Reality Check: Managing Cash and Treasury on the Go

While preparing to fly to Hong Kong, global treasurer ‘Eric’ checks the company’s cash balances on his tablet and notices that a bank account in the UK has a negative balance. So he calls up ‘Clara,’ his finance manager in Singapore.
Eric: “Hi, Clara, this is Eric here. I’m looking at the global cash balances and I noticed that UK has a deficit of US$45 million while Singapore is holding more cash than is required. Can you initiate a payment of US$45 million to our UK subsidiary as soon as possible? I do not want to incur additional overdraft interest.”
Clara: “Hi, Eric, sure I would do that. Will you be in the office to authorize the transaction after I key it in on Citi Direct?”
Eric: “Unfortunately not. I’m on the way to the airport right now to catch a flight to Hong Kong. I will authorize it on my mobile when I can.”
Clara: “That works. I will initiate the transaction now and you will receive an alert once it’s done.”
If you’re a Citi corporate client in Singapore, chances are you would have sat through this piece of role-playing dialogue. The global bank has been tweaking its Citi Direct platform and launched new mobile and analytics modules in October. Citi is not the only pioneer. Earlier, DBS Bank partnered with software firm ACI on IDEAL 3.0, an Internet and mobile banking platform that now serves more than 162,000 corporates across Asia and the UK.
Paul Henaghan, ACI Managing Director–Asia Pacific and Japan, credits the innovations to a change in mind-set. “What we’re seeing now is that banks, particularly leading-edge banks that are looking to grow and support the market, are spending a lot more time listening to what the customers require,” he observes. CFOs and treasurers have long complained that the lenders have simply been pushing products and services.
Visibility and security
But don’t get too excited. While the Citi and DBS offerings are a good start, they are by no means responding fully to user needs. For example, the banks may be talking about 100% real-time visibility, such as Eric getting to view global cash balances on his tablet. In reality, what you’ll see are just the transactions of the particular bank whose platform you are using. Your transactions with other banks will not be covered, unless you request them to send reports to the platform bank – and they may decline or send late or incomplete data.
Some of the touted features are not yet operational. While Citi’s role-playing scenario has the treasurer viewing balances on his tablet, the app that will make this possible has yet to go to market. Citi says it will be available “soon.” For now, mobile users will have to view balances on their smartphone (which is rather wearing on the eyes) or their laptop.
There are also questions about security, although Citi is careful to stress that transaction banking services on mobile devices is as secure as in the office environment. The security features will be the same as on the desktop and laptop, says Citi’s Melvyn Low, managing director and head of ASEAN and Singapore, Treasury and Trade Solutions. Users on the road are required to satisfy the same multi-factor authentication process that they must do at the office, involving a password, security PIN and the constantly changing numbers of their Safeword Card.
“Security is the number one constant,” says Low. “What clients don’t want is just free unfettered Internet access [on mobile devices]. You have the security features to log in, that’s why we feel clients will be comfortable.” Transactions can be initiated only on computers; the smartphone can be used only to authorize transactions, receive alerts and view balances when the authorizing executive is out of the office.
“You cannot take the whole thing and put it all on mobile or the tablet,” he adds. “It doesn’t work that way. There are different levels of users and they use for different things.” That’s what Citi learned since it introduced Internet banking in 2000 and the Citi Direct portal in 2009. “We noticed the behavioral patterns of different users within the company, and so we came out with multi-faced channels. We know that different users use the channels for different purposes.”
And the cost?
Fair enough, but the treasurer or CFO must make sure not to misplace the Safeword Card while on the road. That can be a challenge if there’s a whole slew of cards and dongles to safeguard. Many companies in Asia are multi-banked – they maintain accounts with more than one bank for coverage, regulatory and relationship reasons. The authorizing executive on the go has no choice but to bring along the security devices from various banks.
What about the cost? The new Citi mobile and analytics modules are free for the next six months, but there will be a charge after that although the bank cannot give a figure as yet. Users of DBS’s IDEAL 3.0 already have to fork up. For transactions, in addition to the usual bank charges, they are charged S$30 as setup fee and another S$30 a month as maintenance fee.
“Technology is expensive,” says Tom McCabe, head of global transaction services at DBS. “We spent over US$20 million on this.” But he reckons it’s all worth it. The new platform, he says, allows corporate clients “to manage their exposures and their cash more effectively.” In combination with initiatives that have collectively cost “well over US$200 million in the last two-and-a-half years,” says McCabe, IDEAL 3.0 is helping return “almost a billion dollars cumulatively in new revenue.”
For now, DBS is waiving set-up and maintenance fees for general enquiries – viewing of account statements, trade transactions and remittance advice slips; enquiries on fixed deposits and subscribing to alerts and trade notifications. Enquiry users get two free security devices and pay S$20 for each additional device.
Enquiry and transactions – these include local and international payments, payroll transfers, collections and foreign exchange – can be accessed anywhere anytime on computers, provided there is an Internet connection. In addition, mobile phones can access account balances and activities and can be used to approve transactions on the go.
 “I’m not a person to make a statement that says we have the best Internet platform in the world,” says McCabe. “What I will say is that the feedback we have from customers, the awards that we have won, confirm that [IDEAL 3.0] is a highly productive and usable system for our customers and they see value in it.”
Finding patterns
What the DBS product cannot do for now is analytics. Even for software developer ACI, says Henaghan, “it’s early stages, but we’re certainly making inroads.” That said, he believes that organizations cannot afford to ignore big data and real-time analytics. “It’s a very topical and critical area. Corporates generally run the reporting and analysis themselves. The reports they get from their banks traditionally haven’t been as useful potentially as they could be.”
Citi is at a rather more advanced stage than DBS in this respect. Using the Citi Direct desktop version, corporates can glean insights into failed payments, for example. In a matter of minutes, a Payments Analytics module can extract information from all the client’s Citi accounts around the world and generate a report about the main reason for payments being rejected. The reason may be “invalid beneficiary account,” for instance, indicating that the account is incorrect or closed.
Another module, called the Payment Risk Manager, can extract data about unusual payments just below the amount that requires authorization by the treasurer. For example, two payments may be made within the day or in a matter of days, one for $9,900 and the other for $9,000. The Payment Risk Manager can flag these unusual payments, which may indicate fraud, from the massive amount of data.
These are useful features, to be sure, but the analytics function in Citi Direct is limited. Only Citi transactions are covered, so companies using multiple banks will not get the complete picture. Sophisticated operations such as modelling or predictive analysis are not supported. For these, the company will need to download the bank data into its own analytics system and combine the information with those from its other banks as well as internal data from the ERP, TMS and other systems.
Realistic expectations
It’s probably too much to expect the banks to provide these sophisticated services anyway. What banks can actually do with Internet services, says ACI’s Henaghan, can be categorized into stages. Level One covers making payments and queries anywhere anytime with an Internet connection. Level Two is the integration of various accounts, geographies and transaction types – payments, collections, trade finance, loans, foreign exchange – in a unified interface.
Level Three is extending the functionalities to mobile devices. “Multi-channel would be a great description,” says Henaghan. “Regardless of the environment, the experience remains constant.” Level Three also includes the basic analytics that Citi is already offering, and beyond that, possibly “person-to-person, anytime anywhere” payments via a mobile phone or other device functioning as an e-wallet. 
What about the multi-banking dilemma? “I personally have not seen anything yet [in the banking industry] that truly integrates multiple relationships that a corporate has with different banks into a single view,” says Henaghan. The various formats, codes and systems used by different banks and mandated by different regulators make this undertaking difficult.
Alternative paths
There is an alternative approach. SWIFT, the interbank messaging cooperative owned by the banks, has introduced SWIFT for Corporates in Asia, a product that allow a corporate to use the SWIFT engine and connectivity to conduct transactions with SWIFT-ready banks (which include Citi, HSBC, Standard Chartered, Agricultural Bank of China and other financial institutions in more than 100 countries).
In theory, SWIFT for Corporates should give total visibility as the banks will be reporting previous day and intra-day transactions in standardized format, which the corporate’s own system will then be able to consolidate and report out. In reality, less than 600 banks around the world are deemed ready under SWIFT’s bank readiness certification program. (DBS is not on the list, which can be found on the SWIFT website).
So while the global balances are more complete than what can be seen on Citi Direct or IDEAL 3.0 alone, they may still not cover 100% of the corporate’s transactions. There’s a lot more work to be done as well on mobile access, analytics and the other value-added services that individual banks (and software specialists like ACI) are developing for their own proprietary platforms.
The time may come when the world’s financial institutions will conduct transaction banking using the same formats, codes and other standards. Maybe. But for now, CFOs and treasurers need to keep tabs on what’s on the market, cut through the hype and decide what works best for rtheir organization.
And don’t forget those security devices.
About the Authors

Cesar Bacani is Editor-in-Chief while Melissa Chua is Contributing Editor at CFO Innovation.  


Photo credit: Shutterstock


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