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  • Writer's pictureWilliam Webster

Barrow boys to AI

Treasury and dealing have undergone a remarkable change over the past four decades. What was once a field dominated by intuition, paper-based processes, and "barrow boys" has evolved into a highly regulated, technology-driven profession that demands a diverse set of skills from its practitioners. In this blog post, I'll discuss the key changes that have shaped things and how today's professionals can take out some of the tedium to make things fun again.

From paper blotters to electronic trading

Forty years ago, the treasury world was a far simpler place. Dealers relied on paper blotters to manage positions, trades were conducted over the phone, and the concept of risk management was rudimentary at best. Regulation was virtually non-existent, and dealers were expected to make money based on their gut instincts rather than sophisticated analysis.

Today the picture couldn't be more different. Electronic trading platforms have replaced blotters, and the sheer volume and size of trades have grown exponentially. Information is now abundant and instantly accessible, thanks to resources like Bloomberg. Bid-offer spreads have tightened, and the number of major players in the market has shrunk, with most participants now classified as clients.

New skills

As things have evolved, so too have the skills needed to succeed in this field. Today's dealers are more likely to hold graduate and post-graduate qualifications, and proficiency with spreadsheets and data analysis is essential. Treasury professionals must be able to not only interpret data but also use it to forecast P&L and risk.

The modern treasury environment also demands strong communication skills. Dealers must be able to explain complex strategies and concepts to a wide range of people, often without relying on jargon or technical terminology. Report writing, meeting preparation, and the ability to articulate the pros and cons of different approaches are now core competencies for treasury professionals.

Moreover, dealers must be aware of the cognitive biases that can cloud judgment, such as recency, confirmation, and overconfidence. These concepts were once seen as virtues but academic studies have shown they aren't.

Regulation rules

One of the most significant changes in the treasury world has been the rise of regulation. The days of freewheeling, unconstrained dealing are long gone, replaced by a complex web of rules and oversight. Risk management is now at the forefront of every trade and the fear of censure looms large.

Despite the challenges posed by regulation, some fundamental truths about markets remain unchanged. They are inherently unpredictable, and even the best-laid plans can unravel at the first sign of trouble. Extreme events, while unlikely, occur more frequently than expected, and we must be prepared to act quickly to adjust to the situation we face.

AI makes light of work

As the demands continue to grow artificial intelligence (AI) can help. It can be a powerful tool for automating routine tasks, such as report writing and policy updates, freeing up time for more strategic and interesting work.

But AI's potential extends far beyond mere automation. It can also help dealers improve their skills in areas where they may be lacking, such as communication and data analysis. By using AI for scenario planning, tail risk assessment, and other nuanced tasks, a deeper understanding can be obtained.

Perhaps most importantly, AI can make treasury work more engaging and enjoyable. By eliminating the tedious, repetitive aspects of the job you can focus on work that drew you to the field in the first place.

Maybe it's not quite like the old days but the barrow boys were street-smart and saw an opportunity when it presented itself.

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