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The top three challenges and opportunities for university treasurers
Read time: 5 mins Added date: 13/09/2024
Over the past decade, universities have seen a surge in student numbers. Domestically, this has been driven by a bump in the student-age population and a growing proportion of 18-year-olds going to university. Meanwhile, rising affluence in countries such as China has increased international applicants.
However, the landscape is shifting. The higher education sector in the UK faces multiple complex challenges, exacerbated by student numbers – especially from overseas – falling below expectations and increasing numbers of institutions are falling into deficit.
Today, the sector is looking to bolster financial sustainability and mitigate risk. University treasurers will play a key role in helping their institutions overcome challenges and harness opportunities, paving the way for greater financial resilience and success.
So, how can this be achieved? Three goals dominate the treasurers’ agendas:
1. Digitise and simplify to build financial sustainability
Controlling costs by reducing capital spending is important. But a plan for long-term financial sustainability requires a broader vision focused on improving processes.
Digital transformation for efficiency gains
Digital technologies offer universities opportunities to streamline operations, reduce costs, and improve the service they offer. Currently, many universities manually upload payments or bank statements to their enterprise resource planning (ERP) system, for instance. Automating this process can significantly improve financial management efficiency. It also enhances data accuracy and can speed up financial transactions and reconciliation.
Integration for operational simplification
By integrating various systems—from ERP and banking platforms to student portals—universities can achieve seamless operations for academics, students and suppliers. In many instances, universities use different solutions for UK payments, international payments, card acquiring, card issuance and gateway services. Working with a provider that offers integrated services can facilitate automation and generate significant efficiency gains. Operational integration can also deliver improved insights into spend that may enable universities to consolidate suppliers and negotiate discounts.
2. Improving the student experience
Rankings are an important driver of student enrolment, and student satisfaction is a key component in many such surveys. As a result, enhancing the student experience is a top priority for universities.
Digital onboarding and payment experiences
The Universities and Colleges Admissions Service is known for its digital onboarding and forward-looking universities have much to gain by emulating its integrated approach. Delivering a seamless and digitally-enabled journey can significantly increase student satisfaction and retention rates.
While the vast majority of university fees are paid by the Student Loans Company, a sizeable proportion is paid directly. All overseas students’ fees, and almost all students’ accommodation costs are paid in this way. Payments should therefore be at the heart of a digitally-enabled student journey.
Streamlining the payment process not only improves students’ experience but can lower costs. Open Banking capabilities can be embedded into a university’s website and offer a payment experience as streamlined as a card payment (without requiring a student to enter their account details and sort code). Costs associated with bank transfers can be as much as 90% lower than card processing. In addition, the university receives funds quicker.
Equally, on the payment side, hardship funds and bursaries can be distributed on a timelier basis. While a BACS payment has a three-day cycle, using the Faster Payments Service means that students can receive hardship funds or bursaries almost immediately. Indeed, the university may not even need the student’s bank account details. Provided they are already on the system, all that is required is an email address from which the bank can verify the student’s name, sort code and account number.
3. Sustainability and social responsibility
As stakeholders’ expectations evolve, universities are increasingly scrutinised for their environmental and social practices. Demonstrating a commitment to sustainability and local communities can enhance universities’ reputations and attract socially conscious students and partners.
Environmental commitments and funding alignment
Most universities have committed to achieving net-zero carbon emissions by 2050 (and some as soon as 2030), presenting both a challenge and an opportunity. Funding these transitions will require substantial investment which can be aligned with green financing options like green and sustainability-linked loans.
Ethical procurement and local supplier networks
Universities are reevaluating their procurement practices, favouring ethical suppliers and local businesses. This shift not only supports the local economy but can also support universities’ sustainability and social objectives. For financial partners like banks, supporting these efforts by offering tailored financial products for local SMEs can strengthen relationships and community ties.
Seek support from banking partners
As the Higher Education landscape continues to evolve, collaboration with strategic financial partners will be key to achieving universities’ long-term goals and maintaining resilience in a dynamic higher education environment.
Lloyds Bank has a wide range of solutions that can help universities achieve their objectives cost effectively.
- The Gem cash management and payments platform can enhance universities’ operational efficiency through greater automation. All services sit on the same platform, giving universities access to a single consistent source of data. Its capabilities have enabled Lloyds Bank to win all eight of its most recent tenders. Lloyds Bank Gem Analytics empowers universities to use their data to identify opportunities for improvement and make better informed decisions.
- The API-powered Embedded Payment suite gives universities more efficient and effective ways to make and receive payments. PayFrom allows students to pay fees and accommodation costs on your website directly from their bank account, without having to enter payment details. PayTo delivers clarity and control over transactions to improve reconciliation and lower payment costs. It enables universities to make Faster Payments 24/7 from their ERP, with real-time notifications. Five universities that work with Lloyds Bank are already using our Embedded Payment technology, with more to follow.
- Sustainable finance products, ranging from green and sustainable loans to green deposits, can help universities to access favourable finance for sustainable activities while aligning their financial strategy with their net zero goals and ambitions. They also send a powerful message to stakeholders. Lloyds Bank has worked with a number of institutions, including the University of Hull, which secured £86m of green funding to invest in sustainable facilities and infrastructure, accelerating its ambition of becoming a carbon neutral campus in 2027.
University treasurers are at the forefront of navigating challenges and seizing opportunities in an increasingly digital and socially responsible landscape. By prioritising financial sustainability through digital innovation, enhancing the student journey, and embracing sustainability, universities can position themselves as leaders in both education and operational excellence.