience¹ of firms’ important business services, including payments. It addresses the risks that follow from the interconnectedness of the financial system together with the complex and dynamic environment within which we work.

As a bank, we understand how embedded our systems are now in companies’ sales processes – if the payment process fails at our end, then the whole client-side system can go down. As such, we are required to adhere to the PRA’s expectations of a maximum level of tolerable disruption, including the duration of that disruption.

Ensuring visibility

A major priority for businesses at the moment is their payment systems and evaluating whether they are resilient enough to cope with disruption, whether caused by accident or malicious intent.

Customers tell us that visibility of payment and related data flows is critically important – for many consumer-facing, high volume businesses, billings and payments can be the beating heart of the organisation. Any slow down or stoppage in the systems and data behind the billings and payments can have a considerable knock-on and immediate effect.

Banking systems and payment systems are very much part of the overall customer journey. So, resilience is critically important. Corporates have a reputation to be mindful of and established relationships to protect. Any spike in delayed payments will directly impact customer relations.

Businesses know that harnessing relationships with their financial service providers is key to ensure that data received is accurate and timely. If we think about the cash side of treasury, visibility is so important – if there are multiple components to a business, visibility of cash being received needs to be trusted across each channel of the business, otherwise it makes running the rest of the company much more difficult.

A glitch in the system

What you should ask if your financial service provider’s systems go down.

In an ideal world, the service provider will have identified that there is a problem before customers begin to call. But when they do call, service providers should be able to say what they are doing to fix the problem and how they are managing it in the meantime. The provider should also be able to identify whether there will be any knock-on effects and whether the outage has created further issues.

Time to test

It is far better to ensure that the process runs smoothly first time so that there is no need for such intervention. This is why we would advocate that customers regularly and rigorously test their own systems and ensure the infrastructure is resilient and robust. This may not be limited to their own systems but may extend to others such as those offering data connectivity and specific solutions.

Testing the system during such a process is vitally important to make sure it produces the right outcomes before being released into customer-facing systems. Alongside infrastructure, businesses must have protocols in place so that if a payments system fails, team members know the processes and procedures they need to follow.

Often, a board-level discussion is required, setting out how protecting the payments system will protect the whole business. The board will need to understand the consequences of failing to ensure that the system is resilient. Failures might be low probability, but they can be high impact.

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