Creating Value through Alliance Lite2 at UNESCO
by Anssi Yli-Hietanen, Treasurer, UNESCO
Although UNESCO has a relatively small treasury management function, its needs are complex with operations across every continent and 69 local offices. Consequently, the ability to process payments efficiently and achieve visibility over cash and risk across the organisation is essential, but without the need for substantial investment or resourcing. Having evaluated a range of options, UNESCO identified Alliance Lite2, SWIFT’s convenient cloud-based solution for bank communication globally, as the most appropriate solution for their needs.
UNESCO treasury organisation
We have a centralised treasury function based at our Paris headquarters, responsible for managing UNESCO’s banking relationships and global cash management. While our treasury function selects banking relationships on behalf of UNESCO, we increasingly do so in co-operation with other United Nations organisations to leverage economies of scale and access a wider range of solutions and services. We currently have one primary bank for payments processing in our major currencies, and relationships with a further 80 banks from 30 different banking groups, with which we hold around 200 bank accounts. Ultimately, our aim is to rationalise these relationships with a selected group of United Nations partner banks that together give us the global coverage we require.
Legacy cash management solutions
Before embarking on this project, we had a legacy payments platform in place that we used to validate and transmit payments to our bank, and import balance and transaction information (MT940) for all UNESCO’s bank accounts. This information was then integrated into our ERP system each day. This platform was connected to our primary payment banks via a host-to-host connection based on FTP (file transfer protocol). In addition, each remote office used web-based electronic banking solutions provided by the relevant bank(s) for payment processing or used manual methods such as hard copy instructions or cheques.
These fragmented arrangements for payment processing had a variety of limitations. At a headquarters level, our cash management platform was costly to maintain, the banking interface did not meet our security requirements and we had experienced some stability issues. At a local level, many of the bank proprietary systems that were in use could not be integrated with our ERP solution.
There were wider challenges too. The use of manual payment methods increased the risk of error or fraud, with serious financial and reputational implications for UNESCO and the United Nations. Similarly, by using different methods to make payments, it was impossible to standardise processes and controls across UNESCO, resulting in a lack of efficiency and automation.