What treasury looks like in a tokenised world

Automated. Dynamic. Always on. And global.

That’s not the far-flung future of liquidity management, according to ANZ’s Inga Bambalaite-Saliba. That’s how it’s working today, as leading firms embrace the possibilities and opportunities of tokenisation and digital treasury.

Speaking to ANZ Institutional Insights on podcast, Bambalaite-Saliba, Director, Industry and Innovation at ANZ Institutional, said the benefits tokenisation brought treasury and cash management were already visible in markets around the world, and would only become more ubiquitous.

“Where I see the direction of travel is towards much more continuous, highly automated and event-triggered liquidity management,” she said. “Moving away from a much more static, batch-based type of orchestration that we see today.”

Tokenisation in the context of money can sound unfamiliar, according to Bambalaite-Saliba. In practice, it’s a broad term covering a suite of instruments, including tokenised money market funds, and tokenised bank deposits.

While still at the early adoption stage, these are far from niche, Bambalaite-Saliba said. According to Citi, the latter (effectively “digital versions of insured money”) could support between $US100 billion and $US140 trillion in flows a year by 2030. The impact on how businesses manage money could be transformational.

“Historically, when our clients talked about liquidity management, they had to organise that around banking cutoffs, bank operating hours, [and] batch processes,” she said. “And it's not because it was optimal. That's just how the system worked for decades.

"Tokenised deposits are what changed that. With tokenised deposits, liquidity can be moved much closer to real time, across time zones, entities [and] currencies.”

Bambalaite-Saliba made the comments in conversation with Hari Janakiraman, ANZ’s Head of Industry & Innovation, Transaction Banking. You can listen to the podcast below to find out more.

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Peeled away

Corporate treasury functions have worked the same way for a long time, with baked-in constraints around bank cut-off times, market cut-offs and weekend closures. The advent of tokenisation means these are "being peeled away one by one", Janakiraman said.

"Increasingly we are seeing not just bank cut offs going away, [or] currency cut offs going away," he said. "We are also seeing financial markets being opened up, more and more, to be always ‘on’.

"This technology is going to completely change the way treasury management is done, and it's going to provide more opportunities, but also more challenges in terms of how you make the best out of it."

For treasurers, that involves embracing a new approach, according to Janakiraman.

“If you live in a world where you can move your money around any time of the day, at [a] fraction of [the] cost, then you need to, as… treasury managers, think about how you manage your liquidity in a very different way," he said.

Bambalaite-Saliba said that mindset shift was arguably more important than the technology one. Running treasury based on batch processes has been the “pragmatic” approach for entire careers, she said, with every operation based on specific timing, forecasts and “placing money where [it had] to be in advance”.

Tokenisation asks treasurers to rethink all of that.

“For me the biggest change is always the human element,” Bambalaite-Saliba said. “You need to think past what has been just your reality.”

That means being “open minded and taking mini steps to define use cases to test transactions, working with your banking partner, and educating yourself and your broader team about what is really possible today”, she said. “Because the world has changed.”

Technology has already shifted perspectives in our everyday lives, according to Bambalaite-Saliba, and it was inevitable that it would come to treasury.

“There are so many examples where everything is online available 24-over-seven," she said. "But [the] finance world, because it's such an established infrastructure, has been slower.

"Even the language and the constructs we have today I think will be changing, towards much more by minute by second type of calculations.”

Already happening

The tech behind this shift is in use today, according to Janakiraman.

"This change is already happening," he said. "We are not talking about a couple of years in the future."

Beyond that, Bambalaite-Saliba thinks there are more applications that could evolve in the future.

“I see that stablecoins could be used for a portion of cross-border instant money transfers, and then just be seamlessly exchanged to tokenised money, [a] tokenised bank deposit, where they can earn interest and also serve… within the automated liquidity management mechanism,” she said.

Liquidity “could be optimised and placed in intraday type of yield mechanisms, including tokenised money market funds, that would be used alongside tokenised bank deposits,” she said, managed autonomously through “pre-programed rules and execution mechanisms”.

Janakiraman said the flow-on effects of tokenised treasury management would in many cases eventually reach consumers.

"It is going to enable [businesses] to significantly upgrade the way they manage their money, their liquidity, and… how they [provide] better products and better services to their customers," he said. 

Opportunity

Bambalaite-Saliba encourages treasurers to look at tokenisation as an “opportunity”, not necessarily through a lens of change or risk management.

“Because in our increasingly uncertain world, it's actually very useful to be able to move money at any time, all the time,” she said.

And while it may seem transformationally complex, there are many elements of the tech that “seamlessly integrate into existing bank-to-enterprise systems via ISO standards, and other existing standards”, Bambalaite-Saliba said.

At ANZ, Janakiraman said the bank was committed to ensuring its customer experience when it comes to tokenisation was “as consistent and same as it can be”.

Bambalaite-Saliba said the bank is already having conversations with interested customers, which are “really practical”

“It's definitely a today conversation rather than a future conversation,” she said.

They also touched on the importance of ensuring tokenisation technology is secure, the role of large banks in the shift, and the importance of working on tokenisation with a trusted partner. Listen to the podcast above to find out more.

This story reflects an edited version of the conversation as it appears on the podcast