6 Questions to Consider When Choosing a Trading Portal

The world’s most sophisticated treasury departments today manage cash across various markets, asset classes, geographies, and in multiple currencies. The group’s central function is to manage cash and ensure it's available when the business requires. But, ensuring access to capital is offset by the shareholder’s desire to maximize returns on idle cash, so treasury must have a balanced view and invest proactively to protect capital and provide liquidity – all while trying to achieve competitive yields.

It’s a complex business, and it requires cutting-edge tools that provide integrated market discovery, trading, and reporting capabilities.

Trading portals for short-term investments offer treasury professionals these tools at no cost; however, choosing a portal provider requires significant due diligence.

Not all portals are created equal

Treasury teams need to be sure that the portal they select has the right funds to meet their requirements. But there are other considerations as well.

Here are six questions treasury organizations should ask to ensure a portal meets their needs.   

#1: Who owns the portal?

Some portals are owned by banks and are offered as an ancillary service to their cash management clients. Others are independently owned by companies that focus solely on supporting and developing the portal offering.

The ownership structure has significant implications for the type of products and quality of services a portal provides.  For instance, some bank portals favor their own proprietary products, while independent portals provide unbiased access to hundreds of investment vehicles.

Banks often see their portals as a secondary business, meant to strengthen ties with asset management clients. As a result, they may not devote significant resources to maintaining and upgrading the portal.

Independent portal providers are 100% focused on treasury services. They compete for business by offering up-to-date technology, cutting-edge functionality, and dedicated customer service.

#2: Is the portal future-proof?

Short-term investments technology is constantly evolving to handle new products, compliance requirements, and a dynamic global marketplace. It’s important to make sure a portal is not only relevant now, but that it also has the capacity to adapt to changing conditions in the future.

Treasury organizations should evaluate the resources a prospective portal provider has allocated to technology—including dedicated staff, customer service, and R&D budgets.

It’s smart to inquire about how potential providers have adapted to recent industry changes, such as money market reform, the global credit crisis, or the IRS’ new rules on simplified capital gains and loss reporting. Treasury professionals may also want to know about other new technologies in development, like automated trade settlement.

Ideally, a treasury portal should keep its clients a step ahead of a rapidly changing industry. That means, not only adapting technology to provide new and improved functionality, but also sharing insights into an evolving environment.

Ask for examples of any potential provider’s white papers and briefs. Find out if they’ve been recognized for innovation by treasury industry organizations, publications, or other third-party evaluators. Try to get a sense for how each provider shares information with clients; they may be your main source of insight for important changes that will affect the treasury function.

#3: How well does the portal company communicate and collaborate?

Treasury portal technology has to work seamlessly with treasury management software and processes. Onboarding new clients and managing the transition requires regular collaboration.

Good portal technology providers will work with their clients to solve their problems and, in the process, develop new functionalities that work for other clients, too. Ask providers if any of their platforms’ key features were developed based on client input.

Because collaboration is critical, communication matters, too. Treasury professionals may want to talk directly to high-level executives at the portal provider to get answers about configuring and optimizing the platform for their use.  Find out how easy it is to get in touch with the portal’s leadership team, including the chief technology officer.

#4: How does the portal make money?

Different portal providers have various revenue sources, which may have an effect on the breadth and quality of the services they offer.

Banks, for instance, may not expect to make much money from their portal — but make up for it by selling proprietary cash management products or other corporate banking offerings. Independent portals, on the other hand, generally earn a small percentage of the embedded management fees that fund companies charge the end-client.  Given the “intermediary” business model, and sole reliance on customers investing through their application, independent providers have to build their business on service and innovative technology.  In the end, it is their whole business, so they are more likely to be fully focused on it.

#5: How can I get the most out of my treasury technology?

The saying goes, use “the right tool for the right job,” which is true, but the right investment portal can actually amplify the impact of the other “tools” in the tech stack.  Since every treasury organization is unique, it is critical to work with a partner who has experience integrating with the broader market of treasury technology providers and knows how to maximize the workflow efficiency of the total solution set.

The following questions can help teams get a sense of what to expect:

  • Will the portal integrate seamlessly with existing treasury management systems, or will the treasury team have to adapt and retrofit their software?
  • Are there additional processes and tools that the treasury staff will need in order to use the portal, or can it work with existing applications?
  • Is reporting integrated into the platform, and can it incorporate off-portal investments?

By talking about these issues early in the selection process, treasury professionals can get an idea of how easy, or disruptive, the portal setup will be.

#6: How do clients feel about the portal?

Sales presentations and marketing materials can only reveal so much about a portal provider. Current and former clients offer the best insights into how portal technologies and services function in the real world.

Customer surveys and evaluations can provide critical information.  Statistics on client turnover can demonstrate how well —or how poorly — portals are meeting client needs. Teams can also speak directly to clients about their experiences. Especially helpful are clients that are similar in size or in the same industry.

Talk to your peers, it is a small treasury community and personal references should be weighted heavily and where there’s evidence of significant client losses, find out why customers left.

Find the right investment portal partner

The right portal can make a treasury department’s job easier, streamlining processes and identifying the best investment products that match an organization’s specific needs. But not all portals are alike.

Asking these six questions ahead of time will help treasury professionals find the best portal for their organization’s needs.