Treasury Hot Topics Seminar Building the business case for a payment factory and in-house bank
19 February 2009
Agenda
Next Generation Payment FactoryMaking the best use of SEPA, SWIFTNet and Systems
1. Most promising developments within the Treasury world2. Evolution from Traditional to Next Generation Payment Factory3. Summary of Benefits 4. Conclusion
Agenda
Next Generation Payment FactoryMaking the best use of SEPA, SWIFTNet and Systems
1. Most promising developments within the Treasury world2. Evolution from Traditional to Next Generation Payment Factory3. Summary of Benefits 4. Conclusion
Slide 4 PricewaterhouseCoopers
Promising developments
The future
Main promising developments in treasury that will add value
to the business
In-house banking – 11,0%
Payment factories – 10,0%
Straight through processing – 10,0%
Shared service centres – 8,7%
Global banking – 6,5%
New concepts and ideas to increase knowledge and understanding of risk – 6,3%
Innovative financial instruments/structured finance solutions – 6,2%
Credit risk management tools – 6,0%
On-line dealing platforms – 5,8%
SWIFTNet – 5,7%
Webservices – 4,0%
Euro capital market – 3,0%
Alternative risk transfer products – 2,5%
Other – 2,5%
Bank industry consolidation – 2,2%
IFRS – 2,0%
Basel II – 1,5%
CLS (Continuous Link Settlement) – 1,5%
Outsourcing – 1,3%
Sarbox – 1,2%
Decreased market volatility – 1,2%
Increased market volatility – 1,0%
Agenda
Next Generation Payment FactoryMaking the best use of SEPA, SWIFTNet and Systems
1. Most promising developments within the Treasury world2. Evolution from Traditional to Next Generation Payment Factory3. Summary of Benefits 4. Conclusion
Slide 6 PricewaterhouseCoopers
Example Payment(s) Process without Payment Factory
Multiple Processes
Multiple Payment Formats
Multiple Interfaces
X Multiple locations
Multiple Accounts
Multiple Bank Statements
Multiple Signatories
Business Unit A A/C A Vendor A
Bank AEFT A
PaymentsBusiness
Unit B
Payments
A/C B Vendor B
EFT A2
Payments
Business Unit C Payments
Bank B
A/C C
Vendor CEFT B
Manual Payment
Business Unit D
Bank C
A/C D
Slide 7 PricewaterhouseCoopers
Example Traditional Payment Factory
Payment Factory
Business Unit A
Business Unit B
Business Unit C
Business Unit D
Internal Interfaces
A/C A
A/C B
A/C C
A/C D
1 Standard Process/ Team
1 set of formats internally
1 standard (internal) interface
EFT A
EFT B
EFT C
Vendor A
Vendor B
Vendor C
Bank B
Bank C
Bank A
ExternalInterfaces
Slide 8 PricewaterhouseCoopers
Example Traditional Payment Factory
Payment Factory
Business Unit A
Business Unit B
Business Unit C
Business Unit D
Internal Interfaces
A/C A
A/C B
A/C C
A/C D
1 Standard Process/ Team
1 set of formats
1 standard (internal) interface
EFT A
EFT B
EFT C
Vendor A
Vendor B
Vendor C
Bank B
Bank C
Bank A
ExternalInterfaces
Slide 9 PricewaterhouseCoopers
Example Next Generation Payment Factory
Payment Factory
Business Units
Business Units
Business Units
Business Units
Internal
Interface
A/C A
A/C B
A/C C
A/C D
SWIFTNet interface
One EFT System
One Set of Formats (SCORE)
Direct Connection to your banks
Multiple Accounts
Multiple Bank Statements
Multiple Signatories
Bank C
Bank A
Bank B
Vendor A
Vendor B
Vendor C
Slide 10 PricewaterhouseCoopers
What is Payment on Behalf ?(a) Own Payments – V – (b) Payments on Behalf
• BU1• $ a/c in
Country A
• BU 2• $ a/c in
Country B
• BU 3• $ a/c in
Country C
• Vendor a/c in USA
Cross Border Payments
Straight Through Process
• BU 1• Belgium
• BU 2• United
kingdom
• BU 3• France
$ Payment Requests
• BU 4• $ a/c in
Country D
• BU 4• Sweden
• Straight Through Process
• Multiple External Accounts Required
• Expensive Cross Border Payments
Traditional Payment Factory
(a)
Conversion to Domestic Payments
• BU 1• USA
• BU 2• United
kingdom
• BU 3• France
• Treasury • $ a/c in
USA
• Vendor a/c in USA
Domestic Payments
$ Payment Requests
• BU 4• Sweden
• Value Added Transaction Processing
• One Treasury payment account per country
Reduced risk of fraudulent payment from external accounts
• Significant reduction in Cross Border payments
From XX,000 @ approx $5 each, to X,000 =
Next Generation Payment Factory(b)
Slide 11 PricewaterhouseCoopers
Example Next Generation and Payment Factory
Payment Factory
Reporting
Business Units
Business Units
Business Units
Business Units
Payments
Payments
Cash Settlements Centre
In-HouseBank
Corporate Treasury
Reporting
Operating Parameters
SWIFTNet interface
Bank B
Bank A
Treasury A/C
Country A
Treasury A/C
Country B
Vendor A
Vendor B
Vendor C
Vendor A
Vendor B
Vendor C
SEPA
Reduce number of bank accounts even
further
Agenda
Next Generation Payment FactoryMaking the best use of SEPA, SWIFTNet and Systems
1. Most promising developments within the Treasury world2. Evolution from Traditional to Next Generation Payment Factory3. Summary of Benefits 4. Conclusion
Slide 13 PricewaterhouseCoopers
Potential benefits
• Reduce bank fees and/or number of bank accounts• Convert x-border payments to cheaper products• Reduce the number of payment systems/bank interfaces to be developed
and maintained • Overall reduction in FTE’s involved in the payments processes • Consolidated/Accurate information to reduce cost of liquidity:
a. Improve daily cash managementb. Improve quality of L/T cash forecast for risk management.
Quantitative
Slide 14 PricewaterhouseCoopers
Summary of Potential benefits
• Single technology for communication with the banking environment with a lower cost and greater degree of bank independence
• Minimise corporate risk by reducing locations where cash leaves the co.• Consolidated information for bank fee management & reconciliation• Improved operational flexibility, especially when integrating multinational
businesses.• Improved centralised information and ease compliance for IFRS/Sarbox• Achieve critical mass to improve segregation of duties in high risk areas.• Along with an in-house bank, constitute the building blocks for a shared
service centre. • Opportunity to build a centre of excellence offering expert [banking]
transaction related Customer Service to the business
Qualitative
Agenda
Next Generation Payment FactoryMaking the best use of SEPA, SWIFTNet and Systems
1. Most promising developments within the Treasury world2. Evolution from Traditional to Next Generation Payment Factory3. Summary of Benefits 4. Conclusion
Slide 16 PricewaterhouseCoopers
Conclusion
Costs:
• Implementing IHB module• Implementing SwiftNet• Connect TMS to SwiftNet• Develop payment format &
Interface to PF• Change management
Savings:
• Reduce number of bank accounts
• Reduced number of X-border payments
• Less external payments• Less banking fees• Reduced number of interfaces
and payment systems needed• Reduced number of FTE’s
needed• Better visibility on outgoing
cash
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Damien McMahon Director – Finance & Treasury Solutions [email protected]+32 2 710 9439
Gunter Geysen Manager – Finance & Treasury Solutions [email protected]+32 2 259 3163
Thank you!