The banking sector is undergoing profound transformation, with digital innovation at the forefront—especially in retail banking, but also increasingly in corporate and markets operations.

Specifically, treasury functions are influenced by three main industry drivers:

1. Regulation and Compliance: Increasingly intricate regulatory frameworks require strict adherence, pushing treasury to operate within complex compliance environments, which subsequently drives up operational costs and necessitates optimized cost management.
2. Cost Pressure: Treasury operations must navigate a multifaceted array of global and local standards, policies, and regulations, requiring efficient cost controls.
3. Rapid Technology Disruption: Banks adopting modern technologies swiftly to reduce costs, launch innovative products, and comply with regulatory requirements gain competitive advantage over slower-moving institutions.

Recent studies by leading research organizations highlight notable statistics supporting this trend:

• 62% of financial services CEOs rank digital transformation as their top priority (Gartner 2018 CEO/CIO Survey).
• Early digital adopters achieve 35% higher revenue growth compared to traditional competitors (HFS Research, 2018).
• Cloud adoption in banking continues to rise, with 75% of banks leveraging multi-cloud or hybrid-cloud strategies, and 50% running workloads in hybrid-cloud environments (Gartner Predicts 2019, IDC Hybrid Cloud 2018).

Treasury departments face unique challenges, including:

• Shrinking Margins: Commoditization of treasury products, driven by standardization and increased electronification, has compressed margins.
• Electronification of Flow Products: The COVID-19 pandemic has accelerated electronic trading adoption, with projections such as JPMorgan’s forecast of 40% electronic corporate bond trading by 2022, and government bond trading nearing two-thirds electronic execution.
• Legacy Technology Constraints: On-premises legacy systems hinder rapid deployment of new products and compliance updates, while modernization efforts are lengthy.
• Digital Innovation Pressure: AI, machine learning (ML), and big data analytics are now core to competitive digital treasury models.
• Cost Efficiency Needs: The imperative to maintain a lean cost base discourages large upfront infrastructure investments.
• Future Volume Uncertainty: Planning for volume growth over 3-5 years remains challenging.
• Intensive Risk Management: Banks require capacity to perform complex, resource-intensive risk simulations and pricing calculations.

Operational challenges also include:

• Time to Market: Product launches and regulatory updates necessitate changes across multiple systems, often delaying deployment.
• Cost Transparency and Planning: Managing infrastructure costs amid rapid technology shifts and vendor dependencies is complex.
• Workforce Mobility: Mobilizing specialized skills quickly and efficiently remains a key hurdle, particularly highlighted during the pandemic.

Banks increasingly consider public, private, and hybrid cloud adoption, driven by pressing questions: “What tangible benefits will treasury gain?” and “Are these advantages compelling for decision-makers to pursue cloud transformation?”

The COVID-19 crisis drastically shortened digital transformation timelines, as Satya Nadella, Microsoft CEO, stated, “We’ve seen 2 years’ worth of digital transformation in 2 months.” Cloud adoption is now a board-level discussion within many banks, reflecting a top-down commitment from the C-suite.

Yoter Up identifies the following core business benefits of cloud for treasury:

• Cost Reduction: Beyond immediate cost savings, cloud solutions offer broad operational advantages.
• Faster Time to Market: Accelerated solution deployment and product innovation with continuous delivery of evergreen IT.
• Enhanced Customer Experience: Cloud enables banks to offer new digital services and leverage intelligent data insights from vast structured and unstructured datasets.
• Simplified, Resilient Operations: Supporting remote work, centralized system management, and operational consolidation.
• Improved Security: Leading cloud providers maintain data security standards surpassing typical on-premises capabilities.
• On-Demand Scalability: Cloud infrastructure can dynamically scale computing resources to manage spikes and complex risk calculations.
• Agile Development: Supports modern agile methodologies such as DevOps and continuous integration/continuous delivery (CI/CD).

Despite compelling benefits, cloud migration presents challenges:

• Data Security Concerns: Banks manage highly sensitive customer data and must address risks highlighted by past high-profile breaches.
• Data Localization Regulations: Strict regional data residency laws can complicate cloud deployments, especially in areas lacking local cloud datacenters.
• Fragmented Regulatory Frameworks: Variations in compliance requirements across jurisdictions hinder standardized cloud adoption.
• Organizational Alignment: Successful cloud adoption requires executive sponsorship; otherwise, interdepartmental friction may arise.
• Skills and Strategy: Effective cloud migration depends on having the right expertise and a robust, phased cloud strategy.

A bank’s cloud journey is rarely a simple switch from on-premises to cloud-native systems. Instead, it’s a continuum allowing incremental adoption with measurable benefits at each phase.

Yoter Up recommends a clear, aligned roadmap involving business and technology stakeholders to avoid complexity and delays. Common practical steps include:

• Cloud Testing: Migrating test environments to cloud while live systems remain on-premises, delivering early wins with low risk.
• Cloud Services: Using cloud-based applications for specific treasury functions (e.g., regulatory reporting) alongside core on-premises operations.
• Private Cloud: Hosting applications on third-party private clouds to relieve internal IT burdens.
• Managed Services: Partnering with systems integrators to outsource infrastructure and application management, ensuring evergreen IT and reduced total cost of ownership (TCO).

A comprehensive cloud roadmap should integrate operating models, production support, and release management.

Yoter Up, leveraging Finastra’s leading treasury software solutions like Fusion Kondor and Fusion Risk, excels at implementing these platforms on cloud infrastructure for banking clients.

For clients migrating from on-premises to cloud, Yoter Up focuses on operational risk management, automation enhancement, and transparent multi-year cost agreements.

For banks seeking rapid cloud implementations, Yoter Up offers turnkey solutions including product deployment, support, maintenance, interfaces, and ecosystem integration—enabling early business benefits and increased profitability at lower cost.

Many current treasury and risk projects address regulatory compliance (e.g., market risk capital charge calculations per FRTB guidelines, LIBOR transition efforts), alongside advanced balance-sheet optimization using AI/ML for scenario generation and simulations.

Legacy infrastructure and siloed architectures limit banks’ agility versus digital-native competitors. Cloud solutions support faster, seamless deployments without core disruptions, eliminating burdensome upgrades or complex integration challenges.

Continuous evolution requires treasury to proactively prepare for digital futures:

• Digital Distribution: Increasing electronic trading and product distribution through digital channels.
• Open API-Driven Infrastructure: Customers accessing pricing, transaction, and exposure data directly via API integrations.
• Cloud-Based Analytics: Leveraging AI, ML, and big data for market sentiment analysis and strategic decision-making.
• External Service Consumption: Flexible, pay-as-you-go models for collateral management, regulatory reporting, and other niche services.
• Flexible Operating Models: Outsourcing infrastructure, security, deployment, and analytics to technology leaders, while focusing internally on core competencies.
• Shared Digital Infrastructure: Adopting blockchain and other common trade processing platforms.

Cloud adoption will remain central to enabling these future-ready treasury capabilities.