Why treasury automation is the future
The desk views treasury automation as a pivotal force in shaping corporate finance strategies, underscored by insights from Nordea's Matti Honkanen. His commentary emphasizes that increased digitalization will facilitate treasuries in diverting their focus from rote tasks to higher-value strategic activities. Coupled with the current consensus for EUR/USD at 1.1600 amidst expectations for strategic shifts by corporate treasuries, this shift in focus holds significant implications for FX volatility and positioning. Per the full note source, treasuries that embrace technology stand to set a benchmark for transformation across organizations.
What the desk is arguing
Matti Honkanen's insights suggest that the future of treasury functions lies in automation, allowing for a transition from operational tasks to strategic engagement. This aligns with market movements as we begin to see a pronounced push towards digital transformation across multiple sectors. In the realm of FX, particularly for pairs like EUR/USD and GBP/USD, the ability to react to and factor in technology-driven efficiency could enhance volatility, impacting trading strategies and corporate hedging decisions.
As treasuries automate, they free up resources that can be reallocated to more impactful functions, setting an example within their organizations. Honkanen points out that many treasury departments initially lag behind other business units in adopting digital technologies, but those that do embrace automation can significantly boost their strategic importance within their firms.
Where it sits in our coverage
For EUR/USD, our current consensus target stands at 1.1600 with a range from 1.1200 to 1.2000. Specific firm targets include: - Mizuho: Mar26 1.1800, Jun26 1.1900 - Commerzbank: Mar26 1.1900, Jun26 1.2000 - JPMorgan: Mar26 1.1800, Jun26 1.2000
This view is consistent with a slightly bullish sentiment on EUR/USD, positioning the desk's forecast within a competitive range—near the upper limits of the consensus while many forecasts lean towards stability or slight increases over the coming months.
How other firms see it
Aligned firms like Mizuho and Commerzbank share a similarly optimistic view towards EUR/USD, projecting modest gains. In contrast, firms such as Citi and BNP Paribas are more cautious, suggesting smaller movements, which could signify potential divergence in strategic positioning within the upcoming quarters.
The nature of EUR/USD trading could closely correlate with adjustments in policies from the ECB and Fed, particularly as both embark on navigating post-pandemic recovery and inflation trajectories.
How firms align with this view
Aligned with the desk view
Contrary positioning
Key takeaways
- 01Treasury automation is set to enhance strategic roles within corporate finance functions.
- 02Increasing digitalization is crucial for operational efficiency and can impact FX volatility.
- 03Current consensus for EUR/USD is 1.1600, reflecting expectations of gradual appreciation.
- 04The push towards automation and efficiency can redefine corporate treasury significance in FX markets.
Market implications
Watch for specific price levels around 1.1700 and 1.1400 in EUR/USD as firms adapt their strategies post-automation. Continued digitalization trends could see this pair fluctuate as markets adjust to broader economic shifts.
Risks to this view
Risks to this outlook include a slowdown in digitalization initiatives, central bank policy shifts that could counteract projected strategic enhancements, or unexpected market reactions to geopolitical events.
EUR/USD — All Desk Targets
| Firm | Stance | YE 2026 |
|---|---|---|
Bank of America | Bearish | 1.1200 |
ANZ | Bearish | 1.1400 |
UOB | Bullish | 1.1565 |
Corporate insights Why treasury automation is the future 17-01-2023 In the latest e-Forex podcast, Matti Honkanen, Head of Next Gen FX at Nordea, reflects on the latest trends in treasury technology and automation. How can companies get started with automating their treasury processes? Nordea’s Matti Honkanen gives some practical advice in the latest e-Forex podcast hosted by journalist Larry Levy.
He notes that the direction and pace of digitalisation can differ widely from one treasury department to another. “The apparently slow average pace of change masks treasuries that transform themselves in an extraordinary fashion, and others that almost stay still,” Honkanen says. Listen to the e-Forex podcast here. Becoming a strategic player Recent surveys of treasury and finance professionals by Nordea found that many have the ambition of becoming more strategic.
Nevertheless, quite of few of them struggle to make that ambition a reality. Honkanen emphasises that the only way for treasuries to become a strategic player is by becoming more efficient. “Only by freeing up your time from the mundane, routine tasks are you able to focus on the strategic issues. And only if you are able to use the majority of your time on strategic considerations inside your department will you have the chance of becoming a major strategic actor on the corporate level,” he adds.
Honkanen encourages corporate treasuries to go all in on digitalisation. This will allow them to increase both their productivity and strategic importance. Even if, according to Nordea’s research , corporate treasuries are not often considered leaders of the digital transformation in companies, nothing prevents them from taking such a leading role. “When the treasury digitalises their home turf, they become a natural role model for the rest of their organisation,” Honkanen says.
When the treasury digitalises their home turf, they become a natural role model for the rest of their organisation. Matti Honkanen, Head of Next Gen FX at Nordea Master of the automation tools Treasuries will be expected to do a lot less back-office work in the future. Honkanen explains, “The reason is not that the amount of the back-office work will decrease.
Quite the opposite. But since there are plenty of back-office tasks that are not strategic by nature, but rather quite repetitive and straightforward, they have a great potential for automation.” Anyone who has automated a process knows that this does not mean the humans suddenly disappear, Honkanen notes. “No – smart and hard-working employees are still high in demand. They need to point out the tasks that can and should be automated.
Sources & References
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