This is the post at RBS Insight that surprised me: How retail technologies will help corporate treasurers.
It suggests that banks shall/will adopt a kind of "collaborative filtering algorithms"...successfully used by the online retail sector…to pitch new products to clients.
What is a collaborative filtering algorithm?
It's a method of making automated predictions about the interests of a user by collecting preferences from many users. If one shares a taste with others its more likely that she shares another taste too…is the basic idea behind.
If you listen too much to main stream, you create mainstream?
Collaborative filtering needs enough samples (user-item matrixes may become large and sparse), it looks into the past…so, although collaborate filtering can claim to achieve good diversity and independence, it may work the other way around in unpredictable cases - if you listen too much to mainstream, you create mainstream.
Is good for gadget buyers also good for corporate treasurers?
The traditional role of a corporate treasury embraces core functions…corporate finance, cash management, liquidity planning and control, procurement of financial investments…and increasingly important: management of interest, currency and commodity risk…and marginal functions that are extremely company specific.
IMO, senior management and board seek greater visibility to liquidity and risk exposures and better monitoring financial metrics on critical projects…this requires finding new ways to leverage treasury skills and technologies…maybe use things that are not in stock.
Yes, Steve Job said once: "...people don't always know what they want before you show it to them…" But how do we show complex system behavior and something that has not been described before?
Without using algorithms, you can't understand values and risk and engineer new financial instruments, but the success of treasury departments may need also quantitative methods to validate the major instruments they need…beyond collaborative filtering...
A treasurer's role may need to shift from being an asset guardian to a value creator…set the stage for successful investment and risk management, leverage technology and build quant finance skills.
We'll be pleased to help.