Over the past two decades, the Treasury function in investment firms has significantly evolved. What was once an internally focused, passive role has become an outward-facing, proactive position. Today, Treasurers engage directly with investors, due diligence firms, and service providers, in addition to collaborating with internal trading desks, operations, and management teams.
The financial crisis highlighted the critical importance of the Treasury function, elevating its status within organizations. Traditionally part of the finance team, Treasury has increasingly been granted more independence and greater strategic responsibilities. These are the key areas of responsibility:
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The morphing of Treasury has also been accompanied and influenced by other factors:
Recent increases in the cost of capital and turbulence in the banking sector, including bank failures and the Archegos collapse, have led firms to reassess their oversight capabilities. Firms rely on the Treasury function to answer critical questions, such as:
Addressing these diverse challenges requires innovative technologies. Companies aiming to maintain top-performer status understand that assessing their technological capabilities is an ongoing process. What was sufficient yesterday may not meet today’s or tomorrow’s needs. Financial planning and risk management benefit from new forecasting tools, such as calculators and models, which assess the impact of changes in interest rates, currencies, financing terms, and other market forces.
However, these sophisticated tools are only as accurate as their data inputs. They depend on harmonized data delivered quickly and accurately. With synchronized data sources, purpose-built tools can provide Treasurers with insights to oversee exposure, make informed capital usage decisions, and advise on overall strategy. Access to consolidated data aligns Treasurers with their counterparties, enabling proactive trading and financing decisions that generate alpha for the fund.
With the right technology and Treasury functions, a firm can:
Implementing these strategies can be challenging. For example, translating and mapping margin agreements is complex due to varying terms and conditions among counterparties. Modernized technology can help investment firms effectively oversee their Treasury function. Providing a holistic view of all information supports effective decision-making, operational efficiency, and essential risk management. The toolkit enables:
Treasury teams in have evolved far beyond their traditional passive roles. Equipped with the right technology and expertise, they can significantly boost both cost savings and alpha generation. Real-time visibility into counterparty exposure, the ability to challenge counterparty margin calculations and financing charges, simulate the impact of market changes on the firm’s liquidity, and access comparable counterparty data for borrowing and lending rates enable Treasury teams to make substantial, measurable contributions to the firm’s bottom line.
Himanshu Bagri
Himanshu is the product lead for the Treasury suite at Arcesium. He oversees solutions including margin replication, collateral management, securities lending, cash management, and counterparty risk. He defines product strategy, drives development from concept to launch, and ensures timely delivery of the solution.
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