Digital Treasury: Can it Tackle the Cash Forecasting Challenge?

01-05-2021 | Cashforce | treasuryXL |

Several decades ago, Excel was invented to process/model inputs and generate outputs. Today, it is still by far the most used technology to generate a cash flow forecast. However, as we strive to achieve better forecasting accuracy rates, our desire for automation and the seamless processing of FX hedges, liquidity borrowings and deposits have underlined the need for more effective modelling and increasingly powerful data processing.

The good news is that we’re at the forefront of that digital treasury revolution, or so-called ‘Treasury 4.0’. This means:

  • Leaving the manual-driven Excel jungle behind us and adopting an automated, data-driven forecasting process
  • Automating decision-making based on logic (rules that are within corporate policies), which will drive our liquidity and FX hedge usage

THE CASH FLOW FORECASTING CHALLENGE

Last year, multiple treasury surveys from sources including the Association for Financial Professionals, the UK Association of Corporate Treasurers, PwC and Citi, concluded that cash flow forecasting remains the primary challenge for treasurers today.

What are the headaches behind the process? Why is it so difficult for a corporate treasurer to generate an accurate cash flow forecast? And do we currently have the opportunity to solve this challenge?

The cash flow forecasting challenge consists of multiple underlying process complexities. The aim is to create an accurate cash flow forecast that helps us to make optimal FX and liquidity decisions.

What is accurate? You could write a book about cash forecast accuracy, since accuracy levels are totally different when comparing forecasts between different industries, time horizons, cash flow categories etc. When we forecast with a time horizon of five years, the accuracy levels are, of course, nowhere near as precise as when we forecast something just a few days in advance – and more reliable data is available. Depending on the goal, the treasurer will need a specific form of accuracy.

In addition, cash flow forecast data, together with the forecast assumptions/used models, need to come together in a well-coordinated process. Other challenges lie behind this process, including a disconnect between different data sources/systems such as enterprise resource planning (ERP) and treasury management systems.

Furthermore, there are myriad data-related issues to contend with including: concerns regarding data quality inside these multiple systems; the sheer volume of data to be processed; the need for granular and/or high-level data; and whether reliable external data can be found to be used to further improve the model.

Finally, aligning and coordinating forecasting assumptions between the different company departments is a time-consuming exercise. Imagine pulling all these assumptions from both HQ and local levels into an Excel model. No easy task.

 

FIG 1: THE CASH FLOW FORECASTING CHALLENGE

Fig 1: The cash flow forecasting challenge

SO, WHAT HAS CHANGED?

Solving the cash flow forecasting challenge is easier said than done. Nevertheless, today treasurers can leverage several available technologies that, if used together intelligently, can tackle the described challenges head-on.

First, when we think about the goals and the accuracy levels that treasurers want to achieve, we can use different models to calculate those, such as accuracy heatmaps. Second, when we consider the data (ERP and non-ERP) required to run these cash flow forecasts, we can rely on big data engines, advanced extract, transform and load (ETL) processes, and application programming interface- (API) and non-API-based connectors that create an easy data flow into forecasting models. We have ways to analyse data quality as never before and we can set up a reliable work flow process to obtain assumptions from the decentralised business units all the way up to HQ level. This generates a cash flow forecast while keeping the granular detail.

Third – and we are only scratching the surface here – several machine learning models and algorithms are now at our disposal. These can be used to build and optimise cash flow forecasting models, so we can indeed solve the forecasting challenge in a reliable way.

Finally, armed with the right tools, the salient question is: what can we actually do with the cash forecast? We call it Cash Flow Forecasting 3.0: automating the decisions that are based upon the cash forecast (investing excess liquidity, performing a particular hedge, etc.) or the so-called post-forecasting decision-making engine.

By combining technologies we can not only automate manual and repetitive tasks, but effectively integrate the systemic data with human expertise and algorithmic trends from historic data. Add to this the use of recommendation engines and intelligent insights, and the interplay of data inputs can generate enriched decision support. Apparent visualisations and scenario analyses can offer a clear view of actionable results that treasury and management can use in their decision process. Reliable technology that enables people to make high-caliber decisions; this, we believe, is the true power of digital.

 

 

About Cashforce        

Cashforce is a Cash Forecasting & Working Capital Analytics platform for corporates, focused on analytics, automation and integration. Cashforce connects the Treasury department with other finance / business departments by offering full transparency into its cash flow drivers, accurate & automated cash flow forecasting and treasury reporting. The platform is unique in its category because of the seamless integration with numerous ERPs & banking systems, the ability to drill down to transaction level details, and the intelligent AI-based simulation engine that enables multiple cash flow scenarios, forecasts & impact analysis.

 

Webinar: Trends for Treasury and Cash Management 2021

| 04-01-2021 | treasuryXL | Nomentia |

Treasury & Cash Management Trends 2021

A new year is just ahead of us. And what better way to start the year than to look at trends that will shape our business in the coming months.

Some of the trends derive from the global pandemic that is still showing its effect on the global economy and businesses around the world but other trends have been long brewing or just got further amplified.

Date, Time and Registration


Date: Thursday, January 14, 2021

Start: 13:00 CET / 14:00 EET

Duration: 45 minutes

Register: click here

Some of the topics Nomentia will cover

 

  • Centralization, in 2021 for real? A joint survey we did with GTNews showed that centralization is often stifled by internal roadblocks such as prioritizing the topic internally across functions.
  • This relates to the second trend for 2021, which is the role Treasury functions will take in bridging internal silos.
  • On top of this also payment fraud is a topic that has only further increased during the pandemic. Our survey shows that almost 50% of respondents consider fraud as a big challenge.
  • Lastly we will take a look at the death of monolithic platforms. In 2021 we will see the trend toward best-of-breed platforms continue.

Who should attend:

 

Cash Managers, Treasurers, and Finance leaders working in international companies who are interested in understanding the landscape they are operating in and want to stay up-to-date with developments.

Meet the speakers

jukka_round

Jukka Sallinen

Deputy CEO, Nomentia

Jukka is a cash management domain expert with a strong hands-on background from international and complex payment factory and SWIFT projects. Previously, Jukka has been working in various R&D roles, focusing on bank and ERP integrations and security topics.

 

 

 

David Kelin

David Kelin

Owner, DNA Treasury Ltd

David Kelin possesses invaluable commercial experience gained from over 35 years working in leading organizations in the areas of liquidity, treasury, and cash management. He has a keen interest in treasury technology and has written many articles on the topic. David owns and manages DNA Treasury Ltd where he provides advice to corporates and banks on treasury and liquidity. He has worked with 100’s of companies. He also runs a treasury training company which has developed courses and trained over 1,000 treasury professionals over the years.

 

About Nomentia

Nomentia is a Nordic powerhouse for global cash management. We believe in a world in which businesses can make the right decisions no matter how unpredictable the times are. Our SaaS-based platform offers solutions for cash forecasting and visibility, global payments with bank connectivity, reconciliation, in-house banking, guarantees, and FX dealing. We serve 2,300+ clients in over 100 countries processing more than 200 billion euros annually. Cash is king!

Top 5 most read articles at treasuryXL.com and LinkedIn of 2020

31-12-2020 | treasuryXL | Kendra Keydeniers

The last day of 2020 is here. The whole world experienced a ‘year not to forget’. I can imagine that when you popped the champagne last year you had other thoughts and plans in mind for 2020.

To make sure you don’t miss out on the pieces that made the most impact this year, we sifted through the data to uncover the articles our readers loved most in 2020 on our website and LinkedIn. (Treasury Topic ‘What is’ articles excluded).

Top 5 treasuryXL website articles of 2020

  1. Corporate Governance and Treasury | Embrace the Corporate Treasury Policy

    by Francois De Witte

  2. Top 5 most common pain points in Treasury

    by Michael Ringeling

  3. Corporates: Caveat IBOR!

    by Daniel Pluta, Enigma Consulting

  4. Exclusive interview with FX specialist Arnoud Doornbos about FX Risk Management

    by treasuryXL, Arnoud Doornbos

  5. How to simplify Procurement and Finance in the Supply Chain

    by Wim Kok

Top 5 treasuryXL LinkedIn posts of 2020

  1. Nomentia (former OpusCapita) makes Liquidity Management free for all customers!

    by Nomentia

  2. What is the difference between Treasury and Accounting?

    by TreasuryXL

  3. The missing part of a Treasury Job Description

    by Aastha Tomar

  4. An introduction to Forwards, Futures and Options Part 1

    by Aastha Tomar

  5. Partner Interview Series | The deeper dive with TIS (Treasury Intelligence Solutions)

    by treasuryXL, TIS

Within two weeks we will post a full recap of 2020 with an overview of the partners and treasury experts that have joined us, together with some interesting treasuryXL facts!

Thank you for being part of the treasuryXL community. Now it’s time to pop the champagne! Let 2021 begin…

 

Kendra Keydeniers

Director, Community & Partners treasuryXL

Pinpointing oil and gas sector Risks

14-12-2020 | treasuryXL | Refinitiv |

The oil and gas sector is under greater regulatory scrutiny, with record fines for financial crime-related violations. How is robust and thorough risk screening helping companies across the industry to pinpoint and protect against a range of potential risks?
  1. Screening and related due diligence tools are essential in the oil and gas sector for pinpointing and exposing potential risks early in the game.
  2. In the highly regulated upstream industry of exploration and drilling, risks include sanctions violations, bribery, corruption, and environmental crime.
  3. Refinitiv’s World-Check Risk Intelligence database comprises over four million structured records, enabling robust and accurate screening of both entities and individuals.

The oil and gas sector has been on the receiving end of some of the largest regulatory fines on record in recent years. Our Expert Talk, Drilling down: Oil and gas supply chain risk, written by Refinitiv’s Renata Galvao, takes a look at the sector and its unique challenges.

One of the highest profile was the US$853.2 million levied in 2018 against Brazilian state oil company, Petróleo Brasileiro SA, under the U.S. Foreign Corrupt Practices Act in the so-called Car Wash bribery scandal. While figures such as these are eye-wateringly high, the reputational fallout of any association with financial or environmental crime can be far more devastating. It is therefore imperative that organizations operating in the oil and gas sector take adequate measures to screen for, and mitigate, the wide range of risks to which they may be exposed within often vast, global supply chains.

Oil and gas sector risks

Organizations in the oil and gas sector — whether they are involved in upstream, midstream or downstream activities — face a range of risks and challenges. The highly regulated upstream industry — incorporating exploration and drilling — paid the largest share of all settlements for breaching Office of Foreign Assets Control sanctions in the period 2011-2019. Many oil-rich territories are situated in jurisdictions characterized by political uncertainty, and consequently organizations must contend with high levels of risk relating to bribery and corruption.  There is also exposure to a number of hidden risks, such as those related to terrorism financing and engagement with armed rebel groups.

The midstream industry — including transportation, storage and wholesale marketing — also faces a range of risks, including the financial, regulatory and reputational fallout associated with accidents such as spills, explosions, and leaks. Environmental regulations governing such issues are stringent, with penalties including both fines and imprisonment where criminal charges are brought against negligent individuals. Moreover, midstream organizations using sea transportation must be able to verify the beneficial ownership of all vessels used, as any links to criminal activity such as smuggling at sea, the illicit transportation of contraband and narcotics, or human trafficking must be identified.

The downstream industry — refining, processing, marketing and distribution — in turn is exposed to significant third-party risk from both the upstream and midstream industries. Oil theft is becoming a growing concern, and therefore understanding the source of crude and the legitimacy of the product are fundamental areas of focus for this sector. Downstream companies are also subject to growing environmental controls, with ever-more stringent national regulations monitoring and restricting the levels of pollution that refineries are allowed to emit.

Mitigating risk in global supply chains

Given this vast range of potential risks, screening and related due diligence are widely regarded as key tools to pinpoint and expose potential risk early in the game.

Refinitiv’s market-leading World-Check Risk Intelligence database can provide invaluable support to compliance teams by enabling them to conduct robust and accurate screening of both entities and individuals. World-Check One, our essential screening platform, further offers a range of specific opt-in tools, including:

  • Media Check to enable targeted searching for negative news and web articles, both current and historical, relating to individuals and entities.
  • UBO Check, which allows users to identify the ultimate beneficial owners of entities and then screen them against World-Check Risk Intelligence on a single platform.
  • Vessel Check, which reveals potential risk related to sanctioned or embargoed vessels and sea ports.

Additionally, where heightened risk is suspected, our Enhanced Due Diligence reports deliver targeted insights into potential business relationships, enabling companies to form a holistic view of potential risk before entering a new market or beginning a new relationship.

By investing in the right screening tools and technology, companies in the oil and gas sector can pinpoint, expose and mitigate risk in global supply chains, and in so doing protect themselves from the ever-growing threat of severe financial, regulatory and reputational fallout that has dogged the sector in the recent past.

 

Press Release: TIS among growth champions in Germany

| 08-12-2020 | TIS |

The cloud-based corporate payments expert establishes itself on the ranking by FOCUS-BUSINESS and Statista for the fourth time in a row.

Walldorf, December 8, 2020. FOCUS-BUSINESS has recently announced growth champions for the sixth time. For the fourth time in a row, TIS (Treasury Intelligence Solutions GmbH) was in the published ranking among the 500 fastest-growing German companies. Its above-average growth in turnover and staff and its innovative business model were important factors for the ranking.

As in previous years, Statista, the Hamburg-based statistics portal, selected a list of 12,000 German companies from all sectors with a particularly strong growth in sales or workforce in recent years. In April, there was a call for participants and on October 13, FOCUS-BUSINESS Growth Champions published the results. TIS ranking again among Germany’s top 500 fastest-growing companies shows that for mid-sized companies to large corporates, a streamlined and secure global payments strategy is becoming a must. From a technology standpoint, TIS’ cloud-based platform is the leading solution for corporate payments. Looking into the future, TIS will further accelerate its business growth in Europe and in the United States.

“With this year soon coming to an end, I must say that 2020 has been characterized by extraordinary challenges,” says Joerg Wiemer, co-founder and Chief Strategy Officer at TIS. “The concept of ‘Working from Home’ has highlighted the importance of digitalization. The current situation has made the decision makers in companies realize that cloud-based solutions are not only indispensable for business-critical processes such as payments, but the automation and standardization enabled by such solutions also boost efficiency and enhance security for these processes.”

About TIS

TIS (Treasury Intelligence Solutions GmbH), founded in Walldorf, Germany in 2010, is a global leader in managing corporate payments. The Financial Times named TIS as one of “Europe’s Fastest Growing Companies” for 2019 and 2020. Offered as Software-as-a-Service (SaaS), the TIS solution is a comprehensive, highly-scalable, cloud platform for company-wide payments and cash management. The TIS solution has been successfully used for many years in both large and medium-sized companies, including Adecco Group, Hugo Boss, Fresenius, Fugro, Lanxess, OSRAM and QIAGEN. More than 25% of DAX companies are already TIS customers.

www.tis.biz

 

 

Press Contact:

Treasury Intelligence Solutions GmbH

Liang Fang

Altrottstraße 31

69190 Walldorf

Germany

 

If you want to know more about TIS, visit www.tis.biz

Read the complete press release also here

 

 

How does the FATF help fight financial crime?

01-12-2020 | treasuryXL | Refinitiv |

The Financial Action Task Force (FATF) plays a crucial role in the global fight against crime, corruption and terrorism through its Mutual Evaluation assessment. How has the FATF evolved since its birth 31 years ago, and what role does it play in anti-money laundering (AML) and countering the financing of terrorism (CFT)?

  1. The FATF is an intergovernmental body that oversees global efforts to combat money laundering and the financing of terrorism.
  2. To become part of the FATF group, a country must undergo a ‘Mutual Peer Review’ to determine its levels of compliance with FATF’s Recommendations.
  3. The FATF’s methodology change, introducing the Effectiveness Assessment, is yielding more accurate results of a jurisdiction’s levels of compliance with its AML/CFT global standard.

The FATF is an inter-governmental body that was established in 1989 by the G7 nations to combat money laundering. For the first 12 years, of its existence it was a little-known organization. However, it came to prominence after 9/11 when its mandate was expanded to include additional Recommendations to combat the financing of terrorism and the financing of the proliferation of weapons of mass destruction. Since then, the FATF mandate and Recommendations have been endorsed by different UN resolutions, and it has been transformed to adapt to different emerging threats. In 2008, after the global financial crisis, FATF’s role as an international standard policy-making body in AML and CFT was expanded by the G20. It was given the ‘soft power’ to generate the necessary political will to bring about legislative and regulatory reforms in countries.

The FATF Mutual Peer Review

Countries wishing to become members of the FATF group must commit to a ‘Mutual Peer Review’ system. This will determine the country’s levels of deployment and compliance with the FATF Recommendations, which have been set as the international AML/CFT standard. The FATF oversees these reviews in conjunction with different international members and observers such as the IMF, the World Bank, the OECD, and the European Commission.                                                                                       
In addition to the information received from the assessment team performing the review, the FATF Mutual Evaluation’s Effectiveness Assessment also considers information from the FATF team that visits the country being evaluated. The Mutual Evaluation team comprises highly trained experts drawn from FATF member countries and international bodies.

 

Recommendations focus on effectiveness

Until 2013, the results of the FATF review were largely focused on the technical implementation of the Recommendations into the local legislations. However, because of the high levels of money laundering (ML) and financing of terrorism (FT) globally, the FATF decided to enhance its methodology to focus more on effectiveness rather than just technical compliance. This revised methodology helped to produce the expected tangible results in the fight against AML/CFT. It shed light on many countries that had previously been evaluated, but who under the new methodology began to show serious weaknesses in the fight against ML and FT. This resulted in the number of countries and jurisdictions on the FATF Grey List — those who were placed under increased monitoring — to start growing.

The FATF Mutual Evaluation employs peer pressure from other countries, as well as bodies such as the IMF and the World Bank, which impels the assessed countries to act. Negative mutual evaluation outcomes not only seriously damage the reputation of the assessed countries and embarrass its governments, but might also generate replicated systemic risks of coercion by other international institutions such as the European Commission. And the new methodology is working. In recent years, the Effectiveness Assessment is yielding more accurate results of a jurisdiction’s levels of compliance with FATF’s AML/CFT global standard. Many jurisdictions are now finally realizing the coercive power of the Mutual Assessment.

New evaluation methodology

The fourth round of Mutual Evaluations from FATF continued the shift towards concentrating on how effectively regulations are deployed rather than mainly focusing on technical compliance and whether country laws and regulations are in place in accordance with the FATF Recommendations.

This can be very challenging for a number of countries in many sectors, including some that have previously been assessed to be complying with the standards before the introduction of this new evaluation methodology.

The pressure to ensure that legislation was changed and that industry sectors complied with the Recommendations was achieved by targeting the industry sectors that posed the highest AML/CFT risk. At least this was the case in the Middle East and Africa. The early years concentrated on the banking and financial sectors, including the capital markets. This focus was later broadened to non-banking remittances and payments organizations and money exchanges. This was followed by the insurance sector and so on.

Non-financial sectors under the spotlight

The last few years has seen Mutual Evaluation reports focus on the designated non-financial business and professions (DNFBPs) sectors — real estate, lawyers, accountants, gold and precious stone dealers, for example — that had been previously overlooked area by past evaluations. For example, the EU Fifth Anti-Money Laundering Directive, which came into effect in January 2020, further strengthened its AML/CFT legislation to fall in line with the FATF, when it included a number of new sectors.

The non-financial sector often has the misconception that AML/CFT regulations are solely for the banking and financial sectors. A key shortcoming identified by FATF across many jurisdictions in emerging markets is that DNFBPs are falling short of FATF expectations. Recent evaluation reports from several countries show that DNFBPs have less comprehensive, and sometimes limited or no understanding, of AML/CFT regulations and the risks that they are facing.

However, the new approach of measuring effectiveness rather than technical compliance might keep many countries’ institutions and companies to consider: “Are our sanctions and transactions screening just a checklist process, or do they show the real effectiveness of our AML/CFT risk process as defined by FATF?”

Nomentia Webinar: Building the Bridge Between Treasury & Finance: Communication, Collaboration, Technology

| 18-11-2020 | treasuryXL | OpusCapita |

Finance & Treasury leaders are being challenged to become more engaged in driving results across the enterprise. This requires alignment across the Office of the CFO before these leaders can have success in impacting performance in HR, Operations, Marketing and Sales. How can treasury & finance leaders identify and mitigate barriers to effective communication and collaboration to maximize the value delivered by the Office of the CFO?

Join us to discover how to earn trust within and across departmental lines, and up and down the org chart at your company.

We will empower you to:

? Identify the skills you possess and/or need to develop to build deeper mutually beneficial relationships within and across departmental lines.

?Leverage technology to communicate with impact in any business environment.

?Raise your IQ relative to how and why treasury & finance work at your company.

?Define opportunities to impact the performance of your colleagues in treasury & finance at your company.

REGISTER NOW

About Nomentia

Nomentia is a Nordic powerhouse for global cash management. We believe in a world in which businesses can make the right decisions no matter how unpredictable the times are. Our SaaS-based platform offers solutions for cash forecasting and visibility, global payments with bank connectivity, reconciliation, in-house banking, guarantees, and FX dealing. We serve 2,300+ clients in over 100 countries processing more than 200 billion euros annually. Cash is king!

Treasury Delta’s corporate treasury RFP platform: How does it work and why collaborate?

| 18-11-2020 | treasuryXL | Treasury Delta | Having a hard time dealing with complex and time-consuming RFP processes?

Read more

Partner Interview SpendLab | Leaders in Spend Justification

17-11-2020 | treasuryXL | SpendLab |

SpendLab Recovery generates liquidity for clients by using their Accounts Payable Recovery Analyzer (APRA). APRA is a technology platform that combines over 400 algorithms, Big Data, AI, and machine learning, and audits all the raw Accounts Payable data in any ERP system to identify anomalies. Several examples of anomalies include but are not limited to: undue payments, double invoices, overpayments, and overpaid VAT. Over the past years, SpendLab has analysed over 321 million invoices and has recovered more than €200 million EUR for its clients.

We asked the company 10 questions, let’s go!

INTERVIEW

1. Can you tell something about SpendLab Recovery?

SpendLab is the Dutch market leader in spend justification and has grown significantly during the past years. The organization is a former spin-off of the Dutch government with a 98 year old heritage in procurement. SpendLab is specialized in generating liquidity for clients by analyzing- and identifying anomalies in raw Accounts Payable data. Besides the generation of liquidity as part of Treasury, we provide compliance reports that are used by our clients to achieve compliance objectives.

2. What was the main reason to start SpendLab Recovery?

During our analyses back in the day we identified that a significant number of invoices and payments were processed incorrectly in Accounts Payable departments of organizations. As a result of these incorrect processes, liquidity could be recovered over multiple historical years.

During the years we significantly invested in our technology in order to provide our clients with a value proposition that is comprehensible, covering all aspects of an Accounts Payable recovery audit. Despite the approval of financial years by Auditors and Accountants, we are able to recover liquidity from the Accounts Payable for our clients. Nowadays we provide liquidity, a 100% analysis of the administrative Accounts Payable processes, and compliance -and risk reports that can be used for compliance purposes.

3. What is, in your perception, the core issue that SpendLab Recovery solves?

Administrative departments within organizations consistently encompass irregularities that lead to the loss of liquidity, despite the level of automation that is adopted. There will always be a continuous flow of business operations inside an organization, and if there are any checks in place, then these checks are mostly reactive and are used as an add-on for a team or employee. SpendLab specifically focuses on the Accounts Payable and is able to identify any irregularity within the raw AP data. Thereupon, we recover rightful liquidity for clients that they can use for value-adding activities.

4. What are the biggest advantages of using SpendLab Recovery?

From our own perspective the generation of liquidity from the Accounts Payable of financial years that were audited and ‘’closed’’ is a great advantage for our clients. Specifically, we are remunerated for the amount of liquidity that we recover.

In terms of Procurement, the Procurement department is usually in the lead during the contracting phase. However, after this phase a lack of insights and active control exist in how suppliers perform in processing invoices. Through our approach and the methods that we use, you could say that we are educating the suppliers of our clients in processing invoices correctly. Besides, it creates awareness that our clients are performing Accounts Payable Recovery Audits on a structural basis.

5. How does the customer project phase looks like from start till actual results?

Our recovery analysis consists of six project phases and requires approximately four months to conduct. The first results will be visible after only eight weeks. Below the project planning can be found.

6. How fast can customers experience the impact of SpendLab Recovery after implementation?

The average lead time of a recovery project is four months. The first payments from suppliers, however, will be collected after just two months. SpendLab is only charged based on the payments that are received, on the basis of no cure no pay.

7. What is the biggest challenge you ever experienced with SpendLab Recovery?

In the very beginning of Account Payable recovery audits, research was done based on spreadsheets. In the past five years we have invested significantly in our IT-platform APRA®. Nowadays, we have a team of more than twenty employees in the Technology department that are continuously developing software for Recovery. The transformation from manual research to automated research in combination with Machine Learning and Artificial intelligence has been the biggest challenge within SpendLab, and could not have been possible without the team and the investments that had to be made.

It has been a challenging choice to completely focus on IT development. However, this choice has enormously helped our organization in optimizing our service, identifying anomalies in Accounts Payable data, and remaining thought leader in the field of Accounts Payable recovery.

8. What have been the latest successes around product development?

Remote and safe access to ERP systems. Whereas our Data Collections team used to literally fly all around the world to align data requirements and to safely collect the raw data of the Accounts Payable that we need for our recovery audit, we can now align and safely collect (ISO:27001; ISO:9001 certified) the data remotely with and from our clients. SpendLab is now able to conduct a complete Accounts Payable recovery audit on a remote and digital basis. Since March 2020, COVID-19 has only accelerated this level of digitization and the service that we provide for our clients.

Moreover, as an organization we have completely changed our way of working. We now work from our platform on a digital and remote basis. Just like every success, this could not have been achieved without challenges.

9. Can you give us an outlook on the product developments and tell us a bit more about your vision?

We have gone from subsequent recovery analyses over five financial years to periodical visualizations. Together with our clients we have developed a complete recovery service, which we can utilize several times a year over the current financial year. Instead of conducting subsequent recovery audits, we are now aiming to provide our clients with a subscription agreement in which some of our clients even take care of the recovery themselves.

Despite that organizations keep optimizing their internal -and external processes, there will always be errors in processes. Based on the collaboration with and input from our clients, we have invested in optimizing our compliance -and risk reports. We can now offer the visualization of these reports in Power BI, which allows our clients to have live and real-time insights in the Accounts Payable.

10. The world is always changing, how does SpendLab Recovery stays one step ahead of its competitors?

SpendLab has always chosen to conduct Accounts Payable recovery audits only, and we are now an absolute leader in spend justification. This leadership role allows us to partner up with top leading international organizations and to discuss the current and future capabilities that they require from our recovery service. By commencing structural dialogues with leading organizations and system suppliers we challenge tomorrow’s needs in Accounts Payable solutions.

 

Interested in a free SpendLab Recovery demo and see how your company can benefit?

Contact us!

 

Identity fraud, COVID-19 and the Pivotal role of Digital Identity

16-11-2020 | treasuryXL | Refinitiv |

Financial crime, including identity fraud, is growing as sophisticated criminals exploit the ever-expanding capabilities of emerging technology. The COVID-19 crisis has only served to increase opportunities for criminals to benefit from fear, uncertainty and desperation, but digital identity solutions offer banks and financial institutions (FIs) a chance to fight back.


Financial crime and identity fraud: fueled by the digital revolution

As digital connectivity continues to redefine every aspect of our lives, quick, seamless digital experiences have come to embody our new normal. This digital revolution is being driven by a host of interconnected factors, including a changing regulatory landscape and emerging technology that creates an environment with low barriers to entry. Other factors are also at play, including ever-increasing connectivity between entities, increased cross-border activity, and tech-savvy consumers who demand choice, fairness, flexibility, and an omnichannel experience across all areas of their lives. Consumers accustomed to digital retail experiences expect the same 24/7/365 digital experience in other areas of their lives, such as banking and wealth management. Moreover, they increasingly expect tailored, highly personalized experiences.

The result of enhanced connectivity, convenience and increased consumer engagement is a real need to protect against highly sophisticated financial criminals who are harnessing the same digital capabilities to defraud both organizations and individuals. Put simply, the technological advancements that make our lives easier can also benefit criminals, making it easier for them to commit financial crime. According to the World Economic Forum, fraud and financial crime constitute a trillion-dollar industry, and private companies spent approximately US$8.2 billion on anti-money laundering (AML) controls alone in 2017.

Refinitiv’s own research, presented in our 2019 report, Innovation and the fight against financial crime, confirms that financial crime is indeed pervasive and costly. Our findings were collated from a survey of more than 3000 managers with compliance-related responsibilities at large global organizations. We found that nearly three-quarters (72%) of respondents were aware of financial crime taking place in their global operations during the 12 months preceding the survey, even though the same companies spent an average of 4% of turnover on customer and third-party due diligence checks. Looking specifically at identity fraud, the Federal Bureau of Investigation (FBI) has revealed that synthetic identity fraud – where criminals manufacture a new identity using both legitimate and false information – is the fastest growing crime in the U.S.2

COVID-19 has upped the ant

Following the rapid spread of the epidemic , financial crime has accelerated as criminals have found new opportunities to exploit fear, uncertainty and desperation. The FBI provides various innovative examples relating to how criminals are using COVID-19 to defraud individuals, including government impersonators who aim to extract personal information for illegal purposes. And work-from-home fraud, in which victims are asked to send or move money, effectively becoming money mules and enabling criminals.

Forward-thinking banks and FIs are already beginning to accelerate their existing digital transformation programs to mitigate the higher levels of risk anticipated during and after the pandemic. In particular, we expect a significant uptick in the use of digital onboarding and digital identity solutions as more consumers are forced to transact online as a result of lockdown and social distancing requirements; choose to do so for fear of contracting or spreading the virus; and/or are seeking better security when asked to prove their identity.

Even before the pandemic, many firms were increasingly using digital innovation to fight financial crime, including digital identity solutions in the client identification space. Digital identity solutions offer fast, reliable digital identity verification and screening; transcend geographies; boost operational efficiency; and remove the human error factor. Moreover, digital identity helps financial institutions optimize compliance models, improve risk mitigation and protect customers from identity fraud. As the world grapples with the effects of the pandemic, banks and FIs have a real and immediate opportunity to review their systems and controls, while simultaneously accelerating digital transformation and moving away from old-school manual Know Your Customer (KYC) processes.

The far-reaching effects of identity theft

Organizations across the financial services industry are facing a range of common challenges, including rising competition, tightening margins, strict regulatory expectations, the need for greater operational efficiency, and pressure to reduce costs. There is the added fundamental requirement to ensure that the client experience is positive. Customer abandonment levels remain unacceptably high, with over half (56%) of consumers in the UK abandoning bank applications in 2018. Our research suggests that traditional KYC and due diligence processes – which can be time-consuming, inefficient and costly – have contributed to this.

While firms are increasingly aware of the need to ensure better experiences for clients, they also need to consider the ever-growing security threats such as large-scale data breaches, phishing and social engineering attacks. These crimes have made it easier for fraudsters to assume the identities of legitimate account owners via account takeover fraud. The impact of identity fraud is far-reaching, with victims experiencing both financial and psychological damage that can severely impact their behavior and future brand loyalty.

There is therefore an urgent need for banks and FIs to prioritize customer identity protection alongside the accepted need to ensure a positive experience. Many banks and FIs are not moving fast enough to address this issue – and need to become more aware of the wider social risks of identity fraud.

On a more positive note, a highly encouraging finding from our survey was that technology, including digital identity solutions, is increasingly able to help organizations fight back against financial crime while improving client relationships. A significant 94% of survey respondents agreed that the technology they use to detect financial crime is also enhancing customer engagement.

Digital identity: who can benefit?

Digital identity solutions continue to grow in popularity and offer numerous benefits to different industry participants, including retail banks and wealth managers.

Retail Banking

Retail banks, for example, can benefit from enhanced speed, efficiency and security when using digital onboarding and digital identity solutions during customer account opening, where it is necessary to verify and prove the identity of new customers who apply for new bank products and services. Digital identity is also invaluable for customer re-verification and authentication in instances where existing customers seek to make changes to their personal information.

Wealth management

Turning specifically to the wealth industry, the benefits are equally clear. The wealth arena is operating against a backdrop of unprecedented uncertainty as wealth transfer from baby boomers to millennials brings far-reaching changes to business models, in line with the expectation that a new generation requires new strategies and alternative data.

We commissioned research from global research and advisory firm Aite Group, which collated the findings from executive interviews with leading wealth management firms around the globe. The research found that 100% of respondents consider wealth transfer to be one of their top-three concerns. This report also revealed that financial advisors are becoming less product-focused and more relationship-oriented. As the wealth industry continues to shift away from products and towards services, the role of financial planning is taking center stage in the client/advisor relationship. Advisors are increasingly shifting focus from administrative duties and investment selection to client service. Digital identities can enable the shift of work from financial advisor to less expensive parts of the value chain, enabling them to concentrate on areas of added value.

A strong belief in technology

Our research shows that firms overwhelmingly believe in the power of technology in the fight against corruption: 97% of all respondents in our innovation survey said that technology can significantly help with financial crime prevention. There are of course still challenges in adopting digital solutions – nearly three-quarters (73%) reported concerns or obstacles when harnessing technological advancements to reduce risks and costs.

Respondents revealed that only about half (51%) of the data and legal documentation needed to carry out due diligence is obtained, but creating more difficulties, only 54% of this is in a digitized format. While remedies will take time, the digitization outlook is positive with 60% of organizations prioritizing automation and digitization for investment. Respondents indicated that spending on customer and third-party due diligence checks was expected to increase by 51% in the year following the survey, with technology being the biggest investment area. This data was gathered prior to the onset of COVID-19 and is expected to accelerate further as a result.

Digital identity solutions deliver diverse benefits

Digital identity solutions tick many boxes, including:

  • Faster turnaround times. Using digital identity accelerates the pace of business, benefits all stakeholders, and means that banks and FIs can onboard and service more customers, more efficiently.
  • Improved accuracy. Human error is unavoidable in manual identity procedures, but digital equivalents reduce manual keying errors, ultimately leading to better compliance.
  • Better security. Old school security features, including passwords and knowledge-based authentication (KBA), not only cause high levels of frustration among clients, but are also often unsecure.
  • More streamlined operational costs. Digital identity solutions boost efficiency levels, leading to more optimal deployment of resources and cost savings.
  • A more favorable customer experience. Faster turnaround times, fewer touch points and a seamless digital experience all contribute to higher levels of customer satisfaction.

Refinitiv’s digital identification and verification solution, Qual-ID delivers in each of these areas. Built specifically for FIs, Qual-ID enables secure, digital identity verification and screening to boost compliance team efficiency. The solution focuses exclusively on consumer identity. Qual-ID helps with identity verification, document verification, enables anti-impersonation checks to be performed in a variety of robust yet consumer friendly ways.Qual-ID also leverages our market-leading World-Check Risk Intelligence Database to enable screening for financial crime risk within the same solution.

World-Check delivers accurate and reliable information compiled by hundreds of specialist researchers and analysts across the globe, adhering to the most stringent research guidelines as they collate information from reliable and reputable sources, including watch lists, government records and media searches. Incorporating World-Check capabilities into Qual-ID means that customers can verify identity against trusted sources, proof legal documents and screen for regulatory and financial risk – all in one transaction, via one API.
This unique combination of elements delivers a holistic digital identity and screening solution that assists our clients to comply with their legal and regulatory requirements at the time of onboarding.

Technology’s significant and tangible impact

Only 53% of respondents in our innovation survey confirmed that they conduct KYC checks on client identity during onboarding but worse still, only 46% of these checks are considered successful. While these figures are alarmingly low, our research did reveal that those organizations that use technology are almost twice as successful at performing KYC checks on client identity (47%) as their counterparts who don’t use technology (28%). These findings are a clear indication of the significant, tangible impact that the right technology can have in the client identity space, and ultimately in thwarting financial crime.

What is certain is that the digital transformation will continue to gather momentum – digital commerce is expected to grow globally at more than a 20% CAGR by 2022, reaching nearly US5.8 trillion in value. Alongside this growth, another certainty is that sophisticated criminals will continue to exploit emerging technology to advance their illicit activity, both now and after the COVID-19 pandemic. Forward-thinking banks and FIs must therefore harness the power of the best available technology and solutions to prevent financial crime and protect their customers – and digital identity solutions offer an immediate opportunity for success in this critical area.