BankingCash & Working Capital

Founder’s KTAs from the Global Cash and Banking Group 2020 H1 Meeting

By May 27, 2020 No Comments
Digital Forecasting

By Joseph Neu

NeuGroup facilitated our Global Cash and Banking Group’s 2020 H1 meeting last week, sponsored by ION Treasury.

Here are a few takeaways I wanted to share.

Focused on cash visibility and forecasting, still. Members in this group noted that their projects and priorities had not shifted as a result of Covid-19 and its impacts, given that cash visibility and forecasting were already a priority.

  • Using treasury technology and process improvement to get better at both also has not changed.
  • It’s just now the tech and processes have to work from home.

AI is the future of cash forecasting. Among the cross-product solutions ION is focused on are machine learning applications, starting with a cash forecasting tool leveraging artificial intelligence, mostly in the form of machine learning and deep learning neural networks. ION’s research suggests that linear regression-based learning models perform well for businesses with stable, growing cash flows, but less well with cash flows subject to seasonal peaks. ARIMA, or AutoRegressive Integrated Moving Average and Neural Network models perform better, but require extra modeling:

  • for seasonality with ARIMA models and
  • with neural networks, careful attention to training data to learn from and supplemental intervention when non-repeating events occur, such as when global pandemics happen.

Still, you can get 90%-95% accuracy most of the time, in seconds vs a day or more.

Bank connectivity as a service progressing. Members sharing on bank connectivity experience suggests that it is a diminishing, albeit still a pain point as:

  • global banks offer to serve as a gateway for statements and payments
  • TMS and ERP vendors look to connect around traditional bank portals and
  • specialty providers fill the breach for those ill-served by these solutions.

Balancing access security (e.g., managing tokens) and segregation of duties with convenience and business continuity in a crisis (mailing new physical tokens vs. turning off virtual tokens on employees own smartphones fast enough) is still an issue, yet positive progress is the prevailing sentiment.

Stay safe and well.

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Joseph Neu

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