The shift toward open source platforms in treasury departments

This article was written by Francesco Tonin, Markets Specialist at Bloomberg. 

For seasoned corporate treasury professionals, their day-to-day workflow mostly involves using two tools: Microsoft Excel and e-mail.

In a recent conference, Francesco Tonin, FX and Economics Market Specialist at Bloomberg, and Todd Yoder, Global Treasury Head of Derivatives and Hedging Capital at Fluor Corporation, discussed the market shift from manual tools to more automated and modern solutions.

In the late ’90s, Microsoft created a pervasive ecosystem for corporate productivity that revolved mainly around the use of its programs to perform daily tasks in the vast majority of diverse companies.  Numbers were essentially being manually entered and then run on spreadsheets and distributed both internally and externally as email attachments. Nowadays, this bastion of corporate culture is under threat, because professionals believe the tools they use shape the way they think.

The shift away from manual data input

Newer generations, such as millennials, have not so closely embraced Excel because of two problems: typing errors can easily infiltrate formulas and be virtually impossible to detect; and the difficulty large teams face when working together on large spreadsheets — trying to identify who had the very last version, what date they sent it by email and how to re-distribute it after having edited it. Firm-wide adoption of Excel also entails the high cost of software licenses, which can strongly affect businesses’ budgets. Corporations that use Excel to manage data often have great difficulty handling large datasets (for example, the program can freeze). The software is also unable to seamlessly produce professional-grade typeset reports straight from that data. Moreover, everything about it is, in general, manual: repeatedly clicking, typing, dragging and dropping and clumsily attaching files to e-mails.

To experienced finance professionals, the scenarios described above are just par for the course; however, for the new generation of finance and economics graduates who are slowly populating trading desks, these are non-negotiables. For the new cohort of treasury professionals, the new way to do things is by using open source computer languages like Python or R and manage the collection, processing and typeset output of treasury data via shared code. The upside of this process is that it facilitates sharing, it eliminates manual errors, the software is zero-cost , and thousands of ready-to-use packages are available to run any possible task. It also allows for quick linear regression, compelling data visualization and for data tables to interact with graphs in an automated manner.

How to move toward open source computer platforms

The shift away from Excel and toward open source computer platforms has many benefits, but how can corporate treasurers even begin to get there? The vast majority of treasury professionals don’t think of themselves as coders and don’t have a degree in computer science, so many of them overestimate the learning curve to get up to speed with the new way of doing things.

The software that hosts these open source files is free, so there is no need for additional budget. And coding, a complex activity, has a whole new meaning and process nowadays. Professionals can now stitch together packages that are available for free download from the Internet and begin creating new and automated tools to improve their current workflows without ever having to plunge into extended coding sessions.

Tonin and Yoder also demystified the difficulties of using code to run daily corporate treasury tasks and how treasurers can benefit from doing so. One example provided involved the ability to pull data via code, run calculations, and typeset the final report and charts all within the same code. And, if an error is found, the code can be re-run in only a few seconds. This results in the end of manual operations and no more copy-pasting or typing numbers from Excel into Word.

Extracting live financial and market data directly into Python and R code is also an important flow that facilitates the manual tasks in a treasury department. By using Bloomberg’s APIs to extract data series, for example, all existing calculations are pulled into reports. Another API, the MARS API, allows treasurers to run all risk calculations by Bloomberg’s prices and portfolio analytics. The tool also allows customers to shock their positions with custom scenarios, stress test them and run Value-at-Risk. As a result, all calculations and charts are seamlessly pulled into reports and data can even be incorporated into text, while automatically being refreshed.

With these and other types of technological advances and solutions, productivity gains are achieved by corporate treasurers and their departments, and also seen throughout the entire enterprise. For example, if procurement were to ask the treasury department for a complex 50-page report that took a month to design, it would easily take three minutes to re-run it and guarantee the information is shared across different business areas quickly and efficiently.