In the rapidly evolving financial landscape, neobanks are revolutionising banking with their digital-first approach. However, this innovation brings unique challenges, especially in treasury operations. Treasury Management Systems (TMS) are essential for neobanks, to deliver a risk managed return and ensure STP and efficiency.
Supporting the Treasury team in balancing risk and reward
Many neobanks are deposit led banks, i.e. their business model is at least partly based on attractive current and savings account products. It is not unusual for neobanks to attract large amounts of customer deposits, with the lending side growing considerably more slowly. This means the Treasury’s role is to find suitable investments while carefully balancing risk and reward. Quite a few neobanks are going beyond the plain vanilla investment instruments and are also investing into e.g. RMBS/ABS, Covered Bonds and CLOs. In order to manage both the liquid assets and the less liquid assets such as RMBS / ABS the Treasury Team needs a sophisticated TMS that can both provide timely and instant position keeping & risk , while also supporting the trade workflow from Front to Back office.
Optimising Liquidity in a Digital Environment
Neobanks operate in a dynamic environment where real-time cash flow visibility is critical. TMS solutions provide this visibility, enabling neobanks to manage liquidity effectively, prevent shortages, and optimise cash utilisation.
Advanced Risk Management
Neobanks face diverse risks, including market volatility and interest rate fluctuations. A robust TMS helps in identifying, assessing, and managing these risks through advanced analytics and integrated risk management frameworks, ensuring a secure and resilient operation.
Operational Efficiency and Automation
Operational efficiency is key for neobanks to scale and compete. TMS automates routine treasury functions such as cash management, payment processing, and reconciliation, reducing manual errors and operational costs while enhancing accuracy and speed.
STP and Integration
A TMS with open API’s and flexible integration capabilities is key. We see our customers requiring automation with 3rd parties’ systems whether that is Market Data or Order Management through Bloomberg, Cash balances from Open Banking sources or Accounting Entries to Microsoft Dynamics the common theme is automation and STP.
Regulatory Compliance in a Complex Landscape
The regulatory environment for neobanks is complex and constantly evolving. TMS solutions ensure compliance by providing comprehensive reporting, audit trails, and real-time monitoring. This not only meets regulatory requirements but also builds trust with customers and regulators.
Strategic Decision-Making with Data Insights
Neobanks thrive on data-driven decision-making. TMS provides actionable insights through advanced data analytics and reporting tools. These insights support strategic planning, investment decisions, and performance management, driving growth and profitability.
Embracing Innovation and Technology
Neobanks are at the forefront of technological innovation. TMS solutions integrate with advanced technologies like artificial intelligence (AI) and machine learning (ML), enhancing predictive analytics, improving decision-making, and automating complex processes.
Conclusion
Treasury Management Systems are vital for the stability and efficiency of neobanks. By optimizing liquidity, managing risk and returns, enhancing operational efficiency, ensuring regulatory compliance, and supporting strategic decision-making, TMS provides a solid foundation for neobanks to thrive in the competitive financial landscape. As technology and financial services continue to evolve, the adoption of advanced TMS will be crucial for neobanks aiming for long-term success.