How treasury can be a catalyst for digital adoption

Written by: JTC Group Posted: 18/08/2023

BL84adv_HSBC JTC illoAs corporate treasuries embrace digital technologies to help boost efficiency and enhance client experience, we speak to Benjamin Sykes, Head of Global Payments Solutions, UK and International, HSBC, and Paul Fosse, Group Head of Banking and Treasury, JTC, about the benefits of adopting virtual account solutions

Corporate treasurers were already facing a multitude of challenges as treasuries transition from a cost centre to a key part of corporate strategy and revenue potential. The role of the treasurer has evolved from cash management to encompass risk management and business strategy, growing in complexity and importance. 

Now, treasurers are faced with the additional pressures of a difficult economic climate, where cost savings and efficiencies are imperative. 

Payments are an industry-wide challenge in professional services, as they are in all other organisations with multiple clients, such as law firms or estate agents. 

Any company that deals with large numbers of payments coming from multiple sources must deal with all the different banking providers of their clients, duplication of time and effort, cost inefficiencies and multiple time-consuming processes. So, to address challenges such as these – and in an attempt to do more with less  – treasurers are turning to digital solutions. 

What are some of the key priorities for corporate treasuries today?

Benjamin Sykes: In the current environment, every organisation is looking at how they can improve productivity, and investment in digital is a fundamental way in which this can be achieved. But from a more practical sense, regardless of the scale of your organisation, most firms are looking at how they can do more with less.

And clients are expecting workflows to happen digitally, end-to-end. So, having technological tools that enable your workforce is more and more important.

Paul Fosse: What we’re looking to do is leverage tech to reduce common issues for client-facing teams, removing their admin burden so they can focus on their clients. We knew that if we got our banking strategy right, it would allow us to turn our attention on client-focused cash management and FX solutions.

BL84adv_HSBC_Ben SykesBenjamin Sykes (pictured left): When adopting new technologies, organisations need to be addressing pain points on multiple fronts. It is not enough to only cut costs or to introduce incremental efficiencies, businesses are seeking solutions that also enhance customer experience and help make the company as a whole more commercially successful.

What are virtual accounts?

Benjamin Sykes: Virtual accounts allow companies to have as many accounts as they need to organise their cashflow – all centralised through one physical account. They can help to streamline structures, offering a solution that is flexible, centrally accessible and integrated.

They are something akin to a drawer in a virtual filing cabinet. Where once that drawer was filled with all the payments from all clients jumbled together, virtual accounts provide dividers to organise that drawer in a system that works for you.

Payments, receivables and liquidity solutions can be interconnected through centralised transaction processing. And virtual accounts can be opened and closed quickly and easily.

How could virtual accounts provide an important solution to the challenges around processing multiple payments?

Benjamin Sykes: Previously, accounts were based on function or organised for record-keeping, with each bank account requiring time and effort to open or close. 

But virtual accounts can give every single client a virtual IBAN to pay into, keeping all those records separate, which is a very laborious thing to do manually. When cash needs to be deployed, you know exactly where it comes from, so it’s much easier to reconcile. 

Compared with a physical account, a virtual account can be opened or closed almost immediately, offering flexible scalability. You can have 10 virtual accounts or you can have thousands.

BL84adv_JTC_Paul FossePaul Fosse (pictured right): There are times we may want to give each client a separate virtual account, and keep payments segregated from the company’s main account, and each other.

Virtual accounts have reduced our account opening to a few hours on the same business day when compared with that of opening traditional bank accounts – it’s a 92% reduction in processing time.

A digital stratergy also sees a 75% reduction in payment processing time and up to a 90% reduction in error rates. 

It allows us to bank in a really efficient manner, pooling client funds while keeping them segregated achieves real value adds, such as instant cash pooling to achieve better rates and risk diversification management for our clients.

Why did you partner with HSBC when adopting a virtual accounts solution?

Paul Fosse: The word partner is used too often, and it starts to not mean much, but this was done in a true partnership style. HSBC and JTC have worked through our approach and procedures together, it’s been shoulder-to-shoulder the whole time. 

They looked at our technology roadmap and understood that a key driver to be able to offer value-adding services to our underlying clients is ensuring that our payment and receipt processes are robust and efficient.

We take pride in every payment that we make on behalf of our clients as we like to build strong relationships with our clients to enable them to focus on their core businesses while we manage risk, protect assets, spot opportunities on their behalf all efficiently and in a cost effective way.

It’s been a really exciting journey, collaborating with our clients, risk, legal teams, external partners and HSBC to create this virtual solution we can offer to our clients.

• This advertising feature was first published in the July/August 2023 issue of Businesslife magazine

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