Corporate TreasuryCentralisationSSCs/Payment FactoriesQ&A: What do Treasurers Want from a Bank Relationship?

Q&A: What do Treasurers Want from a Bank Relationship?

gtnews recently spoke with Mohamed Belgharbi, programme manager for Expertus Technologies, a Canada-based provider of payments, cloud and consulting services, on what today’s treasurers are looking for and what their banking partners are doing to keep them from straying to greener pastures.

Q (gtnews): At a number of recent events gtnews has attended, there has been much talk about what banks are doing to keep their corporate treasurer clients happy. What are treasurers demanding?

A: (Mohamed Belgharbi):
Aside from the traditional services offered by their banks, corporate treasurers are asking for a more advanced solution that will enable them to diversify their counterparty risk, maintain visibility over their worldwide cash and manage liquidity in real time. Treasurers are demanding automation to manage their daily operations, mitigate risks, minimise their transaction cost and maximise their revenue.

Today, many corporates have to connect to a myriad of bank portals with numerous security tokens to handle their treasury operations, which is risky, cumbersome and time consuming. Therefore, having a value-added solution, with a single point of entry to view and manage their worldwide bank accounts, can significantly streamline daily treasury operations, create efficiency and reduce risk, and translates into significant cost savings. The centralisation of the corporate’s worldwide bank accounts provides corporate treasurers with control of their bank account structure and real time visibility to be able to manage their investments and make their important day-to-day financial decisions.

With this goes SWIFT connectivity, which is a must. It allows corporates to automate their processes and be bank independent. There is also the growing need of adaptation to new industry standards such as XML ISO20022. Corporates are often confronted with different payment file formats requested by each of their banks. They need a solution that can accept their payment file format and transform it into the format expected by the receiving bank through the least costly channel. Following the path of other regions and central banks, the US Federal Reserve recently outlined a plan for speeding up US payments. This plan entails the need of adaptation to new industry standards such as ISO20022, which allows the payment remittance information to travel along the payment chain unaltered and facilitates real-time reconciliation

Payment factories, shared services centres (SSCs) and treasury workstations remain key elements in an organisation’s cash management strategy. When corporates have several subsidiaries or branches, banks need to provide access to a workstation where clients can make their payments, monitor their account balances, conduct cash forecasting, foreign exchange (FX) and automatic account reconciliation. Furthermore, an integrated case management module enables treasurers to efficiently initiate an investigation and get updates online, thus avoiding phone calls and emails to their banks, which often is time consuming for both ends – all the while keeping a documented trace of the investigation.

Another value, which has recently been raising corporate interest, is the integration of sanctions screening, which enables corporates to screen payments against sanctions lists before they reach their banks. This prevents unnecessary delays due to bank compliance inquiries and – most of all – the freezing of funds by regulatory authorities.

Lastly, there is the technology and innovation aspect. The use of smartphones and tablets to manage daily treasury operations has gained in popularity especially for treasurers on the move.

Given those trends, what are banks doing to keep their corporate clients?

Leading banks are becoming proactive and are partnering with payment service hub providers to integrate their solutions within the bank platform and offer the latest technology and value-added services to their corporate clients.

The integration of a single point of entry for the corporate client, through their bank, allows the processing of all payment file formats from the corporate bank account directly to the receiver in an efficient and cost effective streamlined process. It also allows banks to offer cash forecasting, liquidity and risk management, sanctions screening, automated payment investigation and mobile capabilities.

Moreover, banks should be transparent with their clients, by advising them of all the possible options available, even though this might be at the expense of losing some of the business traffic. Direct SWIFT connectivity, for instance, gives corporate clients with substantial message volume,the freedom and independence to exchange financial messages with the banks of their choice. It also allows them to negotiate better terms and conditions and change banks in a couple of days.

With so many corporate treasurers favouring software-as-a-service (SaaS) today, would you say that most banks are embracing cloud technology as well and offering it to their corporate clients?

To remain ahead of the competition, embracing cloud technology is a must for a bank. We have seen a growing trend in the adoption of SaaS by banks and corporates.

In fact, among our many clients we have a US bank that has been on board from the beginning in incorporating the SaaS cloud technology, and will be offering the same to their corporate clients, through a single-portal entry solution. In addition, through our ongoing conversations with leading banks, they are also considering SaaS. On the other hand, one of our multinational corporate clients opted for our SaaS solution because their banks could not offer all the value-added services referred to above.

However, we are still seeing some resistance from the internal IT departments of banks, which are reluctant to embrace the shift of this advance in technology which is a value–added solution for the client and also for the bank.

SaaS is a must-have cloud technology that definitely sets apart the proactive banks who are looking to add more corporates to their long-term portfolio. It has proven to be secure, flexible, reliable and less costly than the in-house model and provides banks and corporates with peace of mind allowing them to concentrate on their core business.

gtnews recently interviewed agents with the US Federal Bureau of Investigation (FBI) who encouraged treasurers to diversify their portfolios and keep money in a large number of different banks, given the escalation we’ve seen in cyberattacks. What are your thoughts on that? Should treasurers split up their money into more bank accounts due to today’s threats?

Well, it’s not only about the security threats; it’s about financial and counterparty risk as well. Treasurers should diversify their bank account relationships to mitigate risk and be in a better position to negotiate better terms and conditions. However, given the ongoing cyberattacks to the major banks in the world, banks are stepping up to provide assurance to corporate treasurers, by hiring top ex-government cybersecurity experts to set-up a robust anti-cyberattacks that can prevent this huge risk.

Meanwhile, hacks will continue and corporates will need to continue protecting themselves with appropriate techniques such as multifactor authentication and data encryption, as well as securely managing encryption keys.

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