Insights   •   Cash

Transformed Overnight: How COVID-19 Changed Cash

What a year it has been — a trying one for many. Despite so much tragedy, there were some positive developments in the world of cash. Corporations demonstrated a remarkable ability to pivot. Overnight we reinvented the way we work. Treasuries were forced to reimagine themselves as well, and to change how they manage cash.

Portfolio Strategist

WFH: Separation Blues

Overall, the level of disruption wrought by remote work has varied considerably by industry: tech employees accustomed to working from home may have barely noticed a change. Those in manufacturing have faced major obstacles. Many struggled with shattered boundaries of time and space, and with homes transformed into offices shared with people unaccustomed to workplace norms. Videoconferencing became a way of life: humanity logged 3.5 trillion Zoom minutes in Q31 — more than 6.6 million years — triggering a surge in plastic surgeries.2 On a positive note, people cherished the extra time to enjoy loved ones. We heard no nostalgia for missed commutes.

Many are eager to go back to the office as soon as it is safe, even if they don’t foresee doing so five days a week. Clients miss the hallway chats and popping in to colleagues’ offices, and bemoan conversations that are premeditated and less organic. They also miss meeting with vendors, a valuable source of information and market intelligence. Although remote technology has improved since lockdown, innovation, collaboration and relationship-building have all suffered. “I don’t know that you can replace the energy created by a group of people brainstorming together in a room,” said one client.Another called 2020 “a lost year for new relationships and for helping newer team members build their networks. Microsoft Teams cannot replace human teams!”

While nothing trumps in-person collaboration, video conferencing will remain a constructive legacy of COVID-19. As a client so succinctly stated: “People’s comfort with the multitude of platforms has opened up communication opportunities like never before. A video meeting where documents and screens can be shared enables higher quality communications with people farther away.” 

The Quest for Yield: Lower for Much Longer

Entrenched low interest rates are prompting concern that the corporate treasury department will revert from profit center to cost center. While safety and liquidity remain top priorities, cash managers “have never before kept such a sharp eye on yield across their providers,” observed one relationship manager. “Every basis point matters now.”

Careful cash management is prized more than ever. Clients are looking to improve cash-flow forecasting so they can allocate more efficiently to funds offering the best rate. They are searching for ways to generate yield while still ensuring liquidity. As such, State Street Global Advisors is having more frequent conversations with clients about separately managed accounts, which can be customized according to a company’s needs, and about enhanced cash and ultra-short-term bond strategies. The bottom line: there are options for clients willing to take the initiative and get creative.

Technology to the Rescue

Both the pandemic and the low-rate environment are highlighting the importance of technology, without which treasury functions would have foundered since confinement. Treasuries that were more digitally advanced proved far more resilient to the obstacles of remote work. Those that were behind at the beginning of the pandemic scrambled to catch up. Two-thirds of non-financial corporations said that remote work had accelerated their treasury’s digital transformation according to a State Street Global Advisors survey; the number rose to 83% for insurers. Digital workflows and electronic verification are proliferating, while manual processes and hard copies are becoming relics of a prepandemic past.

Cash management portals have proved essential, both to remote operations and to meeting the challenges posed by low rates. Clients are searching for portals with superior functionality. They want portals that enable operational efficiencies, such as letting them set dollar restrictions on authorized traders. They also seek to be able to trade seamlessly among various cash products, rather than calling each sponsor separately. Instead of investing in a main banking partner’s money funds, they are making more informed decisions using platforms that aggregate information across all of their strategies.

Finally, we hear that automation is also accelerating. “Our treasury leadership is always interested in new technology that our banking partners are creating,” said one client. “Many treasury, finance and accounting positions will be automated over the next 10 to 15 years, dramatically changing the size of teams and how they work.”

A New Frontier for ESG Cash

The events of 2020 — Black Lives Matter, expanding political chasms, the #MeToo movement, the forest fires in Australia and the West Coast of the US, and of course COVID-19 — have inspired an upsurge in social awareness. This is true among both individuals and corporations, as evidenced by the proliferation of CEO statements on events and issues making headlines including race and gender inequalities.

Social awareness is fueling interest in ESG money market funds. Our COVID-era survey found that 69% of cash managers believe integrating ESG into cash investments will be a mainstream practice within the next three years. Commonly cited drivers for this shift include client pressure and mitigating reputational and investment risks. Among the range of issues covered by ESG, clients tell us that diversity and inclusion has become a particularly strong focus.

For the moment, ESG funds remain small, and therefore subscriptions tend to be modest, due to allocation limits. Additionally, there is a significant opportunity for investor education, since ESG cash methodologies are relatively new. Some companies report researching ESG, but have yet to invest due to a lack of selection criteria. Given client interest in ESG cash, assets under management could increase significantly in the near future.


Looking ahead, we expect and sincerely hope that 2021 is a better year. The approval of vaccinations is certainly a key step. Meanwhile, 2020 has clearly inspired meaningful changes in the way companies in general, and treasuries in particular, work. One thing that has not changed: State Street Global Advisors continues to strive to be our clients’ best partner.