The marketplace is evolving beyond our imagination. At the same time, data are moving beyond the speed of light eight times over, and how we manage that data is up to us.
Today, there are over 4.5 billion Internet users. Just consider that every minute:
- 300 hours of video are being created
- 510,000 Facebook comments are made
- 4.4 million Facebook “like” clicks occur
- 3.5 billion Google searches are made
- 100 million messages are sent
- 1.2 million new data points are created
- 21.9 billion text messages are sent
Mobile phone usage is exploding and it’s just beginning. Over 65% of all emails are read on mobile devices with usage up 83% over 2018.
The way we communicate is changing and COVID-19 is just the start. Now, what is considered personal interaction is an online Zoom session. Keep in mind that people trust technology over people—but people trust technology supported by people even more.
Human interaction is the critical key in providing confidence and comfort, despite the constant advances being made in technology. This has become even more apparent as we have all had to learn to work remotely over the last several months.
The way you and a finance office will deal with the public, your banks, and cash will continue to change. The power of technology feeds data; that will lead you to new efficiency, savings, doing more with less, and providing new sources of revenue.
As we talk about the evolution of technology and communication, let’s also talk about the evolution of interest rates. Who would have guessed rates would be as low as they are right now? Even so, that doesn’t mean you can’t make money on your cash in today’s marketplace.
First, you have to use the data that are right at your fingertips. Solid, usable data will allow you to capture all the information you need to have a holistic picture of (1) what cash you have available; (2) what you need and when you need it; and (3) the time horizon on cash for investing and its actual value in the marketplace.
The power of data will lead you to develop a liquidity analysis. Keep in mind that cash flow is the flow of cash you see over the course of time: the ebbs and flows on a weekly, monthly, and annual basis.
Liquidity is composed of each cash transaction between you and your financial institutions. The actual flow of cash from the time you need it, when it actually goes out the door, and the time it takes for the transaction to be processed are critical data points.
The power of liquidity will allow the past to lead you to more accurately charting the future. Be mindful that liquidity data will highlight behaviors that will repeat patterns that determine the outcome.
The benefits of proper liquidity management will lead to the following:
- Determining how much cash you have and the level of cash needed to borrow for immediate needs. You’ll be able to see the whole picture during certain periods of time.
- The potential to enhance your credit rating
- Determining all levels of cash and being assured that all cash is seen as an asset. You’ll have a full picture of all dollars and the level of stresses on your cash during certain time periods.
- Monitoring all bank fees.
- Greater peace of mind during times of local, state, and/or national emergencies
Even in today’s marketplace, there are options to put cash to work. From state pools to bank deposits, money market funds to municipal bonds, government securities to CD products—they’re all being offered by the big banks to local community banks.
It’s good to know that there is no one product that fits all cash. Please do not fall for that fallacy. Cash has behaviors that need to be identified and treated accordingly. It’s your fiduciary obligation to those your serve to actively manage all your cash. You should never consider cash to be a passive asset.
Just as the marketplace for cash is changing, so too is the marketplace for banking. As I wrote in several blogs over the last few years, the transition from a bank branch to mobile banking was going to evolve. New technologies have led us to be served predominately over a computer rather than at the counter of a bank branch. Little did we know that it would take a pandemic to have one realize just how much of a reality remote working and banking would become.
Clearly, the world is changing for all of us. It’s up to each of us to grab what is in front us and seize the opportunity. In doing so, your office will be better prepared for whatever challenge awaits.
Those we serve deserve our moving with them as the marketplace continues to evolve into “a new normal.”
