Savings and investment banks have a lot of potential for improvement in the onboarding process for customers

24-11-2020 | treasuryXL | Enigma Consulting |

(Dutch Item)

Hoe digitaal en gebruiksvriendelijk verloopt het proces om klant te worden bij spaar- en beleggingsbanken? En wat kunnen zij opsteken van banken die een betaalrekening aanbieden? In een nieuw onderzoek van Enigma Consulting komt naar voren dat spaar- en beleggingsbanken hun onboardingsproces naar een hoger niveau kunnen brengen door te leren van de klantreis van banken die reguliere betaalrekeningen aanbieden. Wat vooral opvalt is dat de onboarding bij spaar- en beleggingsbanken nog hoofdzakelijk via de website verloopt, terwijl betaalbanken de onboarding via de app aanbieden en overduidelijk meer inzetten op innovatieve oplossingen. Een bijdrage van Marc Groot, Managing Consultant bij Enigma Consulting en expert binnen het onboardingsdomein.

Als expert in het klantonboardingsdomein publiceerde Enigma Consulting in juni 2020 een artikel over de onboardingsprocessen van de belangrijkste ‘betaalbanken’ in Nederland. Dit onderzoek heeft een vervolg gekregen, waarin naar de onboarding van spaar- en beleggingsbanken is gekeken, die worden aangeduid als ‘niet-betaalbanken’. Banken die  – onder andere – een betaalrekening aanbieden, noemen we betaalbanken.

Wanneer onboarding niet via de app mogelijk was, is de onboarding uitgevoerd via de website op de smartphone. Het onboardingsproces is per bank doorlopen en beoordeeld aan de hand van verschillende criteria. De onderzoekers hebben zich in het onderzoek geconcentreerd op de klantervaring, waarbij niet achter de schermen is gekeken bij de onderzochte banken. De klantreis is beoordeeld op basis van drie categorieën:

  • Innovatie: door handig gebruik te maken van innovatieve technieken, zoals een selfiefilm en de NFC-chip voor het uitlezen van legitimaties, kunnen gebruiksvriendelijkheid en fraudepreventie bij elkaar gebracht en versterkt worden.
  • Gebruiksvriendelijkheid: het gemak waarmee de klant het proces doorloopt, de doorlooptijd, de begeleiding van de klant door het proces en de aanwezigheid van technische barrières.
  • Veiligheid en fraudepreventie: alle banken hebben de verantwoordelijkheid om fraude te voorkomen en de klant correct te identificeren. De banken zijn beoordeeld op basis van hoe de klant wordt geïdentificeerd,  klantidentificatie- en verificatiemethoden en in hoeverre deze  aan de voorkant voldoen aan de geldende wet- en regelgeving.

De volgende afbeelding geeft weer welke spaar- en beleggingsbanken zijn meegenomen in het onderzoek en welke het beste zijn beoordeeld per categorie.

Niet-betaalbanken weinig innovatief

Allereerst is gekeken in hoeverre niet-betaalbanken innovaties gebruiken in het onboardingsproces en hoe dit zich verhoudt tot betaalbanken. Bij de identificatie van een klant gaat de bank af op de door de klant verstrekte gegevens. Een voorbeeld is een kopie of scan van het paspoort. Vervolgens verifieert de bank de identiteit door vast te stellen of de opgegeven identiteit overeenkomt met de werkelijke identiteit, bijvoorbeeld door een selfie-foto. Innovaties in het onboardingsproces zijn onder meer vernieuwende klantidentificatie- en verificatiemethoden en het uitlezen van de legitimatie via een foto in de app of via een NFC-chip.

Bij de niet-betaalbanken bieden alleen beleggersbanken DeGiro en Semmie de mogelijkheid aan om via een foto het legitimatiebewijs te delen met de bank. Bij de overige niet-betaalbanken dient de klant een scan van het legitimatiebewijs te maken en deze vervolgens te uploaden of te mailen. Daarbij moet de klant de persoonlijke gegevens handmatig invoeren op de website. Dit leidt tot een langer proces en kan leiden tot incorrecte invoer van de klant. Verder bieden de niet-betaalbanken geen van alle een selfie-foto, selfie-film of stemopname aan als middel voor klantverificatie.

Daarentegen gebruikt een meerderheid van de betaalbanken wel innovatieve identificatie- en verificatiemethoden. Vijf betaalbanken laten hun nieuwe klant een selfie-foto maken, drie kiezen voor een selfie-film en twee voor een stemopname. Verder worden bij vier betaalbanken de persoonsgegevens automatisch overgenomen in de app door middel van een scan van het legitimatiebewijs of door het uitlezen van de NFC-chip van het paspoort.

Onboarding via app bij niet-betaalbanken nog in kinderschoenen

Kijkend naar gebruiksvriendelijkheid is het bij vrijwel geen enkele niet-betaalbank mogelijk om de volledige onboarding te verrichten via de app. Dit kan alleen bij vermogensbeheerder Semmie. Deze jonge fintech-onderneming maakt in alle categorieën een goede indruk. Bij de overige gevallen gaat de klant grotendeels door het proces via de website. De klant vult de persoonlijke gegevens handmatig in via een webformulier. Bovendien heeft een deel van de niet-betaalbanken überhaupt geen app waarin zij hun diensten aanbieden.

Bij de niet-betaalbanken onderscheiden BinckBank, DeGiro, Lloyds Bank en Semmie zich positief qua doorlooptijd. De klant weet binnen een uur wat het spaarrekeningnummer is. Bij Semmie moet aangetekend worden dat het rekeningnummer nog niet direct actief is na de onboarding, vanwege de afhankelijkheid van de acceptatie door hun depotbank.  Bij de andere spaar- en beleggingsbanken varieert deze doorlooptijd van binnen een dag tot binnen een week.

Uit het onderzoek komt naar voren dat banken waarbij de onboarding via de app verloopt beter scoren op gebruiksvriendelijkheid en innovatie. Het grote voordeel van mobiele apps in vergelijking met mobiele websites is de betere klantervaring. Mobiele apps zijn geoptimaliseerd voor een grote hoeveelheid aan smartphones en schermresoluties, apps werken sneller dan websites en apps kunnen gebruikmaken van apparaat-eigenschappen, zoals camera of GPS. Bij onboarding via een website zijn deze apparaat-eigenschappen niet mogelijk.

Een belangrijk element van een goede gebruikerservaring is dat de klant zo snel mogelijk gebruik kan maken van de rekening en diensten. Bij een aantal betaalbanken is de rekening binnen een uur al actief en kan de klant transacties uitvoeren. Om dit te realiseren is een gedigitaliseerde klantreis noodzakelijk. Bij de meeste betaalbanken is het mogelijk de onboarding volledig te doorlopen via de app. Duidelijk is dat bij de niet-betaalbanken een flinke stap valt te maken in het aanbieden van de onboarding en dienstverlening via een app.

Veiligheid kan gebruikersgemak verlagen, innovatie is de oplossing

De derde categorie is ‘veiligheid en fraudepreventie’. Voor banken is het van groot belang dat zij op de hoogte zijn van de laatste wet- en regelgeving en de processen volledig compliant zijn in relatie tot KYC en AML.

Zowel betaalbanken als niet-betaalbanken gebruiken de identificatiestorting regelmatig. Bij niet-betaalbanken is het primaire doel van de identificatiestorting het moeten verifiëren van een vaste tegenrekening. Bij betaalbanken gaat het om afgeleide identificatie van de klant.

Bij de niet-betaalbanken komt de identificatiestorting acht keer terug. BinckBank, DeGiro  en Semmie maken het mogelijk om via iDEAL te betalen, terwijl de overige niet-betaalbanken nog steeds een handmatige overboeking hanteren. Deze handmatige overboeking is tijdrovend en gaat buiten de directe flow van de klantreis om. iDEAL is de oplossing hiervoor.

De betaalbanken hebben iDEAL nagenoeg standaard opgenomen in de klantreis. Bij zes betaalbanken die de identificatiestorting gebruiken, kan de klant bij vijf de storting uitvoeren via iDEAL en bij één gaat dit via een handmatige overboeking.

Innovatie en app zetten betaalbanken op grote voorsprong

Uit het onderzoek kunnen een aantal conclusies getrokken worden. Ten eerste lopen niet-betaalbanken ver achter op betaalbanken op het gebied van innovatieve  klantidentificatie- en verificatiemethodes. Ten tweede bieden niet-betaalbanken het onboardingsproces hoofdzakelijk aan via de website, terwijl de onboarding bij betaalbanken verloopt via de app.

Kortom, spaar- en beleggingsbanken hebben veel verbeterpotentieel als het gaat om klantervaring en digitalisering van het onboardingsproces. Tegenwoordig voeren steeds meer bedrijven een ‘app first-strategie’ waarbij alle diensten, en dus ook onboarding, via de app verlopen om zodoende een vlekkeloze mobiele online ervaring te kunnen bieden. We zijn immers tegenwoordig meer online via onze smartphones dan via andere apparaten.

Innovatie en gebruikersgemak zijn op een positieve wijze nauw met elkaar verbonden. Door gebruik te maken van innovaties, wordt de veiligheid van het proces bevorderd zonder dat dit ten koste gaat van de gebruiksvriendelijkheid.

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?

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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.

treasuryXL announces collaboration with Treasury Delta

| 5-11-2020 | treasuryXL | Treasury Delta | VENLO, The Netherlands, November 5, 2020 – treasuryXL, the community platform for everyone who is active in the world of treasury, and Treasury Delta, an Irish FinTech company, which has brought to market an innovative platform that uses digital technology to connect companies, banks and treasury management […]

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Corporates: Caveat IBOR!

03-11-2020 | treasuryXL | Enigma Consulting |

Many of the world’s leading benchmark base rates are about to change; this could impact your business in unexpected ways.

Since Roman times, the phrase ‘caveat emptor’ – let the buyer beware – has been used in agreements as a warning that a lack of due diligence could come back to bite you. For today’s corporate treasurer it might instead be more relevant to use (with apologies to the linguists out there) ‘caveat IBOR’.

For the past 40 years, IBOR has been the benchmark used to determine the interest rates applied to a myriad of financial products. All this is about to change: starting on 31st December 2021 many of these rates will cease to exist and be replaced by ‘Risk-Free-Rates’ (RFRs).

The potential impact of these changes is often seriously underestimated. Corporate companies need to prepare today to be ready for banks wanting to discuss changes to existing contracts in the coming months.

 

The 4 to 6 months ahead of us are arguably the most critical period in the transition away from LIBOR. The time to act is now.
 – FCA July 2020

 

Why should I care about the IBOR transition?

It is highly likely that your organisation will be affected by the IBOR transition. Most corporate organisations underestimate the impact, thinking that the ‘only’ thing that will change is a base rate and its calculation method. Before you join their ranks, take some time to reflect on the following:

  • The IBOR will cease to exist, starting on the 31st December 2021 and be replaced by Risk-Free-Rates (RFRs) with a different basis for calculation
  • These changes will impact financial (e.g. bond, (intercompany) loan, (multi-currency) credit facility) contracts as well as commercial contracts with an IBOR related ‘late payment clause’
  • This in turn will impact processes in the Treasury functions, with knock-on effects to supporting departments, Legal, IT systems, accounting, and tax reporting to name just a few
  • IBOR transition is progressing at a different pace across jurisdictions and financial products (e.g. loans, bonds, and derivatives), adding to the complexity of managing the transition

In the coming months you are going to be approached by your bank(s) to discuss changes to contracts maturing after 2021. To be prepared for these discussions, it is essential that you have a solid idea of what the repercussions of these changes will be on your organisation.

From IBOR to RFRs: a brief history

For the past 4 decades, IBOR (interbank offered rates, including LIBOR and EURIBOR) have been the benchmark for lending, hedge contracts, current accounts, valuation models etc. The (L)IBOR is calculated by processing hypothetical borrowing transactions that are submitted by a few ‘panel’ banks.
In 2012, the LIBOR scandal came to light: it was discovered that since 2008, panel banks had been colluding to illegally manipulate the rates. This set in motion that regulators, central banks, and market participants started a search for a safer alternative to the LIBOR. In 2017, the Financial Conduct Authority (FCA) announced that it would not compel or persuade panel banks to make LIBOR submissions after December 31st, 2021.

As a direct result, LIBOR term rates (1m, 3m, 6m, 12m) for USD, GBP, CHF, JPY, EUR will cease to be published as per December 31st, 2021. Other benchmarks such as EONIA and EURIBOR are similarly subject to an interest rate benchmark reform and it was decided to also discontinue the submission of EONIA after December 31st, 2021. Additionally, other benchmarks, such as JIBAR (ZAR), SIBOR (SGD), SOR (SGD) and Euroyen TIBOR (JPY) are undergoing comparable reforms[1]. See the sidebar (at the bottom of this article) for additional IBOR related details.

To minimise the possibility of fraud in future, global working groups have defined a new reference rate and calculation system. As a result, IBOR will be replaced by secured or unsecured transaction-based alternative Risk-Free Rates (RFRs) by the end of 2021. These new interest rate benchmarks are determined on the basis of transactions[2] and are therefore significantly more robust and resistant to manipulation.

Covid-19 will not buy you any time

After the worldwide outbreak of the Covid-19 virus, the world has changed rapidly. Uncertain times have arrived with a looming global economic recession. While many expected the pandemic to postpone the deadline, this does not to appear to be borne out by reality.

UK regulators have indeed postponed the deadline for the cessation of new issuances of GBP LIBOR-referencing loan products maturing after 2021 to the end of Q1 2021, instead of Q3 2020[3]. However, it is widely expected that the deadline for migrating existing LIBOR related contracts to alternative risk-free benchmarks will remain unchanged. Indeed, the FCA even emphasised in July 2020 that the LIBOR deadline is not going to change and that “The time to act is now.”

ISDA agreements and IBOR transition

On October 23, 2020 ISDA (International Swaps and Derivatives Association) finalised the protocols and other documentation by which outstanding derivatives contracts which reference LIBOR can be transformed in order to work with the new RFRs[4]. The FCA has repeatedly urged market participants from all sectors – sell side, buy side, non-financial, to ensure they are ready for the end of LIBOR by adhering to the protocol that ISDA is producing[5].

How will the IBOR transition impact you?

At a basic level, your corporate organisation’s existing IBOR-based interest rates will be replaced by new RFR-based rates. As these depend on a different underlying valuation methodology, any place in the organisation that currently relies on or makes use of an IBOR-based rate could potentially be impacted:

  • Corporates have a variety of products with financial contracts that refer to an IBOR related benchmark. These can be bond agreements, loan agreements, cash pooling agreements, (multi-currency) credit facility agreements, derivatives, intercompany loan agreements and many other instruments. In particular, larger organisations active across multiple regions in the world with more complex non-Euro instruments will be impacted
  • Commercial contracts with e.g. ‘late payment clauses’ with charges involving an IBOR related benchmark will also be impacted
  • Processes and other aspects related to these agreements and contracts across the Treasury functions (such as Corporate Finance, Risk Management and Cash Management & Working Capital) will need to be reviewed, and changed if impacted: Legal, IT systems and interfaces, reporting, accounting (e.g. hedge-accounting), Tax, policies, procedures, valuation models will all require attention
  • Interim milestones intended to smoothen the IBOR transition will lead to a cessation of the issuance of new LIBOR referenced products maturing after 2021. (For example, this will be the case for GBP LIBOR referenced bonds, loans, and derivatives; from Q2 2021, new GBP denominated issuances for these products will already refer to the alternative RFR.)
  • An additional complication is that the IBOR transition is progressing in different stages across different jurisdictions and different financial products
  • And, quite simply, there are many aspects that are as yet unknown, amongst which:
    • what the impact of applying hedge accounting to IBOR referenced instruments will be
    • whether and when alternative reference rate term structures will be available and for which products
    • how compounding daily rates over time will be handled in the absence of a term structure for cash management purposes
    • whether fallback language will be available
    • how liquid the market for (L)IBOR rates will be towards the end date of 31st December 2021
    • whether and when EURIBOR and other IBOR critical benchmarks will be discontinued

The magnitude of change is well-recognised by banks and financial institutions, and they are demonstrating an increasing sense of urgency to address contracts maturing after 2021. Be prepared for a call from your bank in the coming months!

What should you do to prepare?

As the deadline approaches, you will need to know your level of exposure and impact in order to prevent surprises. What will the impact of the IBOR transition be on your TMS and ERP systems, your credit facilities, bank loans, cash pooling, bonds, ISDA agreements and intercompany agreements? What impacts will these have on your processes and supporting systems? Which complexities will need to be managed?

Having this information at hand will enable you to be a proper sparring partner for your banks when they renegotiate contract terms.

Depending on the complexity of your contracts, the IBOR phase out could substantially affect your corporate organisation. Prevent unnecessary loss by preparing yourself, following this three-step approach:

1. Assess impact

The first step you should take is to analyse the IBOR related contracts in use throughout your organisation. Determine which contracts have an IBOR related component and the size of the exposure. Once you have assessed the complexity of your IBOR related contracts, analyse the impact on related areas (ranging from Tax and Legal to IT systems, and procedures, reporting, accounting (e.g. hedge-accounting), and the like).

2. Plan actions

On completing your impact assessment, create a detailed action plan. Define a project team governance to manage this action plan and the status of the transition across different areas, business lines, and geographical locations. In particular, take care to ensure external resource availability regarding e.g. Legal counselling and system provider experts, as demand for these specialists will rapidly increase as the IBOR transition deadline approaches.

3. Act and implement

Step three is the implementation of your action plan throughout the affected areas of your organisation. In this ‘Act’ phase it is important to maintain the conversation with external parties, such as banks and system providers. It is also of vital importance to support the implementation across all relevant business lines and functions, maintaining support for go-live readiness in line with the defined action plan and deadlines.

 

A golden opportunity

The good news is that there is still time to assess the impact of the pending IBOR changes on your organisation and to act upon it if needs be. The sooner you have an idea of the potential consequences for your organisation, the sooner you will be able to mitigate these. This understanding will also give you more leverage in the coming discussions with your bank(s).

Moreover, the IBOR phase out may bring a golden opportunity for corporates to re-evaluate the current contract agreements and look for better deals. Consider this: during the IBOR migration contracts are in fact ‘renegotiated’ and banks will need to come up with a new offer. Will you take that offer as a corporate client? That all depends on your level of understanding and preparation.

IBOR may well be a golden opportunity, but it is up to you as a corporate treasurer to seize it by acting rather sooner than later! Corporates: Caveat IBOR!

If you are interested in how we can help you to assess your IBOR related contract complexity or if you want to understand how we can support your corporate organisation in the IBOR phase out transition, you can contact us on:

[email protected] or look at www.enigmaconsulting.nl

Daniel Pluta

 

 

 

[1] A more extensive overview of IBOR benchmarks and related alternative risk free rates can be found on the website of The Investment Association (in cooperation with Linklaters): Table Interbank Offered Rates (IBORs) and Alternative Reference Rates (ARRs), version September 24, 2020

[2] Source: Interest rate benchmark reform – overnight risk-free rates and term rates, Financial Standards Board, July 12 2018

[3] Source:  Further statement from the RFRWG on the impact of Coronavirus on the timeline for firms’ LIBOR transition plans, Bank of England, March 25 2020

[4] Source: ISDA launches IBOR fallbacks supplement and protocol October 23, 2020

[5] Source: LIBOR transition – the critical tasks ahead of us in the second half of 2020, Financial Conduct Authority, July 14 2020

SIDEBAR

Selected Highlights of IBOR Phase Out Related Facts[1]

General

  • LIBOR term rates (1m, 3m, 6m, 12m) for USD, GBP, CHF, JPY, EUR will cease to be published per December 31st, 2021
  • Overnight, transaction based “alternatives” for these currencies are already live: ESTER (EUR); SONIA (GBP); TONAR (JPY); SARON (CHF) and SOFR (USD)[2]
  • EONIA is based on Ester + 8.5 basis points (since October 2nd, 2019). EONIA will cease to be published per December 31st, 2021
  • As of October 2019, EURIBOR is published as a hybrid rate (mix of actual transactions + panel consultation) and will continue to be published. EURIBOR is expected to be continued into the foreseeable future, however discontinuation is still a possibility. At the time of writing, it is uncertain if and when this will happen
  • Various consultation groups are assessing reform proposals and alternatives, such as:
    • Working Group on Sterling Risk Free Rates regarding GBP LIBOR
    • Alternative Reference Rates Committee (ARRC) regarding USD LIBOR
    • Working Group on Euro Risk Free Rates regarding EONIA and EURIBOR
  • Financial institutions have performed a global impact assessment on their financial contracts and have created IBOR migration teams
  • Across different jurisdictions and different financial products, the IBOR transition is progressing in different stages
  • Calculation methodologies across different alternative RFRs could differ and a term structure is still missing for most of the alternative benchmarks

ISDA (International Swaps and Derivatives Association)

  • On May 14, 2020 a summary of the response to the “ISDA 2020 Consultation on How to Implement Pre-Cessation Fallbacks on Derivatives” was published. The majority of market participants support a combination of pre-cessation and permanent cessation fallbacks without optionality or flexibility in the IBOR Fallbacks Supplement and IBOR Fallbacks Protocol[3]
  • On July 21, 2020 Bloomberg and ISDA announced that Bloomberg Index Services Limited (BISL) had begun calculating and publishing fallbacks that ISDA intends to implement for certain key interbank offered rates (IBORs)[4]
  • ISDA launched the IBOR Fallbacks Protocol and the IBOR Fallbacks Supplement to implement the new fallbacks for legacy and new derivative contracts on October 23, 2020. From effective date January 25, 2021, all new cleared and non-cleared interest rate derivatives that reference the definitions will include the fallbacks[5]

SIDEBAR

Central Counterparty Clearing houses

  • On July 27, 2020 LCH, Eurex Clearing and CME Group implemented a discounting switch from EONIA to Ester for cleared OTC EUR denominated derivatives related to Price Alignment Interest (PAI[6]) and Price Alignment Amount (PAA) regarding Settle-to-Market collateral[7]
  • On October 19, 2020 LCH, Eurex Clearing and CME Group implemented a discounting switch from EFFR to SOFR for cleared OTC USD denominated derivatives related to Price Alignment Interest (PAI) and Price Alignment Amount (PAA) regarding Settle-to-Market collateral

USD LIBOR transition and Alternative Reference Rates Committee (ARRC)

  • The ARRC issued a deadline on September 30, 2020, in order to establish RFP processes to facilitate the eventual publication of (a) forward-looking term SOFR rates and (b) the ARRC’s recommended spread adjustment for transition of legacy contracts[8]
  • From September 30, 2020 onwards, new syndicated business loans must include ARRC hardwired fallback language
  • From October 31, 2020 onwards, new bilateral business loans must include ARRC hardwired fallback language
  • From December 31, 2020 onwards, no new Floating Rate Notes referring to USD LIBOR and maturing after 2021 should be issued

GBP LIBOR transition and Working Group on Sterling Risk Free Rates

  • New bonds issuances maturing after 2021 and referring to GBP LIBOR should be ceased after Q1 2021[9]
  • New loans issuances maturing after 2021 and referring to GBP LIBOR should be ceased after Q1 2021
  • Initiation of new linear derivatives linked to GBP LIBOR that expire after 2021 should cease after Q1 2021

 

[1] The list of highlights does not have the intention to give a complete overview of all events and only reflects recent developments

[2] A more extensive overview of IBOR benchmarks and related alternative risk free rates can be found on the website of The Investment Association (in cooperation with Linklaters): Table Interbank Offered Rates (IBORs) and Alternative Reference Rates (ARRs), version September 24, 2020

[3] Source: Summary of Responses to the ISDA 2020 Consultation on How to Implement Pre-Cessation Fallbacks in Derivatives. A pre-cessation announcement would be an announcement that the IBOR benchmark is no longer representative of the interbank lending rate. A cessation announcement would be a public announcement that the administrators of different IBOR benchmarks have or will cease to provide IBOR benchmarks

[4] Calculations published by BISL include the adjusted RFR (compounded in arrears), the spread adjustment and the ‘all in’ IBOR fallback rates for the following IBORs across various tenors: the Australian Dollar Bank Bill Swap Rate (BBSW), the Canadian Dollar Offered Rate (CDOR), Swiss franc LIBOR, EURIBOR, Euro LIBOR, Sterling LIBOR, HIBOR, Euroyen TIBOR, Yen LIBOR, TIBOR and US Dollar LIBOR (see https://www.isda.org/2020/07/21/bloomberg-begins-publishing-calculations-related-to-ibor-fallbacks/ )

[5] Source: ISDA launches IBOR fallbacks supplement and protocol October 23, 2020

[6] PAI is the overnight cost of funding collateral. It is debited from the receiver and transferred to the payer to cover the loss of interest on posted collateral. Imagine an Interest Rate Swap, cleared through a CCP such as LCH, Eurex Clearing or CME Group. At the beginning of the life of the swap the PV is close to zero, so worth little to either party. Over the life of the trade the value of the floating leg will vary leading to an NPV to one of the parties. The change in this NPV from day to day is what Variation Margin is, calculated and moved by a CCP on a daily basis.

[7] LCH Discounting Switch Ester and SOFR

CME Discounting Switch Ester and SOFR

Eurex Clearing Discounting Switch Ester and SOFR

[8] ARRC USD LIBOR Transition Timelines, New York Fed, version September 9 2020

[9] UK RFR Roadmap | 2020-21 intermediate update, Bank of England, September 2020

Partner Interview Series | This is a must read story about Enigma Consulting

27-10-2020 | treasuryXL | Enigma Consulting |

Get inspired by the extensive and catchy story of Robert-Jan Wekking about Enigma Consulting. Robert-Jan takes you into the warm corporate culture, mission, expertise, innovation and their continues investment in knowledge with great examples.

Enigma Consulting is a revolutionary knowledge hub in the field of Payments, Digitisation, Risk & Compliance and Treasury. They are a connecting factor in the financial sector thanks to our consultants’ engagement with their clients, both banks and companies and solution providers.

AN INTRODUCTION TO

Robert-Jan has more than 25 years of experience in payment transactions and he advises corporate clients in the areas of treasury, risk management and bank connectivity.He understands the solutions in the market, both from the B2B and B2C perspective.

Robert-Jan switches easily between executive and operational level within companies and the banking sector, as he easily combines his strategic vision with substantive process and product knowledge. He has a wide network with contacts at all (international) banks, which can speed up the implementation of corporates connectivity with their banks.

We asked him 11 questions. Let’s go!

 

INTERVIEW

1. Tell us more about Enigma Consulting and its mission

Enigma Consulting has in-depth knowledge of all ecosystems that are relevant in payments, transaction value chains and financial markets. Transactional connectivity and digitization increase the prosperity and well-being of consumers, companies and the public sector and thus serve a social interest. Our mission is to contribute to the development of efficient digital transaction traffic and to ensure that this is done in an innovative, sustainable, honest and effective manner with controlled business operations. Combined with a correct attitude and behaviour, this contributes to the translation of legislation and regulations into ethical business operations and a better market position. We follow developments closely, research, analyse and make connections. Our consultants reflect, structure and help organisations to achieve their goals.

2. What is the core topic Enigma Consulting aims to address and how does it differentiate it from the other players in the market?

Digitalization is all about the exchange of data, whether these are payments, information, identities, contracts, signatures or any other regular consumer or business transactions. The complexity of exchanging transactions is constantly increasing; regulations, fraud and data protection are just three of the factors impacting this complexity.  On the other hand, innovative technology is continuously providing easier interaction between data, leading to better and integrated business propositions and making client journeys faster, more friction less and safer.  This is exactly in this domain where Enigma operates.  We leverage our in-depth knowledge of payments and transactions to advise and implement.

We distinguish ourselves from other players by looking at the end-to-end value chain, not only from the viewpoint of efficiency but also with a perspective on regulations and compliance. We understand the guiding laws and regulations and can translate them into practical advice to make sure that our clients remain compliant. We recognize that laws and regulations applying to financial institutions are becoming stricter and that attention is now also shifting towards corporates.

Our legal consultants are specialised in transaction and data related legislation, and we have strong connection with for example DNB and AFM in relation to our guidance of our clients.

Our consultancy practice focuses on the  financial-,  corporate- and retail sectors, hence we understand the complexities affecting those areas. With our knowledge of the ecosystems and  vendor solutions we play the matchmaking role between individual client wishes and the solutions available in the market.

This combination of end-to-end view, legislation and compliancy, working in different sectors, and the matchmaker role gives us a unique position. The fact that we not only advise but also take responsibility for  implementations during the past 20 years, makes us a trusted and recognized partner for our clients.

3. Why choose customers for Enigma Consulting?

Our knowledge of payments and other transaction processes is often the starting point for customers to reach out to us. Our capability to advise and implement solutions from an end-to-end perspective is the basis for our interaction with our customers.  Additionally, customers also appreciate the fact that we are able to advise at a strategic level, but at the same time are pragmatic enough to look for feasible and not theoretical answers.

We have strong relationships with a number of our clients, some even stretching back over more than 20 years. This is something we foster, not only by delivering more than what is expected, but also by working closely together. For instance, our Treasury Barometer is an example where we cooperate with the Rabobank, whilst at the same time we are participating in a number of their projects.

At the end, it all comes together with trust, in the quality of delivery, in our people and in the overall relation. This is how we ensure that we will be shortlisted again the next time.

4. What has been the biggest challenge for Enigma Consulting regarding customer projects so far?

The most challenging projects are when we are asked to take end-to-end responsibility for delivering a complete project. Quite often, this means that we have a team onboard and the client is looking at us as lead consultant to get the job done. A good example is the setup of a complete bank payments infrastructure. Apart from the fact that these assignments are exciting and demanding, it is always challenging to make it happen in an environment with its own complexities.

For our individual consultants, stepping into a new assignment always has its own challenges.

Customers ask for us for different reasons, and our consultants have to quickly adapt to start advising the client. This means not only understanding the clients’ business, but primarily building trust relations with the client and their stakeholders. Hence for every consultant the adaptability towards the new environment is always an important challenge.

For myself personally, I am proud to have led a number of strategic programs, like SEPA, Instant Payments and iDIN.  Besides building completely new products, the key challenge is always to work and build bridges between internal and external parties (Banks, DNB, governmental bodies) with sometimes opposing objectives. Working with all these parties and ultimately developing a new product is what makes me happy and proud of my role as consultant.

5. Can you tell us in what sector you see the most innovative developments regarding payments and how does Enigma Consulting react to these?

One of the most exciting aspects of payments is the continuous innovation in the field. However, it is never a revolution but more an evolution. An example are the digital currencies. I believe that in the long run, these might become as important as, or even replace, the current way of paying. But it will take many years to get there. Where it started with the cryptos and Facebook’s Libra, the central banks are now seriously embracing it.

Additionally, the technical transitions to APIs and SaaS, Open Banking and Instant are ingredients for completely new business innovation. Through API and SaaS, corporates can select best in class software modules and integrate them, rather than select single platforms that will still sub-optimise their process. The introduction of Instant Payments in Europe will ultimately change the way the treasurer needs to forecast and manage their accounts.

In the B2C or C2C world, the client journey will continuously improve, seamlessly and friction less, with data integration as a key element.

Through our assignments, we are constantly in the middle of this innovation. For example, we are the leading consultancy firm in the Netherlands for supporting FinTechs, cryptos and payment software companies with their PSD2 application. Our role in digital identity and Mobility as a Service provides us with insights in yet other areas of innovation.

In order to keep all our consultants informed, we have a weekly meeting with our consultants to discuss the latest trends.

We also leverage this knowledge to assist our clients with their questions around innovation. For this purpose, we have initiated the Enigma Innovation Lab, an accelerator environment to answer client specific questions around innovation, vision building or technical solutions by injecting are our own knowledge combined with our ecosystem of solution providers and subject matter specialists, all facilitated by various methodologies like Design Thinking.

6. Do you experience differences in the world of payments before COVID19 and the time we live in now? What are the differences?

The differences are not that when you look at the regular payment products themselves. But we do see COVID as a steppingstone for digitalization. E-commerce and e-commerce payments have shown significant growth and people are spending increasing amounts of time online. The volumes of payments facilitated by Payment Service Providers are going through the roof.

Also “Cash is King” is the phrase that everybody uses, but this should now be “Digital Cash is King”. Volume of physical cash is dropping significantly, being taken over by contactless payments.

I believe these are just indicators for a bigger change, which is the acceptance of the consumer to step into a full mobile journey.

Customers are now more familiar with working with a cashless wallet and seem also to be willing to adapt faster to other contactless, digital processes. Examples are registration, ordering food and payments in restaurants (for example via QR). But also using mobile apps to order your groceries. Clearly, this has already been taking place for many years, but I believe that COVID has accelerated this transformation through necessity.  People are therefore more willing to change their attitude. What is interesting is whether this transformation will continue, or whether people will step backwards to the old normal or step forward to a new normal.

For the retail sector and corporates, before COVID they already had to understand how to become more relevant in the mobile cashless digital world.  COVID is demanding corporates to speed up this thought process.

7. How does the future of payments look like in your perspective? And how will it change the world?

Digital currencies will be an important element in our future, adopted stepwise, and will be overlooked by market systems and regulators. There will be a continuous drive for integrating payments in the client journey, seamless, frictionless and supporting the Internet of Things. Hence payments will be a key enabler of future growth towards the digital world. Digitization is also very attractive for fraudsters, money laundering etc, as your counterpart is not always visible anymore. The need for trustworthy digital identities will be an important building block for this roadmap.

At the same time, the pressure of fraud, regulations and compliance will shift from banks to other parties (corporates) in the end-to-end value chain. Where banks are currently the gatekeeper, corporates will have to integrate this responsibility in their own business processes.

Hence the roadmap to digital, whether it is digital payments, or any other data transaction, will demand continuous change from all parties in the value chain. This will be a stepwise change, but fast enough to need to keep an eye on it.

8. What has been the biggest success for Enigma Consulting?

The biggest success for Enigma is that we have made a transformation from payments “only” to understanding the full transaction, risk and data value chain. For example, we have made a transition from bank payments to treasury payments and risk processes, but also from payments to compliance, and to integrated transactions and data models.

During this period, we have also changed our internal organisation.  We have been running a number of Young Professional Programs. These next generation talents bring us a more diverse view of the world, which makes our proposition to the market stronger and our internal culture more diverse. As a result, we believe that we have the foundation for supporting our clients, now and in the future, with a passion for payments and transactions.

9. How does Enigma Consulting keep on innovating and stay one step ahead of its competitors?

Our ambition is to be recognised as a though leader in the domain of payment and transactions. Investing in knowledge is the basis for our current and future advisory services.

This means that we continuously invest in gaining and sharing knowledge with our consultants and clients. We have organised this in a number of ways.

We have introduced the so-called Theme Lifecycle within Enigma. When we expect a theme becomes relevant for our business, now or the future, we start a workgroup to progress this theme from idea through different stages. It starts with writing a one pager based on study and analysis, called the exploring stage. We validate the readiness for every next stage (exploring, campaigning, harvesting) so that we invest time in those subjects that also become relevant for the market. All our consultants participate in one or more themes, which helps keep them engaged with innovation and market developments.

Every week we organise meetings to discuss news and articles. On turn, every consultant is responsible to select a number of articles to be discussed during this half hour meeting.

For our clients, we have regular Breakfast and Brains meetings to share our insights and to have open discussions on a specific subject. The success is that clients that even might compete in a certain sector, are always willing to learn and share from our and other clients’ experiences.

Finally, we also participate in and cooperate with FinTechs. We support them by leveraging our network of solutions, whilst their innovative ideas are a good source for future improvements, leading to a broader ecosystem that benefits our clients.

10. We are heading to the end of 2020, can you give us an outlook on the scheduled developments for the upcoming year?

The best outlook would be that we leave COVID-19 behind us, however I think that COVID will strongly influence the developments and investments in 2021. There are a number of scheduled developments which will impact corporate clients. Corporates will have to put their capacity in the IBOR Migration.  Also, the transition to XML messages will impact the operating architecture and bank connectivity of corporates.  In parallel, the transition to instant payments including batches will have to be put on the calendar of the finance function.

And in parallel, it is recommended to continue to look at the potential of open banking and further integration of payments data in the corporate business processes. An example is how payment data can improve the risk profiles of insurance companies.

In summary, enough subjects to keep an eye on. Sitting still and waiting is not an option.

11. A great initiative is that Enigma Consulting supports charity projects, what kind of charity projects does Enigma Consulting support, why and how?

The why should never be a discussion, the real discussion is what you can do. One of our activities is the ZEPA challenge.  Our consultants do like sports, and a lot of them love to cycle. When the transition to SEPA was going on, some of our consultants took the initiative for this challenge: cycling from Zeist to Paris in 24 hours. We have done this now 3 times, and a number of our clients’ employees have also participated.  This year’s event was cancelled, but we are already “ready” for the next challenge. There is not a fixed charity goal, the last charity was support for the education of young refugees.

Apart from the above, we have a warm partnership with “Goede Doelen” charity organisations in Netherlands and facilitate a free payments helpdesk for them.

It is of crucial importance to us to participate in an open and honest society, in which diversity and inclusion are critical. This is important for our own culture, as as an organisation we benefit from our consultants and they, in turn, foster these values in their personal lives.

Technology in 2024: Is your trading desk ready?

20-10-2020 | treasuryXL | Refinitiv |

Traders around the world find themselves having to adapt quickly to AI and emerging technologies, the move to automation, and the need to demonstrate best execution.

To understand what this means for the future, Refinitiv teamed up with Greenwich Associates to produce a three-part series called ‘The Future of Trading’.

In our first report, we found broad consensus (78%) that technology has created better and more efficient financial markets.  However, opinions vary on what will bring the greatest future impact—and how soon.

AI and machine learning are widely expected to be the most disruptive. Beyond that, perspectives are split: traders are looking for immediate impact from execution management systems (EMS) and from short and longer term investment in trade performance analytics. Across capital markets, though, the focus is firmly on long-term, strategic and defensive cybersecurity and real-time risk management solutions.

Access full report

Sign up for The Dutch Top 100 Credit Managers

19-10-2020 | treasuryXL |

De Vereniging Voor Credit Management (VVCM) start met het samenstellen van een Top 100 Credit Managers in Nederland. Heb jij als credit manager bijzondere projectresultaten behaald? Of ken je iemand anders die in deze lijst niet mag ontbreken? Lees dan verder…

Over de VVCM Credit Managers Top 100

De VVCM Credit Managers Top 100 zet jouw succes in de schijnwerpers. Deelname aan deze competitie kan jou helpen om de groeiambities van jouw bedrijf verder waar te maken, of je eigen carrière een boost te geven. Een nominatie levert ook contacten met andere koplopers en ingangen in het netwerk van de VVCM op.

De VVCM hecht veel waarde aan de professionalisering van het vakgebied Credit Management in het Nederlandse bedrijfsleven. Welke bijdrage lever jij hieraan? Heb je je workflow gedigitaliseerd of geautomatiseerd, maak je gebruik van innovatieve tools, heb je hick-ups in het order-to-cash proces op weten te sporen en geëlimineerd, heb je het bedrijfsresultaat geoptimaliseerd, het topmanagement van strategisch advies voorzien? Meld je aan!

Hoe werkt deelname?

Zoals elke wedstrijd kent de VVCM Credit Managers Top 100 spelregels. Bijvoorbeeld over wanneer je voldoet aan de criteria. Dat is eigenlijk al als je in een credit management functie werkzaam bent en leiding geeft aan een team. Het maakt niet uit wat je officiële functietitel is, of je lid bent van de VVCM of niet en welke sector je vertegenwoordigd. Iedereen is welkom voor deelname!

We zijn op zoek naar bijzondere, baanbrekende, laterale, innovatieve, verrassende initiatieven die een significant, aantoonbaar positief effect hebben gehad op de kwaliteit van creditmanagement. Beoordeling vindt plaats via expertpanels. Deze (externe) deskundigen beoordelen de inzendingen binnen hun vakgebied. Zij bepalen volgens dezelfde criteria de uiteindelijke volgorde en wie zich 1 jaar lang in de Credit Managers Top 100 kan profileren.

Wat mag je verder verwachten?

De VVCM wil jou graag helpen om een volgende stap te zetten. Dit doen we door:

  • De mogelijkheid om inspirerende blogs en vlogs de publiceren
  • De mogelijkheid tot het geven van een gastcollege of kennissessie
  • Een online event en aandacht via social media
  • Contacten met andere prominenten en partners

In de afgelopen jaren zijn er al veel Credit Managers van het Jaar uitgeroepen en de variatie is groot. Overeenkomst tussen al deze credit managers is dat ze als eindverantwoordelijke betrokken zijn geweest bij een verbeterproject waarin creditmanagement een prominente rol heeft gespeeld.

MELD JE AAN

Is a Letter of Credit (L/C) a dying product?

| 13-10-2020 | Ger van Rosmalen | treasuryXL

In this blog , Ger van Rosmalen explains why you need to ask for a Transferable Letters of Credit when your bank doesn’t want to increase credit limits but even want to lower credit limits.

This blog continues in Dutch language…

Is een Letter of Credit ( L/C) een uitstervend product? Nog steeds worden wereldwijd door importeurs en exporteurs risico’s afgedekt met L/C’s. Als ik kijk naar de afgelopen jaren met het toenemende aantal bedrijven dat ik mocht helpen met het structureren van L/C deals dan ben ik ervan overtuigd dat L/C’s het bedrijfsleven nog lange tijd zullen helpen om de kloof tussen onbekende importeurs en exporteurs financieel te dichten. Ja, er zijn alternatieven en daar moeten we onze ogen niet voor sluiten maar deze zijn (nog) geen gelijkwaardige vervanging voor deze in mijn ogen uitstekende betalingsinstrumenten.

Transferable Letters of Credit

Bijzondere aandacht verdienen daarbij de Transferable Letters of Credit. Een speciale vorm van een L/C die uitkomst biedt als de bank kredietlimieten niet wil verhogen of zelfs verlaagt. Je doet bijvoorbeeld mooie deals met een prima winstmarge, maar je bank beweegt niet mee.

Stel je verkoopt een machine aan een klant, en die machine koop jij weer bij een producent. Hoe kun je een dergelijke deal structureren zonder dat het ten koste gaat van je beperkte werkkapitaal? Een Transferable L/C kan hier uitkomst bieden.  Je ontvangt een Transferable L/C van je koper voor een machine ter waarde van EUR 100.000. Je koopt de machine bij een producent voor EUR 90.000 en die vraagt zekerheid van betaling. Het L/C dat je hebt ontvangen kun je overdragen naar de producent voor EUR 90.000 die op dat moment zekerheid van betaling krijgt. Als de producent heeft geleverd zal de financiële afwikkeling als volgt plaatsvinden: de documenten voorgeschreven in het L/C worden door de producent via zijn bank bij jouw bank aangeboden. Zijn de documenten goed, dan mag de bank de inkoopfactuur vervangen door de verkoopfactuur en zal de marge op jouw rekening achterblijven.

Klinkt simpel, toch is het dat niet, want er gelden belangrijke spelregels. De in- en verkoop condities moeten naadloos op elkaar aansluiten dus inkoop in EUR dan ook verkoop in EUR, verkoop op CFR basis dan ook inkoop op CFR basis. De goederen mogen evenmin bewerking ondergaan. Hier moet je even voor gaan zitten, maar het maakt deals mogelijk die je anders misschien moet laten lopen. Hoewel het een bancair product is, bieden banken het in mijn ogen te weinig aan als alternatief voor kredietverlening. Soms omdat de bank er weinig of geen ervaring (meer) mee heeft of het niet wil doen omdat de exporteur hier niet veel ervaring mee heeft en de bank daarom een reputationeel risico denkt te lopen.

Conclusie

Met een goed onderbouwd verhaal kun je dergelijke L/C transacties heel goed gebruiken om jouw groeidoelstelling te realiseren, met comfortabele zekerheid van betaling.
Mijn advies is om expliciet te vragen om een Transferable L/C en neem niet te snel genoegen met een afwijzing.

TradelinQ Solutions kan je daar heel goed begeleiden. Neem vrijblijvend contact op voor meer informatie.

 

 

Ger van Rosmalen

Trade Finance Specialist

 

 

KYRIBA Global Summit

| 07-10-2020 | treasuryXL | Kyriba |

We are excited to invite you to the first ever Kyriba Global Summit, a free virtual event bringing together treasury, finance and IT teams from around the world to discuss their successes and the latest innovations in cash management, payments, bank connectivity, FX risk management and working capital management.

Hear successes and stories of transformation from some of the most recognized companies in the world with a globally diverse group of speakers.

REGISTER HERE

About Kyriba

Kyriba empowers CFOs and their teams to transform how they activate liquidity as a dynamic, real-time vehicle for growth and value creation, while also protecting against financial risk. Kyriba’s pioneering Active Liquidity Network connects internal applications for treasury, risk, payments and working capital, with vital external sources such as banks, ERPs, trading platforms, and market data providers. Based on a secure, highly scalable SaaS platform that leverages artificial and business intelligence, Kyriba enables thousands of companies worldwide to maximize growth opportunities, protect against loss from fraud and financial risk, and reduce costs through advanced automation. Kyriba is headquartered in San Diego, with offices in New York, Paris, London, Frankfurt, Tokyo, Dubai, Singapore, Shanghai and other major locations. For more information, visit www.kyriba.com.