Cash & Liquidity Management

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How HSBC Puts Connectivity to Work for its Clients One of the primary challenges faced by corporates, whether working with multiple banks or in some cases even with a single bank, is the difficulty in connecting various banking systems, each of which uses its own format, to multiple internal systems which again use their own formats. To achieve this, corporates often need to expend significant resources, as do their banks and system vendors, to set up new interfaces whenever the corporate changes or adds banking relationships, or upgrades or replaces internal systems.

How HSBC Puts Connectivity to Work for its Clients

by Ian Bryant, Senior Product Manager, HSBC Global Payments & Cash Management

The way in which corporates communicate and integrate with their banks has become one of the most significant issues which today’s treasurers need to address. But connectivity is not simply the domain of technology experts; it is the key to effective cash management: cash centralisation and visibility, automated reconciliation, cheaper and more secure payments, regulatory compliance and efficient control over collections. All require an effective communication channel between a corporate and its banks.

One of the primary challenges faced by corporates, whether working with multiple banks or in some cases even with a single bank, is the difficulty in connecting various banking systems, each of which uses its own format, to multiple internal systems which again use their own formats. To achieve this, corporates often need to expend significant resources, as do their banks and system vendors, to set up new interfaces whenever the corporate changes or adds banking relationships, or upgrades or replaces internal systems. This is exacerbated even further when corporates engage in mergers and acquisitions, as treasury may inherit an entirely new banking and systems infrastructure which needs to be integrated within the existing framework.

There would seem to be two possible solutions to the problem. Firstly, it would be a great deal easier if internal systems, which generate information to transmit to the banks, or receive information from them, and the banking systems to which they connect all used the same format of information. That way, while a similar number of interfaces might still exist, these would be uniform and new banks and systems could simply be plugged in to connect to each other.

Secondly, rather than establishing multiple interfaces between systems, an alternative would be to channel all financial messages through a common network to which all financial counterparties are connected.

The past few years have seen significant progress in achieving both of these aims; standardisation by XML ISO 20022 and SWIFT connectivity. While the complexity of corporates’ connectivity requirements has never been greater, the solutions now available to manage these and optimise cash management have also never been more advanced or more convenient.

Getting the right solution

The ability for a treasurer to send and receive information in a secure way with the company’s banks, directly to and from internal systems is crucial to every aspect of a treasurer’s role, so having the right connectivity solutions should be a priority.

The options are diverse but the opportunities are endless. With some exceptions, SWIFT has primarily been the domain of corporates with large cash flow volumes or numerous banking relationships. New pricing arrangements and simpler ways of connecting to SWIFT, including SWIFT initiatives in 2008, and the convenience of service bureaus and member concentrators, means that bank independent connectivity is accessible to a far larger spectrum of corporates than ever before. At HSBC, we anticipate that our customers will increasingly seek to connect both to HSBC and other banks through SWIFT as the experiences of corporates with similar treasury and cash management challenges become more widely publicised.

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