Cash & Liquidity Management

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Corporate Connectivity at HSBC 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 con- nectivity 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.

Corporate Connectivity at HSBC

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

Introduction

Communicating with banks in a secure, automated and timely manner is one of a corporate treasurer’s key priorities. Selecting the right connectivity approach to achieve this is not simply a technology decision, but a holistic organisational endeavour, as it plays an essential role in achieving effective cash management, cash centralisation and visibility, automated reconciliation, secure payments and control over collections.

The more efficiently corporates can communicate with their banking partners, the more effectively banks can deliver services that enhance the way they do business.

Enhancing the way in which corporates communicate with their banks is one of the most significant ways in which today’s treasurers deliver value to their organisations, by optimising the visibility and efficiency of financial processing across the company. The more efficiently corporates can communicate with their banking partners, the more effectively banks can deliver services that enhance the way they do business.

Excellent corporate connectivity capabilities are an essential part of cash management propositions. This includes how to connect the corporates’ systems and applications with the banking systems, the message standards supported, and the connection channels. HSBC’s approach to providing connectivity solutions includes integration with the corporate systems, use of leading-edge messaging standards such as XML/ISO20022, the multi-bank connection service SWIFTNet and data enrichment options. The objective is to deliver real value to our customers.

The issues

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 may 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 corporate 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.

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 bureaux 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 becomes more widely publicised.

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