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Why You Don’t Need a Treasury Workstation
| 11-11-2019 | treasuryXL | BELLIN
Location dependence vs. universal collaboration and access
Often times, terms and definitions change over time; and sometimes terms remain the same but their meaning shifts. Take for example the word “bookkeeping:” accountants nowadays no longer put pen to paper and make manual entries in a book. Transferring this concept to treasury, we only need to look at the name of the department itself. Treasurers no longer watch over dungeons filled with treasure troves and other valuables (maybe with the exception of Fort Knox). But that’s not the only shift in meaning: we can also come across obsolete terms and definitions when it comes to the digitalization of treasury tasks and specifically with the term: treasury workstation.
Looking at search requests in Google, one of the most commonly searched terms in treasury is “treasury workstation” – a term that has been in use for treasury systems for many years. However, we need to ask ourselves if the term and the understanding of technology and processes associated with it are still appropriate today. Should they have long been replaced by other terms?
“Treasury Workstation” – is that what treasury is?
“Treasury workstation” contains the element of “station” that appears to have no place in today’s treasury world: mobile communication and the flexible use of systems are such obvious characteristics of our daily work that a “station” clearly no longer delivers. A workstation is literally stationary and therefore limited: it sits in one single place and is only available right there. Conversely, this is precisely where modern systems differ: they’re web-based and can be used from any mobile device without any limitations regarding security, user-friendliness, and functionality. Indeed, the very fact that modern systems are not stationary makes them so powerful. They’re mobile and any number of people can make use of them from anywhere.
Today, large departments and units need to be able to readily collaborate and exchange knowledge and data; a workstation seems inappropriate to meet these demands and stands for a status quo that IT has long left behind. No one wants to install software on a workstation anymore; no one wants to be tied to a desktop computer. The internet with all its enormous potential drives the optimization of business processes and data communication to the point where companies can no longer afford to back workstations, in particular in treasury.
Collaboration with a Treasury Management System
At BELLIN, their system, tm5, is not a physical workstation limited to a specific location. The system is a web-based and dynamically-integrated platform that excels in ensuring global visibility, maximized security and uncapped work-hours saved. The key ingredient in regard to this article is that the system is web-based, yet accessibly by anyone company wide. We call this our Load Balanced Treasury approach which means no per-user licenses, ensuring subsidiaries can share data seamlessly, profit from real-time transparency, and maximize global security.
While many treasurers still refer to modern platforms as workstations, the distinction is important. Modern, web-based systems are platforms for collaboration, for cooperation and for uniting internal and external parties and partners who all contribute to treasurers always having the information they need to do their job: make decisions that reduce business risk, optimize asset management, manage funding and hedging and give the company the overall stability to meet the company objectives.
This is by no means limited to treasury. Unlike a workstation that is only ever available to the people in one particular office, treasury management systems serve the entire company and people from any department can be involved where needed. This allows treasurers to share the workload, get information first hand and have a fully integrated and connected workflow that ultimately benefits everyone.
Conclusion
Treasury workstations are a thing of the past and platforms like the BELLIN tm5 have long become established as industry standards. Consequently, it is time we reflect that fact in our terminology in order to find what businesses really need and stop searching for things that were modern years ago. “Station” ultimately suggests inflexibility, stagnation. As time goes by, both terminology and processes are subject to change and move forward – just as treasury does. Perhaps this is just a semantic error or term that has stuck over the years? Either way, as treasury enthusiasts and experts, we are keen to help the industry acclimate to the existing technological ecosystem.
Martin Bellin
CEO
Open banking and APIs: transforming the future of treasury
| 05-11-2019 | treasuryXL | BELLIN
Open banking is about much more than advanced technology. It has an impact on business models, processes and ways of thinking – and it will definitely have a huge impact on treasury.
The EU’s revised payment services directive (PSD2) has forced European banks to set up standardised interfaces, so-called APIs, to enable third parties’ technological access to bank accounts. This is an attempt to break up the banks’ monopoly and boost competition amongst payment service providers.
When it comes to payments, PSD2 APIs are currently limited to single Euro payments area (SEPA) single payments. Simply put, they are generally ill-suited for corporate payment processing. Nevertheless, open access to customer and transaction data for third parties represents a radical change that threatens traditional banking business models.
While in the past, banks reigned freely over their customers’ financial data – often keeping them in the dark about margins, fees and transaction routes – open banking makes banking fundamentally more democratic and gives companies much more freedom and flexibility.
How does a company want to handle its payment processing? With open banking, it will be of little relevance to corporates exactly how their payments are processed. As long as the payment goes from A to B, the back-end technology being used is up to the service provider. What will be more significant for corporate treasury departments when it comes to payments is how quickly this information becomes available to them.
Open banking’s impact on cash management
Today, treasurers are blind when it comes to intraday cash flow movements. Depending on the bank, they only receive balance information a few times a day at specific times. This has always been as real-time as it gets. Treasurers who would like to know their account balance at any time and in ‘real, real-time’ need to request this information. But how can you know when to best inquire about your account balance when you have no idea when money will be credited?
Some companies make use of automated requests, managed in their treasury management system (TMS). The system sends scheduled requests to the bank, for example every minute, to check if any new information is available. An analogy would be sending round a company postman to empty the letterbox every few minutes without knowing if anyone has actually posted a letter. This leads to enormous amounts of data and clogs up communication channels and systems, without really solving the issue.
A much more intelligent solution would be to not request the information until it is actually available. For that to work, there would need to be some kind of signal that data has come in – just like the signal flag on American letterboxes. New technologies, such as APIs and WebSockets, enable this kind of reversed order. The bank signals that a new balance is available as soon as money is credited to or debited from an account, and treasurers and other finance professionals can then take action. The same is true for payments, where status notifications for a transaction would be available straight away.
The future of APIs
What will the future look like for banking communication? Will APIs relegate existing technologies, such as electronic banking internet communication standard (EBICS) or SWIFT, to the sidelines? APIs’ greatest downfall is their lack of standardisation. Conversely, complete and powerful standardisation across the SEPA area is the biggest asset of these established communication channels.
In the context of PSD2, there have been various European initiatives to achieve standardisation, for example those of the Berlin Group. However, there is no comparable global initiative, and when BELLIN recently analysed the open banking offering of the ten most relevant banking groups, the discrepancies were staggering. What is needed are suitable enhancements of established technologies that could then be combined with new technologies, for example combining the EBICS protocol with API technology.
And this future is not far off. Massive changes that will impact treasurers’ day-to-day work significantly are just around the corner. Large retailers have already implemented instant payment solutions using APIs that not only enable them to transfer money, but also to receive notifications when a payment has come in as soon as it does. This has enabled them to fully connect payment processing, real-time balance information and customer service.
Direct communication of data between companies and banks is likely to have other, far-reaching consequences for treasury, for example when it comes to FX and risk management. Real-time corporate-bank communication definitely brings challenges for cash management. Banks will have to solve how cash pooling is handled in the future whilst also determining the time on which interest calculations are based. However, with new standards for speed, efficiency and data quality, open banking will continue to revolutionise treasury far beyond 2020.
Karsten Kiefer
Product Manager Solution Management
8 Driving Factors for a Lean and Agile Treasury
| 28-10-2019 | treasuryXL | BELLIN
Dynamic processes in today’s world need lean and agile organizations. We have compiled 8 driving factors how the treasury department can achieve this goal easily.
1 Agile treasury thanks to simplified global statement collection
For businesses, a daily, group-wide, global financial status can now be a reality. It neither requires tedious manual data entry in Excel nor collecting data from subsidiaries by email.
Corporates can share their very own SWIFT BIC with all the banks they have accounts with worldwide and request to receive their account statements to this address (ideally in an MT940 format). One by one, all their banks are going to adopt this way of communication, and everything else is a question of technological automation.
2 Agile treasury thanks to netting and its effect on FX and cash management
Anyone still processing subsidiary payments as if they were customers or third-party suppliers is missing out on a number of potential benefits. This goes for anything from the reconciliation of invoices, to payments, optimized forward cover and efficient cash management. With the right intercompany netting setup, uncertainty and unknown quantities in relation to the amount, date or contents of a payment quickly become a thing of the past.
3 Agile treasury thanks to integrated IC trade documentation
Almost all group companies make use of intercompany loans – agreed to in writing, by email or by phone. If you’re lucky, the subsidiary in question can still find the agreement or has created an Excel sheet reminding them of their interest payments. If you’re unlucky, the auditor has to go in search of the correct documents, and tax authorities are knocking on your door to establish whether or not everything is compliant with the arm’s length principle. This is exactly the kind of scenario the BELLIN treasury management system can help you prevent: it creates a platform that allows both parties to demonstrate that payment dates, conditions and permissions in connection with IC loans are met and complied with, and that everything is documented properly.
4 Agile treasury thanks to digital matching
Exchanging confirmations for FX and Money Market deals is nothing new: for years, banks have been sending confirmation documents to their customers who had to return a signed copy. Ever since EMIR, this is no longer feasible and no longer makes sense. BELLIN’s treasury management system tm5 offers integrated electronic matching and has automated and digitized deal confirmation – technology that is easily implemented, saves time and identifies any errors in real time, in turn reducing risks.
5 Agile treasury thanks to collaboration and spreading the workload
The principle of Load Balanced Treasury® allows you to organize processes in a way that best meets skills and capacities. Depending on your Treasury Policy, you could for example delegate responsibility for local payments to subsidiaries or share responsibility, based on the permissions defined in the system. You can set the system up so that central treasury is automatically notified whenever they need to intervene – so they have the overview and the control.
The platform-based collaboration simplifies complex tasks, such as liquidity planning, for the whole group. Simply use the chat function to organize intercompany reconciliation and set up regular “information cycles” for funding requirements and the use of funds. This way you can stay on top of cash flows and obtain a quick and efficient overview of liquidity developments and any deviations from the planning scenario – so you are alerted straight away and can always react quickly.
6 Agile treasury thanks to agile reporting
The business world over, reports are considered time-consuming and tedious – but they don’t have to be. With all relevant data already entered and available in the system, you have everything you need to create reports at the touch of a button – tailored to the needs of your businesses. This way, you can keep all stakeholders in the loop directly from your treasury management system without the need for an additional tool.
7 Agile treasury thanks to automated processes
Repetitive user actions and recurring tasks can be done by a technological solution. The automation service schedules and automates recurring treasury tasks, such as market data import, account statement import and export, entering bulk payments or importing deals traded via a trading platform. The system automatically takes over tasks that would normally have to be done by a user. While process automation is not suitable for every task, it is also not necessary to do everything manually, again eating up resources; some tasks can easily be performed by the system.
8 Agile treasury thanks to mobile connectivity and payments authorization
Frequently, your financial challenges no longer play out behind a desk but in transit between business meetings or on your way to and from work. Or you are simply the one in charge of making that final decision based on the data gathered by your trusted team. On top of your agenda: mobile access to clearly presented information, the ability to focus on specific processes, and most importantly the knowledge that all your data and all your processes are secure!