Impact of COVID-19 on treasury management and contribution of open banking

3 min reading
Impact of COVID-19 on treasury management and contribution of open banking
Impact of COVID-19 on treasury management and contribution of open banking


The COVID-19 pandemic has caused an unprecedented crisis in the treasury departments of companies. The current situation has led companies to accelerate their digital transformation, especially in banking communication. Open banking and APIs are at the heart of this digitization.

The COVID-19 pandemic has brought about a radical change in many aspects of our daily lives, and corporate treasury has been no exception. This is not a typical crisis with an impact on corporate balance sheets, as happened in 2008. Instead, it is an unprecedented situation that requires different financial measures.

The health situation and the change in consumer preferences have accelerated the change of model toward more integrated and digital finance, especially as refers to treasury management. A new paradigm with open banking and the increasingly widespread use of banking APIs at the center of this transformation.

The challenges of COVID-19 in corporate treasury management

Corporate treasury is facing a number of challenges stemming from the pandemic. Not surprisingly, a recent study by PWC, COVID-19, What will it mean for the treasury function? (COVID-19, ¿Qué va a significar para la función de tesorería), has revealed some of the most important challenges.

Lower revenues

This has been, without a doubt, the greatest challenge that companies have had to face during the pandemic. The decline in sales, triggered by the necessary restrictions, has had a direct impact on the liquidity of companies, which require significantly higher levels of working capital to keep the business going.

The implementation of telework

In many companies, telework has been implemented hastily and this has caused some difficulty in ensuring remote access to business systems, especially in those cases where face-to-face was an important requirement. This has led to problems with the availability of employees when it comes to carrying out their main duties, from the management of collections and payments to reporting.

Regulatory risks

COVID-19 has also had impact on breaches of some contracts, which could result in difficulties accessing finance. In addition, should the company have international presence, regulatory responses in international capital control could have an impact on cross-border payments and foreign exchange transactions.

Operations and business discontinuity

The restrictions imposed to slow the spread of the virus have meant that many companies have faced periods of discontinuous demand and possible business inactivity. This circumstance could lead to failures in the supply chain and stock breaks that could also affect treasury.

The response of treasury: process automation, agility and cost reduction

The new paradigm in treasury departments, currently based more on remote work than face-to-face models, requires a major change in the digital skills of workers, as well as an effort to make a comprehensive transformation of all their processes.

In the particular case of treasury management, strongly connected to banking systems, this involves modernizing much of the communication between companies and banks. Traditional SWIFT or BIC processes, based on P2P networks with timely and regular banking communication, is giving way to instantaneous and automatic processes that also help reduce costs as much as possible.

Not surprisingly, heads of department themselves have highlighted the need for more agile treasury management in this context of pandemic. According to the Treasury-Non Stop survey, prepared by Euromoney, around 77% of those responsible for treasury management of companies say that real-time treasury will have a very large impact on their business systems.

There is no doubt about it. The response of treasury departments is widely the same: the more progress is made in the automation of these processes, the greater the returns and advantages from this transformation.

The role of open banking in corporate treasury management

The entry into force of PSD2 in the EU has opened up a wide range of opportunities for companies, and in particular for their treasury management systems. This occurs in all processes within treasury management, from liquidity management to cash flows to the management of collections and payments.

Open banking and the rapid expansion of APIs allow us to solve some of the industry’s challenges derived from the COVID-19 crisis, such as the instantaneity of operations, the immediate availability of information or the reduction of costs.

Their rapid expansion has caused many treasurers to already consider implementing open banking solutions. In fact, more than half of those surveyed in the Euromoney study say they plan to start using APIs in order to improve their treasury systems in the coming years.

One of the APIs helping to accelerate this process is BBVA’s Business Accounts, which allows you to automatically integrate into your company’s systems, the account statement of the accounts you have associated with your BBVA Net Cash, using the market’s AEB43 standard format. This eliminates human intervention and enables complete integration with the company’s ERP, so that the process is as automated as possible and the information is always available when needed.

And there is also BBVA’s Business Payments, an API that can be easily integrated into your website, app, ERP or treasury system to execute and manage payments on demand, in pesos, dollars or euros through different channels: bank accounts, SPEI and even sending funds to ATMs.

In short, open banking is the ultimate answer that your company needs to adapt your business systems to the new digital paradigm derived from the pandemic, especially as regards treasury management.

Are you interested in financial APIs? Discover all the APIs we can offer you at BBVA

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