A Data-Led Approach to Automation and Analytics
by Cindy Murray, Head of Global Treasury Product Platforms and Digital Channels, Bank of America Merrill Lynch
As this year’s conference season progresses, one of the questions I am asked most regularly in panel discussions is ‘What are your clients’ main priorities today?’ The answer is easy: ‘Data’. However, the type of data they are seeking, and the way in which they wish to use it is multi-faceted, reflecting the diversity in treasurers’ and CFOs’ responsibilities.
Diverse data needs
While many companies have achieved efficient payments transmission, they often lack the ability to track payments during their lifecycle. Cash managers need to know quickly if payments have been delayed or returned to avoid missing cut-off times for essential payments, such as urgent supplier payments, and deal with any supplier credit issues or accounting implications. Consequently, treasurers and finance managers are seeking real-time visibility of transaction status information to identify and address problems, and refine processes and payments data to minimise delays and rejections.
Incoming flows can be even more challenging. Companies with a high volume of collections in particular, whether B2B or C2B, often struggle to identify the payer and invoice or account to which it relates, particularly if there have been partial credits or disputes, or invoices have been aggregated or netted. This often results in additional resource overhead, balances held in suspense accounts and therefore unavailable for working capital purposes, and delays in crediting customer accounts. This can damage customer relationships and hamper sales if credit limits show as fully utilised, and/or collection actions are taken erroneously. To address this, clients are looking for banks to transmit enriched information throughout the payments process, using structured fields in ISO 20022 formats to identify cash flows automatically, such as client references, account numbers, invoice numbers, etc.
Harnessing data for client advantage
At Bank of America Merrill Lynch, we manage a vast amount of client data for regulatory reporting and risk management purposes. While this is important for compliance purposes, we also recognise the opportunity to harness this information to help benefit our clients. Data in itself is not valuable; what is important to clients is receiving the right information, and in a format that is useful to them. For example, by leveraging industry-standard ISO 20022 formats, we can provide structured, detail-rich transaction information to facilitate payments tracking and reconciliation. In addition, we provide sophisticated analytics and graphical presentations of cash flow trends to facilitate working capital and liquidity planning and process optimisation. Furthermore, by understanding more clearly where errors or delays are arising, treasurers can pinpoint where processes may need to be improved, or standing data needs correcting or updating.
The wider view
In addition to providing clients with analysis directly relating to their own cash management activities, we can harness our client connections and unique insights into transaction trends and behaviours to benchmark clients’ relative performance against their peer group. For example, many treasurers are interested in measuring their use of ACH and card payments, and process efficiency, such as rejection rates. This intelligence can be very valuable both in monitoring performance, and also justifying investment in financial technology and business process optimisation initiatives.
Offering the right data in a useable format, and being able to present data clearly and professionally, is essential for our clients. We provide our in-depth analytics and intelligence directly through our electronic banking platform, CashPro®. Data can be manipulated to provide very precise analysis, such as grouping or selecting data by factors such as region, currency, business unit, etc. Sophisticated graphical presentation tools enable charts to be included in management reporting, providing senior executives with an immediate insight into liquidity and risk trends, issues and opportunities.
Bank of America Merrill Lynch’s focus on enriching data, facilitating efficient transaction flows and providing transparency does not stop at cash management: indeed, this approach has important implications in areas such as foreign exchange (FX). Hedging exposures in frequently traded currencies automatically, based on agreed margins, is an essential way of reducing risk. We will continue to work with clients to understand their priorities to harness the wealth of data that we manage. This will further enhance clients’ ability to make informed decisions, streamline processes and understand and adopt industry best-practices, across cash management and beyond.