how to select and implement a global banking structure

Ian Argue | Managing Partner| Global Treasury Partners Greg Person | Vice President, Global Presales | Kyriba

How to Select and Implement a Global Banking Structure March 22nd, 2017

© 2017 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 2

Ian Argue, CFA

Managing Partner

Global Treasury Partners

Greg Person, CTP Vice President, Global Presales

Kyriba Corp

Today’s speakers


Agenda

• Issues and Trends

• Strategy Definition

• Selection Process

• Implementation

• Benefits

Issues and Trends


Issues and Trends

Regulatory, technological and competitive factors will force treasurers to stay on top of developments and plan

A number of factors are changing cash management services:

• Liquidity coverage ratio • Operational deposits • Assessment of category

Basel III

SEC Rule 2a-7

Technology

• Money market fund reforms • Floating NAV’s • Liquidity fees + redemption gates

• Move to standardization • File formats (ISO XML) • Transmission (SWIFT, SAP)

• Counterparty risk and compliance • Changing competitive landscape

• RBS in certain countries

• Greater appeal of operational cash and deposit pricing + innovation

Issues Impact

• Investment policy review and greater emphasis on cash forecasting

• Improved flexibility and ability to change

• Risk to corporate business operations • Corporates may be forced to change

Banking Landscape & Counterparty

Risk

Strategy Definition


Change Drivers and Objectives Definition Any time a company chooses to review its banking relationships it’s important to define the objectives of the

initiative and make sure the benefits are sufficient

Small incremental changes add up to significant benefits at the organizational level

• Changing business requirements

• Geography • Centralization • Relationship • Service • Compliance • Cost

Change Drivers Benefits

• Reduce X bank accounts • Reduce X cash management banks • Reduce X bank software systems • Reduce transaction processing fees

by x% • Increase cash concentration by X

Leve

l of

Urg

ency


Strategy Alternatives

• Multiple bank relationships per region/country

• Managed by business units directly

• Some cash pooling in-country, often limited to single currency

Decentralized

• Single bank relationship in a region (e.g. Euro-zone)

• May still require multiple banks to fulfill requirements in specific regions (e.g. Nordics, Canada)

• Greater cash pooling capabilities across countries

Regional Global

De

scri

pti

on

• Single bank relationship across regions

• Greater opportunity for cash concentration

• Cross border requirements/ arrangements create complexity

• Legal/tax regs. Require add’l accounts

• Decentralized operations • Businesses operate independently

(e.g. growth through acquisition)

• Global company • High degree of centralization • Broad banking needs (e.g. require

local capabilities and service)

• International company • Some centralization • Limited banking requirements in

foreign countries Pro

file

A proven way to manage bank relationships is to set a network of preferred banks and manage others on an exception basis


Strategy Determination

Determining the bank structure for your organization will require significant up-front work and analysis of several factors

• Geography • Transaction volumes • Service requirements

Business Profile

Market Factors

Regulatory Factors

Company Factors

• Bank capabilities + presence • Industry trends • Peer group analysis

• Bank regulations (e.g. Basel III) • SEC 2a-7 • Dodd Frank/EMIR

• Degree of centralization • IT capabilities • Stakeholder engagement

Identification of your preferred strategy up front will translate into an easier selection process


Bank Service Architecture

Account Structure

Bank Connectivity

BU a/c BU a/c

Country

Corporate

BU a/c BU a/c

Country

Corporate

BU a/c BU a/c

Corporate

eBanking Platforms Host-to-host connections SWIFT

Closed Countries Restricted Countries Open Countries


Multi-bank Reporting, Analysis & Control eBanking electronic

statements

Host-to-host connections

SWIFT

Global Treasury Management System

Global bank cash positioning

Bank account mgmt, signatories & bank fee mgmt

Counterparty exposure management

Standardize payment workflow Technology can simplify global, multi-bank access, reporting

and compliance

Selection Process


Selection Process Outcome Description

Step 1 Requirements Definition

Phase 2 Data Gathering

Sele

ctio

n P

roce

ss

Phase 3 Request for Proposal

Phase 4 Vendor Meetings

Phase 5 Selection and

Implementation

• Work with businesses to understand current banking needs

• Use vision and value to drive to future state

• Obtain current transaction volumes to help size business (by country)

• Local services (guarantees, tax, pay/rec products

• Vendor research and long list • Develop RFP • Analyze and summarize responses

• Develop agenda for on-site meetings • Chance to bring all stakeholders together and ask

questions

• Reference checks / benchmarking analysis • Price negotiations • Selection

• Current state requirements • Future state requirements • Internal knowledge development

• Documented transaction landscape • Local support and cross-functional buy-in

• RFP document • Response analysis summary • Vendor shortlist

• Vendor shortlist • Agenda • Tailored questions/Demos

• Updated pricing model • Reference summary • Decision!


Stakeholder Identification

Stakeholder engagement is critical to ensuring the overall success of a bank review

As an organization moves through the process, it must ensure that all stakeholders are identified and engaged

• Responsible for bank relationships • Coordination of overall process • Internal source of expertise

Treasury

Operational / Local Finance

IT

Legal/Tax

• Day to day operations • Hands-on with bank services

• Connectivity and ancillary solutions • Support for interfaces

• Need to provide advice and guidance on account structures


Decision Making Criteria

Some combination of the above factors usually forms the ultimate choice of a banking partner

Identifying a complete set of decision making criteria up front helps to make the decision easier to make

Cost

- Monthly costs (e.g. account maintenance)

- Transaction costs (e.g wire fees)

- Implementation costs

Service

- Local presence - Languages - Escalation path

Service Capabilities

- Account locations - Pooling - Payment clearing system

access (wire/ACH/giro etc.) - Trade finance - Other services (payroll,

lockbox) - Geographic presence - Technology

IT Capabilities

- Support for process automation

- H2H connectivity - SWIFT connectivity - Support for industry

standard file formats

Others…

- Credit rating - Relationship - Reputation - References

Implementation


Implementation Planning - Phases

Phasing can be done on a functional and/or geographic basis

For large and even medium sized implementation it may make sense to break up the implementation into smaller phases:

Step 1: Account Opening

Step 2: Payables

+ Domestic Pooling

Step 3: Receivables

+ Regional Pooling

Step 4: Legacy Account Closing + Global

Pooling + Automated

Connectivity


Implementation Considerations

• Location of resources • Degree of expertise • Capacity to help

Treasury / Local Finance Resources

IT

Legal/Tax

Project Management

• Technical resource availability • ERP environment

• Approval of strategy • Account opening documentation requirements

• Stakeholder coordination • Status reporting • Executive communication

Bank Resources • Location of resources • Experience

Benefits


Expected Benefits

• Local banking products to eliminate operational business risk • Resident expertise • Reward banking partners

Business Continuity

Compliance

Operations

Strategic

• Actively monitor and comply with limits mandates • Bank, country, currency, etc.

• Improve audit, compliance controls (e.g. 404 testing)

• Improve bank account signatory / mandate management • Enhance integration to ERP, TMS to drive GL postings • Reduce month-end close process

• Integration with free cash flow forecast measure forecast error & improve accuracy • Trend analysis & target balance thresholds • Intercompany cash mobilization to fund capital allocation strategy

Questions?

Ian Argue, CFA [email protected]

Greg Person, CTP [email protected]

mailto:[email protected]

mailto:[email protected]


Thank You for Attending

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how to select and implement a global banking structure

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