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Instant cash flow through data standardization and an open banking system to free up cash and reduce funding costs


Instant Cash is ready to not only improve efficiency and help create a more strategic cash function, but also provide monetary benefits and lower funding costs.

“A continuous view in real time [on] our cash flow situation helps us to respond not only [our] daily but also our liquidity management requirements, ”said Sharon Wang, chief treasurer at Alibaba during a Sibos 2021 panel on Thursday.

“Credit limits can be released faster […] enable more business without adding risk.

She added that Alibaba has earned an additional $ 29 million in interest income by keeping buffer balances to a minimum.

“Using the money received the same day [corporates] can reduce bank overdrafts or loans, in other words financing costs.

As part of the journey of digitization and automation, treasury departments should take a phased approach to assess how these initiatives affect the function in a more holistic way.

“I encourage companies when thinking about their treasury processes to take small steps in the right direction, but always consider the whole ecosystem,” said Lori Schwartz, Global Head of Liquidity at JPMorgan.

“It is one thing to receive payment transaction information, [but] the next question is: how fast do you apply this? “

Wang said a combination of robotic process automation, Swift gpi API implementation, and AI chatbots enabled Alibaba’s 11-person payments team to process 17,000 outgoing payments per day. .

“The chat bot will provide real-time information on the status of the underlying payment from the payment instruction received by the bank, to the payment process and to the crediting of payments to the payee’s account.”

“We are also enhancing this function by enabling the generation of automated payment leads, on demand. “

Companies will be assessed by their commitment to common standards and an open bank

As an instant cash function becomes more and more a reality, standardization of data inputs and outputs will be essential to enable real-time visibility for companies with a global footprint.

“Standardization is important. A body like Swift could really help [in developing] a single way to connect with all banks, ”said Anita Mehra, vice president of global treasury and financial services at Microsoft.

The banks themselves recognized that it was no longer possible or desirable to tie businesses to a single bank.

“The days when it was difficult to work with other banks – those days are gone,” said Christof Hofmann, Head of Enterprise and Payment Solutions at Deutsche Bank.

“It is clear that you have to embrace multi-banking, you have to adopt common standards and you have to convince customers by the solutions you offer and not by the degree of attachment you try to bring them. “

Banks must therefore move from being a mere banking provider to that of a banking partner, Schwartz said.

“I can’t help but stress again how important it is to consider the partner you are working with. Open banking has created many opportunities and a catalyst. But there will also be value-added services. I think the banks have a very important role to play in this area.

However, while open banking provides a greater degree of flexibility for businesses, they don’t need to embrace all the new offerings. An example is request-to-pay – or request-for-payments in the United States. Although growing in B2C and SME payments, companies have been slower to embrace it.

“A lot of businesses want to be in charge of their own payment cycles. They don’t want payments to be initiated by a third party, ”said Hofmann.

Wang agreed, saying the benefits of asking for payment are somewhat one-sided.

“If you are a beneficiary, you want to request this service because you control your cash flow and reduce customer risk. On the other hand, if you are the payer, you do not welcome it because it is not initialed by you, it is someone else. You may also have reconciliation issues.

For the most part, in jurisdictions where payment request is available, Alibaba has disabled it. Wang added that requesting payment requires a level of mutual trust between you and the customer.

“We do not welcome [request-to-pay] unless we have mutual trust with our customers.

“It really depends on how you and your customers or suppliers position yourself in the relationship when you do business with each other. “


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Cory E. Barnes

The author Cory E. Barnes

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