AI in Treasury Newsletter – Recap June 2023
In the heart of our modern economy, a revolution is happening. It’s not driven by new policies or economic shifts but by a quiet, digital force. This change-maker is Artificial Intelligence (AI), reshaping the world as we know it. In no place is this more evident than in treasury management, where AI and Machine learning is turning traditional practices on their head.
Welcome to the age of AI in Treasury and Machine learning in Treasury, a transformative era where these cutting-edge technologies revolutionize how we manage finance. From automating routine tasks to predicting financial trends, AI and Machine learning deliver remarkable efficiency and insight into treasury functions. But how exactly does it work? And what does it mean for the future of the Treasury?
Let’s explore this intriguing world together. We’ll delve into how AI is integrated into treasury operations, zooming in on the impacts and potential challenges. So, sit back and embark on this enlightening journey into the future of treasury management – a future bright with the promise of AI and Machine learning.
Understanding AI in Treasury
Have you ever wondered what AI is all about? AI is like a brilliant teacher who helps computers to think, learn, and make decisions. Unlike traditional programming, which only does what you tell it, AI can figure out solutions you never specifically instructed it to find. But what does this mean for the Treasury?
In simple terms, AI can automate financial tasks, spot fraud, enhance cash management, and deliver accurate financial forecasts. This means improved efficiency, fewer errors, and sharper decision-making with minimal human intervention. Exciting, right?
Machine Learning in Treasury
Machine learning (ML) is part of AI but has unique traits. It’s akin to training a pet. Instead of dictating every step to your puppy, you show it a cause and an effect, and it works out the rest. Moreover, ML can train a computer to identify patterns and learn from examples. How does it benefit the Treasury?
By using ML, we can automate payment processing, spot unusual transactions, predict cash flows, and optimize investment strategies. This leads to smoother operations, better risk control, and superior financial planning.
Exploring Deep Learning
Imagine a computer trying to mimic the human brain—that’s deep learning for you. It employs special computer networks that resemble our brains to understand and process information. As we combine puzzle pieces, deep learning helps computers tackle complex problems like understanding speech or recognizing faces.
What is the impact on Treasury? Deep learning can detect fraud, assess credit risk, analyze market sentiment, and predict customer behavior. This enhances security, risk management, and investment strategies.
The Magic of Generative AI
Let’s move a step further into the realm of Generative AI. Unlike earlier AI forms, which focused on data analysis and prediction, Generative AI takes it up a notch—it uses understanding to recreate. Imagine having a machine that can create like an artist, writer, or composer.
For AI in Treasury, Generative AI could help generate financial reports, perform stress tests by creating realistic market scenarios, and even create financial chatbots. Imagine uploading your cash flow data into an AI. The AI would analyze it, forecast your future cash flow, and present it. You could even ask the AI questions about your cash flow.
The Role of ChatGPT: AI in Treasury
Let’s focus on ChatGPT. Picture this: You have a chat with your best friend. ChatGPT is that friend. It’s a friendly and helpful piece of technology. It can talk to you, understand you, and even answer your questions! The brains behind this are a bunch of smart people at OpenAI.
Imagine yourself on a treasure hunt, with ChatGPT as your guide instead of a map. ChatGPT, an NLP (Natural Language Processing) tool, assists you in this endeavor. NLP lets computers chat with you just like a human buddy would. Sounds cool, right?
Now, let’s put on our treasury hats and see how ChatGPT can help us do our job better. Buckle up because it’s going to be an exciting ride!
The Helpful Chatbot for Daily Questions
Have you ever wished for a helper who could instantly tell you about your money matters, just like Alexa or Siri tell you the weather? Say hello to ChatGPT! It can answer your everyday treasury questions like, “How much money do we have today?” or “Do we have any money tied up in Euros?” With ChatGPT and a treasury system, your wish is its command.
A Smart Analyst for Reports
Preparing reports can be a bit of a drag, right? It’s like baking a cake but without the fun part of eating it later. But with ChatGPT, you just have to ask it to bake the cake (or, in this case, make the report). And voila! It’s done! ChatGPT can work like a tireless personal analyst, highlighting the important stuff and saving you much time.
Your Virtual Mentor
Training new team members can feel like teaching a kid to ride a bike. But with ChatGPT, you have a virtual mentor to help them. They can ask questions anytime and get quick answers. It’s like having a knowledgeable buddy who’s always there to help.
The Decision-Maker
What if we could peek into the future and make better decisions today? ChatGPT can’t predict the future (sadly!), but it can give us a pretty good idea about what might happen. For example, you can ask, “What will happen if the interest rates go up?” ChatGPT can show you different scenarios, helping you make better decisions.
So far, it sounds pretty great, right? But remember, every superhero has its limitations.
Things to Watch Out for
ChatGPT is a valuable tool, but it’s not perfect. Here are a few things to keep in mind:
- Data Connectivity: It needs to access your financial systems to do its job. Think of it as needing to go to the library to read the right books. Getting this access can be a bit of a headache.
- Data Security and Privacy: ChatGPT will deal with your secrets (financial data). You need to ensure it can keep them safe.
- Accuracy and Decision Making: ChatGPT is pretty smart, but it’s not perfect. Sometimes, it can make mistakes or misunderstand things. Always double-check its work.
- Training and Learning: Just like you had to learn about Treasury, ChatGPT must also learn about your rules and processes.
In a nutshell, ChatGPT can be your friendly treasury assistant. But remember, it’s not the boss. Its job is to help you do your job better. Like any other tool, it’s only as good as how you use it. It can be a game-changer if we keep its limitations in mind and use it wisely.
Feedzai – Machine learning in Treasury
Let’s imagine we’re detectives solving a mystery. But this mystery involves your money. That’s right! We’re talking about preventing fraud. Our secret weapon in this mission is something called Feedzai.
First, let’s clear up one thing: we’re not being paid to talk about Feedzai. We just think it’s cool and can help you understand a lot about fraud prevention.
What is Feedzai?
Feedzai is a super-smart tool that uses machine learning (remember, it’s like teaching a computer to learn like a human) and big data (think of it as an enormous, never-ending library of information) to help businesses like banks and financial institutions spot and stop fraud. And it does this in real-time, like a live sports commentary but for your transactions!
Here’s a fun fact: back in 2019, Citibank, a big-shot player in the financial world, teamed up with Feedzai to offer machine learning payment solutions. This is like Batman teaming up with Superman!
How Does Feedzai Work? Let’s Take a Real-life Example
Imagine a large company that does a lot of transactions every day, like paying suppliers, receiving payments from customers, transferring money between different parts of the company, and so on. Now, this company uses Feedzai to keep an eye on these transactions. But how?
Let’s go step-by-step:
- Setting the Scene: The company uses Feedzai’s AI to monitor its transactions.
- The mystery Begins: One day, someone requests a significant payment to a new account, claiming it’s for an existing supplier.
- AI to the Rescue: As soon as someone makes this payment request, Feedzai’s platform springs into action. It collects all the information about the transaction, like the amount, account details, and past transactions with the supplier.
- Solving the Mystery: Feedzai’s machine learning algorithms analyze this information. Seeing that this transaction is unusual, it marks the transaction as high risk.
- Stopping the Fraud: The high-risk score triggers actions. In our story, it stops the transaction and alerts the treasury team to check the payment request. If it’s a fraud, it’s stopped!
- AI to the Rescue: This shows how AI in Treasury can help companies spot and stop fraud.
Let’s Dive a Bit Deeper into Feedzai’s Magic
- Collecting Clues: Feedzai collects information from many sources. It can handle a lot of data, which helps it make accurate predictions.
- Solving the Puzzle: Feedzai’s machine learning tools analyze this information to spot patterns and trends. It learns what normal transactions look like and what might suggest fraud.
- Scoring the Game: Each transaction gets a score in real-time based on how likely it is to be a fraud. Higher scores mean higher chances of fraud.
- Taking Action: Based on the score, Feedzai might take action. High-risk transactions could be blocked or flagged for checking.
- Never Stop Learning: The more transactions Feedzai processes, the smarter it gets at detecting fraud. It’s always learning, just like us!
Feedzai is like a personal detective for your transactions. It works in real-time and can handle a lot of data, which makes it great for large companies that do a lot of transactions. But remember, no detective is perfect. Companies should also have other security measures, like multiple people checking transactions (the 4-eyes principle), good governance processes, and fraud monitoring training.
How HighRadius Uses AI to Innovate Financial Forecasting
Let’s discuss how AI is used in macroeconomic analytics and why it’s crucial for Corporate Treasurers. Our guide on this journey is a company named HighRadius.
But before we begin, it’s important to clarify that HighRadius doesn’t sponsor this article. We’re discussing their services because they have interesting solutions worth sharing. Let’s get started!
Discovering HighRadius and its AI-powered Financial Solution
HighRadius is like a financial wizard that uses the magic of AI to optimize and automate various financial processes. The star of their show is the Autonomous Treasury solution, a platform that combines two essential modules: Cash Management and Cash Forecasting.
Our focus today is on the Cash Forecasting module. This is where HighRadius’s AI does its best tricks!
The Cash Forecasting Module: How AI in Treasury Becomes Your Financial Assistant
The Cash Forecasting module of HighRadius’s Autonomous Treasury solution has several key features that make it a valuable tool:
- Getting Connected and Automated: The module starts by creating a network between your business’s ERP, banks, FP&A systems, and other relevant systems. This is done through SFTP and APIs – think of them as a secret language that different software can use to talk to each other. Once connected, the system automatically gathers data for its forecasting models.
- Creating Accessible Workspaces: Once all the connections are set up, users can interact with the forecast at any point using dedicated workspaces. This allows for adjustments and interventions to be made swiftly if required. Imagine being a conductor with a perfect view of every section of your orchestra!
- Applying AI to Cash Flow Forecasting: The heart of the Cash Forecasting module is its AI-powered models. SWhat’s unique about this is that HighRadius applies different AI models to each cash flow category instead of using one generic model for the entire business. This makes for a more precise and detailed forecast.
- Maintaining Human Control: Although AI does much work, users still play a crucial role. They can manually input additional data, making the forecast more tailored to their needs. It’s like a dynamic duo, where AI in Treasury provides the power and humans provide the customization.
Rule-Based vs. AI-Based Cash Forecasting: What’s the Difference?
You might be asking, “Why is AI-based forecasting better than traditional rule-based forecasting?” Well, let’s compare them!
Rule-based cash forecasting is like following a recipe. You use historical data and assumptions to predict cash flow. The advantage of this method is its simplicity. However, its accuracy can be limited because it depends on past trends and doesn’t adapt well to changing patterns.
On the other hand, AI-based cash forecasting is more like having a personal chef. The chef (AI) learns from historical data, spots patterns, and predicts future cash flows. This method can offer more accurate and detailed forecasts because it can adapt to changing patterns and consider more factors.
But remember, every chef needs the right ingredients. You need lots of diverse and high-quality historical data to effectively implement AI-based forecasting. And, of course, the right knowledge and resources to manage the technology.
Why HighRadius’s AI-powered Solution Stands Out
HighRadius’s Cash Forecasting module demonstrates AI’s value in financial forecasting. Using distinct AI models for different cash flow categories provides more detailed and accurate forecasts. The blend of AI automation and human input allows for efficiency and customization, giving businesses a powerful tool to navigate their financial future.
Also, The world of finance can be complicated, but innovations like HighRadius’s Autonomous Treasury solution make it a bit easier. So, whether you’re a Corporate Treasurer or just curious about finance, it’s clear that AI is making a significant impact in the field!
How Concise AI Uses AI in Treasury to Revolutionize Macroeconomic Analytics for Corporate Treasurers
Now we will explore how AI is used in big-picture economics, or “macroeconomic analytics,” for the fancy among us. This is important for Corporate Treasurers, who keep a company’s money matters in check.
Our guide for this adventure is Concise AI, a platform that works like a super-smart data collector. Like a diligent detective, this AI captures and organizes information about changes in finance, economics, government, and society worldwide.
Please remember, we’re just sharing about Concise AI because it’s a cool example, not because we’re getting paid to promote it! 😊
The Magic of Concise AI in Treasury
Imagine seeing the world’s economic activities in one place, like a bird’s eye view. That’s what Concise AI does. It captures and organizes data about financial, economic, governmental, and societal changes worldwide. Let’s look at why this is helpful for a Corporate Treasurer:
- Watching Inflation: Inflation is like the sneaky mouse that nibbles away at the value of our money. By tracking inflation trends worldwide, Corporate Treasurers can plan better and protect their company’s money.
- Tracking Costs: Sometimes, prices of things companies need, like raw materials, can go up and down like a seesaw. AI helps track these changes, helping Treasurers make better decisions and avoid risks.
- Understanding Uncertainties: Sometimes, troubles in a specific country can make business riskier and more costly. Concise AI provides insights into these uncertainties, helping Treasurers navigate these tricky waters.
- Observing Economic Trends: Changes in things like job rates or how much people are spending can impact a company’s health. Concise AI monitors these big-picture changes, helping Treasurers respond quickly and smartly.
Are Our Current Tools Not Enough?
But you might ask, “Why do we need AI? Can’t our existing tools do the job?” Let’s talk about the added benefits of AI and why it’s like giving a superpower to our tools:
- Supercharged News Gathering: AI tools are like super-quick librarians. They can read and understand vast amounts of information, even tricky things like jokes or sarcasm. They can also predict future trends and tailor the information based on the user’s interests. Imagine having a news article written just for you every day!
- Limitations of Old Tools: Traditional tools are like a basic calculator; they can process large amounts of data but struggle with complicated stuff. They can tell you about current news but can’t predict future trends or understand your interests as well as AI can.
However, every superhero has a weakness, and AI is no different.
Understanding the Limitations of AI in Treasury
While AI is indeed very cool, it has its challenges:
- Garbage In, Garbage Out: AI is only as good as the information it’s trained on. If the data comes from unreliable sources or contains false information, the AI might get confused and give inaccurate results.
- Don’t Forget Humans: We can’t just rely on AI and forget human insight. AI is a tool to help us, not replace us. It can sometimes repeat the same mistakes if they are in the data it learned from.
- Respecting Privacy: When AI looks at information from social media or other places where people share personal information, we must respect privacy and follow the rules.
- Needs Some TLC: Setting up and caring for an AI system needs some know-how. If not done right, the AI might not work properly.
To avoid these bumps, we should use AI responsibly. We need to feed it good data, remember the human touch, respect privacy, and take good care of it. Ultimately, AI is here to make our work easier and better, not to take over!
Wrapping Up: AI in Treasury
AI and machine learning can transform treasury management by automating tasks, increasing efficiency, and aiding decision-making. They can streamline financial processes, detect fraud, forecast cash flow, and refine investments. Deep learning (a type of AI), solves intricate problems by imitating the human brain, boosting security, risk management, and investment strategies.
Generative AI takes it a step further by recreating and generating content. In treasury management, it can generate reports, create realistic market scenarios for stress tests, and even develop financial chatbots. The possibilities are endless, providing enhanced analysis and decision-making.
ChatGPT, our friendly treasury assistant, can answer everyday questions, generate reports, mentor new team members, and present scenarios for better decision-making. Just remember its limitations and use it wisely.
AI-powered solutions like Feedzai offer real-time fraud prevention using machine learning and big data analytics. They detect and stop fraudulent transactions, providing an extra layer of security.
HighRadius’s cash forecasting module utilizes AI to provide accurate and detailed forecasts. It applies different AI models to each cash flow category, allowing for precise predictions. The blend of AI automation and human input ensures customization and efficiency.
Concise AI offers macroeconomic analytics, providing insights into inflation, cost tracking, uncertainties, and economic trends worldwide. It supercharges news gathering and analysis, aiding better decision-making. However, it’s important to remember AI’s limitations and use it responsibly alongside human expertise.
We hope you enjoyed reading this article about AI in Treasury. The goal here is to introduce you to the fundamentals of AI and how it can be used in Treasury. If you’re interested in learning more about Treasury-related subjects or if there are specific topics you’d like us to discuss in future articles, we invite you to check out our website. You’ll discover a wide range of valuable resources there.
