Treasury for Non-Treasurers: Sophistication in Solvency Management (Part I)
Introduction In the last chapter, we reviewed different types of treasuries at a high level: the operational ones, internal and control-oriented, and the strategic ones, sophisticated and externally oriented to work with and support other organisational functions as well as customers and suppliers. We also reviewed tactical treasuries, neither completely operational nor entirely strategic, that either had too little underlying business cash flow to create value from or were constrained by cultural and contextual factors. We described these tactical treasuries as being in ‘The Chasm’ – trying to resolve too many conflicting objectives with too few resources. We reviewed methods of getting out of the chasm and making treasury strategic and materially value-adding to non-treasurers. This new chapter concentrates on corporate treasury’s most important objective, keeping the organisation solvent. We’ll start with an overview and then review solvency management in operational treasuries. After that, we’ll follow up with tactical and strategic treasuries in the next articles, and then, next, other objectives like profitability support. Note that this article builds on the previous ones. For example, we talked in detail about the impact of cultures and contexts in the two articles about crossing the chasm. You will find it harder to follow without reading these articles first. Each article is short – If you want to read or re-read them, the links are below. Overview: What are the different levels of sophistication in solvency management? Remember this diagram from the article on operational treasuries? Let’s look at all the different levels of sophistication relevant to solvency at all levels of sophistication, along with the associated-level productivity and management strategies: There are six types of treasury with six levels of solvency management sophistication. Before we dive in and talk about each, it’s important to note that these are descriptions of the ‘average’ treasury managing solvency in an ‘average’ way. There are variations in real-life treasuries: Organisations may be more or less sophisticated; Individuals may have unusual innate or previously learnt skills. These variations are noteworthy, especially when we compare sophistication in solvency management with sophistication in profitability support, productivity and management strategy. These can and do get misaligned. We’ll talk about this and its impacts in a later article. The six levels of solvency management sophistication are: 1. Cash management 2. Liquidity management 3. [New] Skills development and application 4. Working capital management 5. Financing optimisation 6. Value-chain financing We will investigate each in turn, including Who needs sophisticated solvency management? Not all companies need sophisticated solvency management, but it’s hard to think of anyone who shouldn’t be interested in whether these companies have appropriate solvency management in place. Imagine an international consultancy like McKinsey or a recruitment consultancy like Adecco. Compare these to manufacturing companies like car companies, long-term research and development investors like GSK or Johnson & Johnson, and even housebuilders like China’s Evergrande. This last one is now famous because it did, in fact, become insolvent. We can only speculate what would have happened if it had had more sophisticated solvency management. Consultancies’ costs, even global ones, are primarily related to their employees. Employees can be decreased or increased quickly in line with sales. In other words, outflows can be reduced fast if there aren’t sufficient current and future inflows. Manufacturing companies, long-term investors in research and development, owners of large amounts of inventory and work-in-progress, on the other hand, cannot adapt so fast. They must borrow or issue shares to remain solvent even in worse economic environments. They, therefore, need to be more sophisticated in managing their solvency. What’s this got to do with you, non-treasurers? It’s hard to think of anyone who shouldn’t be interested in knowing in advance whether these companies have appropriate solvency management and adapt the actions they take as a result. It’s too late once the companies hit hard times. So, imagine you’re a leading decision maker in Acme Manufacturing Corporation, a multi-billion-dollar turnover company that needs large amounts of funding. What kind of treasury do you have now, and what should it be like? You are not the Treasurer, however. How can you tell from the outside looking in? Let’s find out by looking at operational treasuries first. Operational treasuries’ solvency management For a reminder of operational Treasury types, see the article Operational Treasuries. Basic treasuries Basic treasuries do cash management only. They move money between head office, subsidiaries and or banks, doing the same day-to-day unless the CFO or head of the finance function says differently. They follow an ad-hoc management strategy with, usually, no written policies or processes. They have little specialised technology and a small staff – often just one person. This person or small staff will have little or no specialist training. They rely on on-the-job practical experience. What can you expect from this type of treasury if it’s what you’ve got in Acme Manufacturing? Not much – This type of treasury won’t have the tools and skills to assess future solvency. This type of treasury is likely to be found in a smaller turnover organisation, a startup-, a small- or medium-sized enterprise – my experience suggests one with $ 200 million or less in sales – or in organisations where the CFOs do not realise that treasury should be the guardian of solvency management. My experience working on the sales side in banks and as a consultant tells me that many multi-billion $ sales companies have treasuries like this. Let’s describe these basic treasuries in an easy-to-read format consistent with how we’ll describe other types later on: 1. Solvency management sophistication level: 2. Management strategy: 3. Focus: 4. Productivity: Technology: Outsourcing: Banking products and services: 5. Skills: 6. Organisation structure: 7. Ability to handle future funding shortfalls: The accounting department will usually handle all longer-term cash flow planning, not treasury. 8. Unintended consequences at this level: 9. ‘Tells’ non-treasurers might see from outside the function: As a multi-billion $ turnover company, ACME needs a more sophisticated treasury than this. This type is unacceptable except in any…
Nicholas
HSBC’s New Organisational Structure and Implications for Corporate Treasury
HSBC’s recent announcement of a simplified organisational structure, effective from January 2025, is a significant move designed to accelerate strategic execution. By dividing its business into four main units—Hong Kong, UK, Corporate and Institutional Banking, and International Wealth and Premier Banking—HSBC is positioning itself for more focused growth and operational agility. This restructuring reflects a trend seen in large global banks, aiming to streamline decision-making and reduce internal duplications. For corporate treasurers, especially those managing global operations, the implications of this new structure are critical. Treasurers often choose banks like HSBC for their global reach, yet frequently discover that even the largest institutions do not function as one cohesive entity across markets. Local forms, country-specific regulations, and the need for regional contacts remain a challenge, even with global giants. Global Bank, Local Challenges While HSBC’s vast presence in over 50 markets is undeniably a key advantage, treasurers know that navigating the complexities of local regulations, banking norms, and administrative requirements can undermine the efficiencies gained from a global banking partner. For instance, managing cash across jurisdictions may require unique account structures or compliance procedures that differ widely between markets. This is particularly evident in emerging markets where regulatory frameworks are less harmonized with global standards. In many cases, treasurers find themselves dealing with the same bank but essentially managing separate relationships with each local entity. This reality raises an important question: Is bigger truly better when selecting a global banking partner? Is Bigger Always Better? The idea that larger banks are automatically the best choice for corporate treasury has long been debated. While global banks like HSBC offer unparalleled scale, access to liquidity, and the ability to execute cross-border transactions, the local challenges cannot be overlooked. For corporate treasurers, a bigger bank might offer: However, these advantages come with their own set of challenges: The Corporate Treasurer’s Dilemma Corporate treasurers must weigh these pros and cons when choosing their banking partners. While HSBC’s restructuring aims to reduce these internal inefficiencies, it remains to be seen how much of this will benefit the day-to-day operations of corporate treasuries, especially those that rely on HSBC for managing complex global operations. For treasurers, this restructuring could offer some hope of a more unified service experience. By focusing on specific regions like Hong Kong and the UK, and by integrating its global banking and commercial banking functions, HSBC may reduce the fragmentation that treasurers often experience when dealing with different business units of the same bank. However, HSBC’s ability to execute on this vision will be key. Insights from Treasury Experts We thought it would be valuable to get perspectives from Treasury experts, who are also Treasury Masterminds Board members. Jeremy Reedus, Vice President and Global Treasurer, Varel Energy Solutions, Comments: Although we can all respect a bank for improving internal efficiencies, the Treasury professional has an additional issue that comes to mind. If the bank is fully integrated into the company’s ERP, then Treasury is faced with a migration to another institution in the near future. This requires additional SME personnel support from Accounting and IT at minimum. In other words, the bank’s strategic decision has larger ripple effects on an organization than just Treasury. Nicholas Franck, Founder, INTELIGANS, Comments: One question that come to my mind: does splitting into two segments mean the bank is looking to sell off one or the other? It’s normal practice when a company wants to sell part of itself off to another or to PE investors. That would be a market changing move. Patrick Kunz, Fonder/CEO, Percunia B.V. Treasury and Finance, Comments: I am struggling to see this as positive or negative news. So many questions that come to my mind. Will the distance between segments increase? how about global intrabank communication lines? A truly global bank would be great but this will remain challenging for a big bank like HSBC. Time has to tell if this is a smart move. The treasurer judges are still out there. Conclusion: Rethinking Global Banking Strategies In conclusion, while HSBC’s organisational changes aim to simplify their operations, treasurers must continue to carefully evaluate whether a bigger bank is truly the better option for their specific needs. In some cases, the answer may be a blend of global and local banking partners, ensuring that they have both the reach and the on-the-ground expertise required to navigate the complexities of international markets. As HSBC implements its new structure, treasurers will need to monitor whether the promised efficiencies translate into real-world improvements in banking relationships, especially in emerging markets where local compliance and bureaucracy often prove to be the largest hurdles. Also Read Join our Treasury Community Treasury Masterminds is a community of professionals working in treasury management or those interested in learning more about various topics related to treasury management, including cash management, foreign exchange management, and payments. To register and connect with Treasury professionals, click [HERE] or fill out the form below. Notice: JavaScript is required for this content.
Franklin
10 Years of Joint Treasury Excellence with Mann + Hummel
This article is written by TIS Payments For over a decade, MANN+HUMMEL Treasury has been using the TIS cloud platform to control their bank account management, global payments, and connectivity functions. Passing the 10-year mark in this relationship is the perfect opportunity to reflect on a journey marked by continuous technological advancement, innovation, and mutual trust. In this article, Saboor Seddiqi, Key Account Manager at TIS and Mario Parrotta, Group Treasury & Risk Manager at Mann+Hummel, explore what has made their collaboration so successful. Notice: The original version of this article first appeared in the TIS Quarterly Magazine: Summer Edition 2024. For Context: About MANN+HUMMEL MANN+HUMMEL is a leading global company in filtration technology. Under its two business units Transportation and Life Sciences & Environment, the German-based Group develops intelligent filtration and separation solutions that enable cleaner mobility, cleaner air, cleaner water, and cleaner industry. Thus, the company makes an important contribution to a clean earth and the sustainable use of limited resources. In 2023, over 22,000 employees at more than 80 locations generated a turnover of EUR 4.7 billion. The portfolio comprises fuel, oil and air filters for combustion engines and industrial applications, filtration solutions for electric and hydrogen powered vehicles, simulation technologies and filter media, as well as membrane technologies for municipal and industrial water and wastewater treatment. Furthermore, the family-owned company, founded in 1941, offers air and molecular filtration technologies for vehicle interiors, building filtration, as well as industrial applications and cleanrooms. SABOOR SEDDIQI, Key Account Manager at TIS Mario, how did your Treasury transformation with TIS begin back then? MARIO PARROTTA, Group Treasury & Risk Manager at MANN+HUMMEL I can start with an anecdote: About 10 years ago, our then-CFO asked the Head of Treasury: ‘How many bank accounts do we have world-wide?’ It turned out—we didn’t have a clear answer. Our overview was Excel-based and was perhaps updated once a year by being sent “around the world”. So, the directive was: Implement a system that provides full and always up-to-date visibility and allows you to track who has banking authorizations for which accounts, where are all the open accounts globally, and so on. It was also important that the headquarters be involved in the process of opening or closing bank accounts in the future. SABOOR SEDDIQI In this context, it’s interesting to note that in our conversations with various companies, we often hear that the issue is not only the lack of visibility over bank accounts but in particular the transparency on bank authorizations. Without a central system and a super-user approach, individuals who left a company long ago are often still listed as authorized on the bank’s side. Managed locally and across different eBanking tools, a central overview is completely missing. “Without a central system and a super-user approach, individuals who left a company long ago are often still listed as authorized on the bank’s side. Managed locally and across different eBanking tools, a central overview is completely missing.” MARIO PARROTTA Exactly. This was also one of our more challenging issues, but we have now resolved it. We implemented a quarterly process with TIS, where we cross-checked the HR list of people who had left the company. If colleagues at a local entity hadn’t kept in mind to set the necessary changes, we could then directly make them in TIS. This was much more efficient than before, when local systems still had eBanking users listed. But since we now also have Single-Sign-On (SSO) in TIS, we have completely eliminated this issue: As soon as a person leaves the company, the Windows user is deactivated, and they can no longer log into TIS. SABOOR SEDDIQI TIS was only founded 2 years earlier when MANN+HUMMEL decided to manage their bank accounts with us. You mentioned in our preliminary talk that master data and workflows were key topics for you. MARIO PARROTTA Yes, one of our main requirements was the workflows in the platform. We wanted a company-wide two-step procedure where accounts are only requested from banks after approval has been given in TIS. Only then should contact be made with the bank and the account opened. TIS customized and refined all this for us to fit perfectly. SABOOR SEDDIQI As the next step, you then also moved payments to TIS. MARIO PARROTTA Exactly. The first payment was processed via TIS at the beginning of 2016 with our pilot entity. By then, TIS had already been in regular use with us for over 2 years. The company and people out there already knew TIS, so it was a logical step for us to build on that. With TIS, we had good master data and functioning processes. Of course, we also looked at other tools, as required by procurement. But TIS totally convinced us back then. The functionality perfectly matched our requirements. SABOOR SEDDIQI What was a particularly important aspect for you here? MARIO PARROTTA One of the big drivers was the issue of formats. We primarily use SAP, but we also have other ERPs in use. Previously, many resources were tied up with format issues. Translating formats, maintaining formats. We could completely hand that over to TIS. “We primarily use SAP, but we also have other ERPs in use. Previously, many resources were tied up with format issues. Translating formats, maintaining formats. We can now completely hand that over to TIS.” SABOOR SEDDIQI This is clearly one of our strengths at TIS: the flexibility we offer customers through our format library. The relevant back-end systems can be smoothly connected, such as HR providers or TMS—also in different versions, of course. For SAP, this of course applies to the old R3 version as well as the current S4 HANA. Our customers need not worry about potential hiccups. We have a deep integration with SAP through our TIS add-on, and TIS is an SAP-certified partner. MARIO PARROTTA Exactly. We also have other ERP systems besides SAP. And even there, the integration with TIS works very well. Generally, we try to connect everything because we pursue…
The Future of Faster International Payments: What It Means for Corporate Treasurers
In today’s interconnected world, corporate treasurers face increasing pressure to streamline cross-border payments. As global businesses expand, so does the need for faster, more transparent, and cost-effective international payment solutions. A recent update on the European Central Bank’s TARGET Instant Payment Settlement (TIPS) service reveals promising steps toward global payment interoperability, with significant implications for treasurers managing complex multinational cash flows. The Need for Speed in Treasury Traditionally, cross-border payments have been slow, cumbersome, and costly, often taking several days to clear. This can disrupt cash flow, delay supplier payments, and increase financial risk due to fluctuating exchange rates. Corporate treasurers constantly look for ways to mitigate these issues, seeking payment solutions that align with their companies’ liquidity needs. The expansion of fast payment systems like TIPS represents a game-changer for Treasury departments, enabling near-instantaneous settlement across borders. TIPS and the Global Payments Ecosystem TIPS is designed to support real-time euro payments, but its latest initiatives aim to go beyond Europe, connecting with other global fast payment systems. According to the ECB, this will reduce fragmentation in the global payments ecosystem, a challenge that corporate treasurers regularly encounter when managing cross-border transactions. Interoperability between systems not only promises to reduce transaction times but also cuts costs—essential factors for improving overall working capital. Here are the core initiatives related to TIPS’ global expansion: 1. Cross-Currency Settlement via the OLO Scheme: This involves implementing cross-currency settlement, allowing payments between the TIPS platform and other fast payment systems without the need for direct links between them. For corporate treasurers, this would mean smoother cross-currency transactions, lower FX exposure risks, and more predictable cash flows. Having instant access to funds in multiple currencies is invaluable for managing daily liquidity needs. 2. Joining Project Nexus for Multilateral Payment Networks: Project Nexus, spearheaded by the Bank for International Settlements, aims to connect fast payment systems from countries such as Malaysia, India, Thailand, and Singapore. By linking with Nexus, TIPS will evolve into a hub for instant payments in and out of the eurozone. For treasurers managing global operations, this simplifies cross-border payments, cutting down on the number of intermediaries, which often delay transactions and increase costs. 3. Establishing a Bilateral Link with India’s UPI: India’s Unified Payments Interface (UPI) is one of the most advanced and heavily used payment systems globally. A bilateral link with UPI would unlock significant potential for treasurers, especially those handling payments in or out of India. Given that India is among the top ten recipients of remittances from the euro area, corporate treasurers can benefit from seamless euro-to-INR transfers, helping them manage both outgoing and incoming cash flows with unprecedented ease and speed. Use Cases for Corporate Treasurers The adoption of faster payment systems has several direct applications for corporate treasury functions: Faster settlement times mean that treasurers can better predict and manage daily cash flows, ensuring sufficient liquidity across global operations without having to rely on costly short-term borrowing or holding excessive reserves. Cross-currency settlement services help mitigate the risk of currency fluctuations, allowing treasurers to execute transactions at near-real-time exchange rates. This can also reduce the need for complex hedging strategies that often consume time and resources. For multinational corporations, having access to a unified payments ecosystem can drastically reduce the complexity of cross-border transactions. Instead of navigating different payment systems in each country, treasurers can rely on the interoperability of TIPS and other linked networks to ensure faster, cheaper, and more transparent payments. Fast payments ensure that suppliers are paid promptly, potentially improving negotiation terms and fostering better partnerships. This is particularly important in industries with tight supply chains, where payment delays can disrupt production. The Road Ahead: Interoperability and Instant Payments The ultimate goal of these initiatives is to create a globally interconnected instant payment network, aligning with the G20’s vision of faster, cheaper, more transparent, and accessible cross-border payments. For corporate treasurers, this means a significant shift towards more efficient international financial management. As systems like TIPS expand, treasurers will be able to make quicker decisions, improve cash management, and enhance their companies’ global financial strategies. Treasurers should stay informed about developments in the global payments landscape and consider how these advancements could fit into their broader liquidity and risk management strategies. The future is fast, and corporate treasury must be ready to keep pace. Also Read Join our Treasury Community Treasury Masterminds is a community of professionals working in treasury management or those interested in learning more about various topics related to treasury management, including cash management, foreign exchange management, and payments. To register and connect with Treasury professionals, click [HERE] or fill out the form below. Notice: JavaScript is required for this content.
Optimize Your Cash Forecasting with AI
This article is written by Kyriba Imagine a world where manual processes and guesswork don’t bog down forecasting. Instead, your forecast is created easily using real-time data and predictive analytics. This is the potential of artificial intelligence (AI) in modern financial operations; this is the power of AI in cash forecasting. AI’s ability to process vast amounts of financial data in real-time, predict cash flow trends, and provide actionable insights is already changing the game for Treasury teams. These advancements enable organizations to navigate economic volatility with unprecedented precision and confidence in the accuracy of their forecasts. Traditional Cash Flow Forecasting Methods Contribute to Liquidity Gridlock Cash flow forecasting is a cornerstone of Treasury management. Traditionally, the process has relied heavily on historical data, manual data entry, and complex spreadsheets, requiring Treasury teams to spend considerable time consolidating data from multiple sources, which leads to inefficiencies and inaccuracies. The time-intensive nature of these traditional methods means that treasury teams are often operating one step behind and with increasing volatility in the market, that can be detrimental to future growth. Staying ahead of the curve demands a more efficient, accurate, and dynamic approach to cash forecasting–one that AI is uniquely positioned to deliver. By leveraging AI, organizations can become better equipped to handle economic uncertainties and make informed decisions. The shift from simple forecasting to a broader liquidity planning approach involves surrounding traditional cash flow forecasts with real-time data from diverse sources. This expansion allows organizations to formulate a true enterprise liquidity strategy, helping them understand and manage liquidity risk while ensuring financial stability and resilience. It All Begins with a Data Strategy A critical component of AI in cash forecasting is having a robust data strategy in place that specifies how a company collects, stores, manages, and analyzes its data. Having the right data strategy is a game changer and an essential first step for integrating AI, and real-time insights, into your cash forecasting. By tapping into real-time data processing, treasury teams can craft a full picture of their company’s liquidity and thus are better equipped to make quick, informed decisions, and optimize their liquidity performance. Additionally, introducing real-time data into the cash forecasting process helps mitigate risks- something any CFO would be happy to hear. Through scenario planning and sensitivity analysis, companies can gauge how changes in the economy, environment, and customer behavior might impact their financial position, allowing them to tweak their strategies, hedge against risks, and stay one step ahead. Connect All Data Sources to Activate the Full Benefits of AI Once a data strategy has been established, the next step is connecting all of your data sources to a single source of truth a.k.a. a data lake. By ensuring seamless integration and communication between banks, ERPs, applications, and data trading platforms, you provide the fuel AI uses to leverage intelligence capabilities effectively. This approach is specific to your organization which means that the outcome is hyper-relevant and extremely context-rich. With a data lake in place, AI tools can quickly analyze vast amounts of integrated data. This provides context-rich insights that enhance the precision of your forecasts and make it easier to achieve financial stability and business resilience. Leveraging AI for cash forecasting and liquidity performance management has enabled organizations to achieve remarkable outcomes: $1.04M average net interest benefit from 47%+ reduction of idle cash $55M average free cash flow per $1B revenue from Supply Chain Finance program 87% reduction in overall risk impact with BI-enabled exposure management Source: Kyriba Value Engineering Analysis of 341 Corporations Top Applications of AI in Cash Forecasting The integration of AI in cash forecasting extends beyond basic financial management, offering solutions that are as varied as they are impactful. Some key applications where AI is making a significant difference are: These applications enhance the accuracy of cash flow forecasting and broaden the scope of overall financial strategy, making it more powerful and responsive to both internal and external changes. By harnessing AI, organizations can both improve their immediate financial forecasting abilities and strengthen their strategic planning capabilities to set themselves up for future success. Just Scratching the Surface In a recent webinar, Kyriba’s Viena Swierczek, Solution Engineer, and Lisa Husken, Value Engineer, highlighted how AI, especially as it relates to cash forecasting, refines existing processes and paves the way for groundbreaking approaches in financial management. “AI is not just about automating existing processes,” Lisa Husken, Kyriba Value Engineer, said. “It’s about enabling entirely new ways of thinking about financial strategy and execution.” “We are just scratching the surface of what AI can do in the financial sector,” Viena Swierczek added. “The next few years will be crucial in defining how deeply integrated AI becomes in our everyday decision-making processes.” This forward-thinking perspective invites finance leaders to consider the broader opportunities of AI beyond immediate operational improvements. Read more from Kyriba Join our Treasury Community Treasury Mastermind is a community of professionals working in treasury management or those interested in learning more about various topics related to treasury management, including cash management, foreign exchange management, and payments. To register and connect with Treasury professionals, click [HERE] or fill out the form below to get more information. Notice: JavaScript is required for this content.
Payment hub security: Everything you need to know
This article is written by Nomentia Executive summary: As businesses handle more sensitive data and cross-border transactions, payment hubs have become essential for secure and efficient payment processes. Their security features mitigate fraud and operational risks, but continuous system strengthening is crucial to address evolving threats. In this blog post, Brian Hopkins, CISO at Nomentia with over 20 years of experience, discusses the challenges in modern payment activities and the security features of payment hubs and shares best practices for enhancing payment security, ensuring businesses can trust these systems to protect their financial operations. Meet our security expert Brian Hopkins, Chief Information Security Officer at Nomentia Brian is responsible for internal operations and processes at Nomentia, including information security, data privacy and corporate ICT. Brian has over two decades of experience in payment automation, including key roles in product delivery, product management, carve-out projects, HR and information security. Brian’s extensive experience and close customer co-operation have perfected his deep understanding of how cash management has evolved in organizations, from manual repetition to process automation and exception management. Security challenges in payment activities The top security concerns regarding payments are tied to their sensitive nature. These activities involve a series of financial data, including account details, customer information, and transaction amounts. This makes payments an attractive target for cybercriminals. According to AFP’s 2024 report, 80% of organizations reported falling victim to payment fraud, with nearly 40% recovering less than 10% of stolen funds. Any breach in security could result in compromised data, fraud, or disrupted financial operations. Based on the CIA model – Confidentiality, Integrity, and Availability, we can categorize the challenges related to payment activity security as follows: These security issues are becoming more challenging because payment systems are getting more complex, often working with outside vendors and moving toward instant payments. Different payment security threats and their impacts Companies should be aware of several security threats when conducting payment activities. Some of the most common risks include: When any of the threats occurs, the most immediate impact of fraud is financial loss, which can vary significantly based on the transaction size. In cases where large sums are targeted, such as breaches involving banks with hundreds of millions at risk, the financial damage can be serious. There is also the risk of reputational harm, which can be just as damaging. Smaller fraud attempts may go unnoticed for long periods, gradually causing substantial cumulative losses, although advancements in fraud detection systems have made these harder to execute. However, one-time, high-value frauds remain a significant concern despite these improvements. Why payment hubs are an ideal solution for secure payments Due to the critical nature of payment activities, businesses must carefully evaluate the systems they use to manage payments. While ERP systems and bank portals have long been popular, these solutions can pose challenges, particularly as a company’s financial infrastructure’s complexity grows. Many ERP systems have built-in bank connectivity, but each system often operates differently. This lack of standardization can lead to complex processes, especially for organizations using multiple banks or systems. Bank portals, on the other hand, offer limited functionality and rely heavily on manual processes, which increases the risk of errors and fraud. Payment hubs come in the picture as secure places for payment activities, protecting them effectively from common frauds. One of the main advantages of using a payment hub is the ability to harmonize the payment process across multiple systems and banks. The payment hub ensures that all payments follow the specific approval processes, such as the “four-eye principle” for approvals and integrates fraud prevention features. These features can detect duplicate payments or unauthorized changes to bank account details. Additionally, payment hubs often come with robust security features like encryption and fraud detection. Payment hubs offer several security features, as mentioned, but what exactly are they? And what companies should look for in a payment hub to ensure their payment activities are secure. We’ll explore these aspects further in the next section. Important security features of payment hubs To safeguard payment hubs effectively, the platform must combine technical solutions with secure processes. When choosing a payment hub from security perspective, businesses need to make sure the providers secure the following features for their solutions: Technical security features A payment hub’s technical security is foundational, ensuring that sensitive information is protected throughout the payment process. Usually, the technical features for security are covered in information security standards such as ISO/IEC 27001. Below are these must-have features: Process-related security features Beyond the technical aspects, payment hubs also require comprehensive processes to maintain security and operational efficiency. These process-related features ensure that all employees use the hub securely, especially in large organizations. Advanced fraud detection and prevention Fraud detection features are vital for any payment hub. They ensure that potentially fraudulent activities are identified and halted before they escalate. Business continuity and disaster recovery In addition to day-to-day security features, payment hubs should have a business continuity and disaster recovery plan to ensure that payment operations can continue even in the event of an outage or cyberattack. Emerging challenges and best practices for securing payment hub As payment hubs take on increasingly important roles in managing payments for growing businesses, they are encountering new challenges. Among them, Brian Hopkins highlights two key challenges: the rise of real-time payments and the growing complexity of financial systems. Growing challenges With real-time payments, the need for stronger security becomes even more critical. Once a payment is initiated, there is very little time to detect and reverse any fraudulent activity. For example, if a fraudulent cross-border transaction is processed, it can be nearly impossible to recover the funds, especially if the payment goes to a country with less stringent financial regulations. Additionally, as payment hubs become more interconnected with external financial partners, suppliers, and customers, the potential attack surface expands. This interconnectedness introduces more entry points for cybercriminals. A cyberattack on a third-party payment vendor could have a ripple effect, impacting the primary company and its operations. These challenges are just a few of the emerging issues businesses need to address when using payment hubs. While…
Global Banks to Use Swift for Digital Asset Transactions by 2025
The financial world is undergoing a transformation with the rise of digital assets and tokenization. And Swift is stepping in to facilitate this change. Starting in 2025, global banks will trial live digital asset transactions using Swift’s well-established messaging and infrastructure. This is an important step in creating a bridge between traditional finance and the rapidly evolving world of digital assets. Swift has long been a central player in global payments, ensuring secure and reliable cross-border transactions for financial institutions worldwide. With digital assets gaining traction—both in the form of cryptocurrencies and tokenized real-world assets—the need for a platform that supports the interoperability of these assets is growing. Swift’s initiative aims to meet that demand. Connecting Traditional Finance with Digital Assets One of the key challenges in integrating digital assets into mainstream finance is interoperability. Different platforms and blockchains often operate in silos, making it difficult for financial institutions to manage cross-border and cross-asset transactions. Swift’s approach, which leverages its messaging infrastructure, is to create a unified system for managing both digital and traditional assets. Earlier in 2023, Swift conducted a series of successful blockchain interoperability tests with global banks and financial institutions. These tests confirmed that Swift could enable digital asset transfers and ensure smooth communication between different platforms. The upcoming trials will take this a step further. This will allow banks to conduct live transactions using digital assets, all while connected to Swift’s network. Key Participants and Vision Prominent financial institutions, including BNP Paribas, Citi, and Clearstream, are taking part in the trials. These banks, along with other global players, will explore how they can integrate digital assets into their offerings. Whether it’s handling tokenized securities or settling digital currencies. Swift aims to be at the forefront of facilitating seamless financial transactions. This trial will provide valuable insights into how digital assets can coexist with the traditional financial system. Swift’s role will be to ensure that transactions are not only secure and compliant but also efficient. This is regardless of the asset being transferred. As more assets become tokenized—ranging from real estate to stocks—having a robust system like Swift’s that can handle these transactions will be crucial. What This Means for the Future The move towards digital assets is gaining momentum, driven by the potential benefits of tokenization. Tokenized assets, for instance, can enhance liquidity, make trading more efficient and open up new investment opportunities. Swift’s involvement signals that mainstream financial institutions are taking this seriously. For treasurers and finance professionals, this development could mean more efficient cross-border transactions, lower costs, and improved access to new asset classes. It’s a sign that the financial infrastructure of tomorrow will be more inclusive, supporting a wide range of assets and platforms without sacrificing the security and reliability that Swift is known for. Swift’s digital asset transaction trial is not just about adopting new technology; it’s about shaping the future of global finance. As tokenized assets and cryptocurrencies continue to grow, Swift is positioning itself as a key enabler, ensuring that both traditional and digital assets can be managed seamlessly in the same system. Conclusion The financial landscape is evolving, and Swift is making strides to ensure it remains relevant in a world where digital assets play an increasing role. With trials set for 2025, the global banking community will gain first-hand experience in managing digital assets, paving the way for broader adoption and integration of these assets into mainstream finance. Swift’s efforts to connect traditional and digital finance could be a major step forward for the global economy, offering new possibilities for financial transactions across borders and asset types. For financial professionals, keeping an eye on Swift’s developments in this area will be critical as the financial ecosystem continues to embrace the future of digital assets. Also Read Join our Treasury Community Treasury Masterminds is a community of professionals working in treasury management or those interested in learning more about various topics related to treasury management, including cash management, foreign exchange management, and payments. To register and connect with Treasury professionals, click [HERE] or fill out the form below. Notice: JavaScript is required for this content.
It’s not just about buying — it’s about using: What happens after the Decision?
This article is written by Cobase Choosing the right financial system for your business is a big deal, but the real challenge starts after you’ve made that decision. It’s easy to focus on picking the right solution, but what comes next—getting the system up and running, training your team, and making sure everything works smoothly—is where things can get tricky. The truth is, many businesses hit unexpected bumps in the road during this phase, from hidden costs to confusing setups. Let’s talk about how to avoid those pitfalls and why Cobase makes this process as seamless as possible. The reality of implementation After choosing your financial system, you face a new set of questions: How will the implementation be handled? Are you going to need external consultants, which can add extra costs? Will the solution provider manage the setup, or will your team need to take on some of the work? And importantly, what happens if something goes wrong—who’s responsible? These concerns are valid. In practice, many businesses discover that implementing a new system is more complicated than they expected. Some providers might require you to bring in expensive consultants to get the system running. Others might promise easy integration but struggle to deliver, leaving you to deal with unexpected delays and costs. Worse, when issues arise, it can be unclear who is accountable, leading to finger-pointing instead of solutions. Are you sure your provider can deliver? Here’s a critical question: Are you sure your provider has done this before? Implementing a financial system isn’t just about the software; it’s about knowing how to connect it seamlessly with your existing infrastructure. Many providers will assure you they can integrate with all your systems and banks, but the reality can be very different. Before you commit, challenge your provider. Have they successfully set up similar integrations before? Can they prove it? How quickly can they get you up and running, and do they have the experience to back up their promises? These are tough questions, but they’re essential to ask. The last thing you want is to discover halfway through implementation that your provider is in over their head. How Cobase keeps it simple and transparent At Cobase, we know that the success of your financial system isn’t just about making the right choice—it’s about ensuring everything works smoothly once you’ve made that decision. That’s why we’re committed to making the implementation process as straightforward and hassle-free as possible, with no hidden surprises. Support from day oneWhen you choose Cobase, you’re not left to figure things out on your own. We provide you with a dedicated project manager who guides you through every step of the implementation. We don’t rely on expensive external consultants—we handle everything in-house, ensuring your system is up and running on time and within budget. Our project manager is your single point of contact, so you always know who to turn to if questions or challenges arise. No hidden costsOne of the biggest concerns during implementation is the fear of hidden costs. Some providers might offer a low initial price but tack on charges for every additional feature, customization, or unexpected challenge. At Cobase, our pricing is transparent and straightforward. You only pay for the features you need, and there are no hidden fees. This means you can budget confidently, knowing there won’t be any surprises down the road. The integration landscape Integration is where many systems stumble. You’ve been promised seamless connectivity with your banks, ERP, and other systems, but how often does that promise hold true? With Cobase, we bring years of experience to the table. We’ve successfully integrated our platform with a wide range of banks and systems around the world. Our extensive library of pre-existing connectors means we can get you up and running quickly, without the need for extensive custom development. And if you have unique requirements, we have the expertise to handle them. Getting your team ready A financial system is only as good as the people using it. Even the most sophisticated system will fail if your team isn’t comfortable with it. Cobase understands this, which is why we make sure your team is well-prepared from day one. Our platform is designed to be intuitive and user-friendly, minimizing the learning curve. We also provide tailored onboarding and training to ensure everyone knows how to use the system effectively, helping you get the most out of your investment right from the start. Staying on track and on budget It’s a common story: a project starts strong but slowly drifts off course, eating up more time and money than planned. This is a risk with any major implementation, but at Cobase, we work hard to keep your project on track. We develop a clear plan with defined milestones, so you always know where you stand. Our approach is built around transparency and accountability, ensuring you stay within budget and meet your deadlines. Ongoing support you can count onYour financial system needs to keep evolving to stay effective. That’s why Cobase offers continuous support and maintenance. We handle all the updates and any issues that arise, so you don’t have to worry about them. Our support team is always ready to assist, ensuring your system remains efficient and reliable long after the initial setup. We’re here to make it work—no excuses At Cobase, we believe our job isn’t done until you’re fully operational and satisfied with how your system is performing. We’re committed to making the process as smooth and transparent as possible, with no hidden costs and no excuses—just a system that works the way you need it to. When you choose Cobase, you’re not just buying software—you’re partnering with a team that’s dedicated to your success. We’re here to ensure everything goes smoothly from day one, and we’ll be there to support you every step of the way. No excuses, just results. Money moves: 6 secrets of financial leaders The financial world is changing fast. To stay ahead, you need…
Wero: EPI’s New Instant Payment Solution Reshaping European Finance
The European Payments Initiative (EPI) has taken a significant step towards unifying the European payment landscape with the launch of Wero, an innovative instant payment solution. This new service, currently available in France, is backed by major banks, including BNP Paribas, Crédit Agricole, and Crédit Mutuel. As Wero begins to make its mark on the European financial sector, it’s worth exploring its current features, future aspirations, and the broader implications for the continent’s payment ecosystem. Key Features of Wero Wero simplifies peer-to-peer transactions by allowing users to send and receive money instantly using just an email address or phone number. This streamlined approach eliminates many of the complexities associated with traditional banking transactions. Set to replace Paylib by 2025, Wero is positioning itself as an all-in-one payment solution. Its functionality is expected to expand beyond personal payments to include: This versatility will enable users to conduct a wide variety of transactions seamlessly, whether online or in-store. Bolstering Europe’s Financial Sovereignty One of the primary objectives of Wero is to strengthen Europe’s financial sovereignty. Historically, the region has relied heavily on international payment processors like Visa and Mastercard for cross-border transactions. By establishing Wero, EPI aims to create a secure, efficient, and European-controlled payment system. This initiative is expected to reduce dependence on non-European players and promote smoother cross-border transactions within the region. Benefits for Businesses Wero also aims to enhance the payment experience for businesses, particularly small and medium-sized enterprises (SMEs). The instant payment features allow retailers to access funds immediately, which can significantly improve cash flow and liquidity. This speed is crucial for smaller merchants who often depend on quick access to their earnings to maintain operations. Part of a Broader Vision Wero is part of EPI’s broader vision to simplify payments across Europe, addressing the challenges of fragmentation and fostering financial inclusion. The platform aligns with the European Union’s initiative to develop a more cohesive and secure financial infrastructure, positioning itself as the primary digital wallet for everyday transactions. Future Aspirations and Ultimate Goals While Wero is currently operational in France, its ambitions extend far beyond. The EPI has outlined several key aspirations for the future of Wero: Challenging the Status Quo One of the ultimate goals of Wero and the EPI is to provide a viable European alternative to the dominant Visa and Mastercard schemes. This ambition is driven by several factors: Challenges and Opportunities The road ahead for Wero is not without challenges. Achieving widespread adoption across diverse European markets, each with its own established payment habits and systems, will require significant effort and investment. Moreover, competing with well-entrenched global players like Visa and Mastercard, who have decades of experience and vast networks, is a formidable task. However, these challenges also present opportunities. The fragmentation of the European payment landscape means there’s significant room for improvement and efficiency gains. Wero’s success could lead to: Looking Ahead As Europe continues to move towards greater digitalization and real-time financial services, Wero is poised to be a transformative player in modernizing the payment landscape. It offers individuals and businesses a streamlined, efficient, and secure way to manage their transactions in a rapidly changing digital economy. The success of Wero could mark a significant shift in how Europeans conduct financial transactions, potentially reshaping the continent’s financial ecosystem for years to come. As it evolves and expands, Wero may well become a cornerstone of European financial sovereignty and a symbol of the EU’s capacity for technological innovation and economic integration. The journey of Wero is just beginning, but its potential impact on European finance is immense. As it grows and develops, it will be fascinating to watch how this ambitious project shapes the future of payments in Europe and beyond. Also Read Join our Treasury Community Treasury Masterminds is a community of professionals working in treasury management or those interested in learning more about various topics related to treasury management, including cash management, foreign exchange management, and payments. To register and connect with Treasury professionals, click [HERE] or fill out the form below. Notice: JavaScript is required for this content.