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Ian Argue | Managing Partner| Global Treasury Partners Greg Person | Vice President, Global Presales | Kyriba
How to Select and Implement a Global Banking Structure March 22nd, 2017
© 2017 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 2
Ian Argue, CFA
Managing Partner
Global Treasury Partners
Greg Person, CTP Vice President, Global Presales
Kyriba Corp
Today’s speakers
© 2017 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 3
Agenda
• Issues and Trends
• Strategy Definition
• Selection Process
• Implementation
• Benefits
Issues and Trends
© 2017 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 5
Issues and Trends
Regulatory, technological and competitive factors will force treasurers to stay on top of developments and plan
A number of factors are changing cash management services:
• Liquidity coverage ratio • Operational deposits • Assessment of category
Basel III
SEC Rule 2a-7
Technology
• Money market fund reforms • Floating NAV’s • Liquidity fees + redemption gates
• Move to standardization • File formats (ISO XML) • Transmission (SWIFT, SAP)
• Counterparty risk and compliance • Changing competitive landscape
• RBS in certain countries
• Greater appeal of operational cash and deposit pricing + innovation
Issues Impact
• Investment policy review and greater emphasis on cash forecasting
• Improved flexibility and ability to change
• Risk to corporate business operations • Corporates may be forced to change
Banking Landscape & Counterparty
Risk
Strategy Definition
© 2017 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 7
Change Drivers and Objectives Definition Any time a company chooses to review its banking relationships it’s important to define the objectives of the
initiative and make sure the benefits are sufficient
Small incremental changes add up to significant benefits at the organizational level
• Changing business requirements
• Geography • Centralization • Relationship • Service • Compliance • Cost
Change Drivers Benefits
• Reduce X bank accounts • Reduce X cash management banks • Reduce X bank software systems • Reduce transaction processing fees
by x% • Increase cash concentration by X
Leve
l of
Urg
ency
© 2017 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 8
Strategy Alternatives
• Multiple bank relationships per region/country
• Managed by business units directly
• Some cash pooling in-country, often limited to single currency
Decentralized
• Single bank relationship in a region (e.g. Euro-zone)
• May still require multiple banks to fulfill requirements in specific regions (e.g. Nordics, Canada)
• Greater cash pooling capabilities across countries
Regional Global
De
scri
pti
on
• Single bank relationship across regions
• Greater opportunity for cash concentration
• Cross border requirements/ arrangements create complexity
• Legal/tax regs. Require add’l accounts
• Decentralized operations • Businesses operate independently
(e.g. growth through acquisition)
• Global company • High degree of centralization • Broad banking needs (e.g. require
local capabilities and service)
• International company • Some centralization • Limited banking requirements in
foreign countries Pro
file
A proven way to manage bank relationships is to set a network of preferred banks and manage others on an exception basis
© 2017 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 9
Strategy Determination
Determining the bank structure for your organization will require significant up-front work and analysis of several factors
• Geography • Transaction volumes • Service requirements
Business Profile
Market Factors
Regulatory Factors
Company Factors
• Bank capabilities + presence • Industry trends • Peer group analysis
• Bank regulations (e.g. Basel III) • SEC 2a-7 • Dodd Frank/EMIR
• Degree of centralization • IT capabilities • Stakeholder engagement
Identification of your preferred strategy up front will translate into an easier selection process
© 2017 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 10
Bank Service Architecture
Account Structure
Bank Connectivity
BU a/c BU a/c
Country
Corporate
BU a/c BU a/c
Country
Corporate
BU a/c BU a/c
Corporate
eBanking Platforms Host-to-host connections SWIFT
Closed Countries Restricted Countries Open Countries
© 2017 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 11
Multi-bank Reporting, Analysis & Control eBanking electronic
statements
Host-to-host connections
SWIFT
Global Treasury Management System
Global bank cash positioning
Bank account mgmt, signatories & bank fee mgmt
Counterparty exposure management
Standardize payment workflow Technology can simplify global, multi-bank access, reporting
and compliance
Selection Process
© 2017 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 13
Selection Process Outcome Description
Step 1 Requirements Definition
Phase 2 Data Gathering
Sele
ctio
n P
roce
ss
Phase 3 Request for Proposal
Phase 4 Vendor Meetings
Phase 5 Selection and
Implementation
• Work with businesses to understand current banking needs
• Use vision and value to drive to future state
• Obtain current transaction volumes to help size business (by country)
• Local services (guarantees, tax, pay/rec products
• Vendor research and long list • Develop RFP • Analyze and summarize responses
• Develop agenda for on-site meetings • Chance to bring all stakeholders together and ask
questions
• Reference checks / benchmarking analysis • Price negotiations • Selection
• Current state requirements • Future state requirements • Internal knowledge development
• Documented transaction landscape • Local support and cross-functional buy-in
• RFP document • Response analysis summary • Vendor shortlist
• Vendor shortlist • Agenda • Tailored questions/Demos
• Updated pricing model • Reference summary • Decision!
© 2017 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 14
Stakeholder Identification
Stakeholder engagement is critical to ensuring the overall success of a bank review
As an organization moves through the process, it must ensure that all stakeholders are identified and engaged
• Responsible for bank relationships • Coordination of overall process • Internal source of expertise
Treasury
Operational / Local Finance
IT
Legal/Tax
• Day to day operations • Hands-on with bank services
• Connectivity and ancillary solutions • Support for interfaces
• Need to provide advice and guidance on account structures
© 2017 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 15
Decision Making Criteria
Some combination of the above factors usually forms the ultimate choice of a banking partner
Identifying a complete set of decision making criteria up front helps to make the decision easier to make
Cost
- Monthly costs (e.g. account maintenance)
- Transaction costs (e.g wire fees)
- Implementation costs
Service
- Local presence - Languages - Escalation path
Service Capabilities
- Account locations - Pooling - Payment clearing system
access (wire/ACH/giro etc.) - Trade finance - Other services (payroll,
lockbox) - Geographic presence - Technology
IT Capabilities
- Support for process automation
- H2H connectivity - SWIFT connectivity - Support for industry
standard file formats
Others…
- Credit rating - Relationship - Reputation - References
Implementation
© 2017 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 17
Implementation Planning - Phases
Phasing can be done on a functional and/or geographic basis
For large and even medium sized implementation it may make sense to break up the implementation into smaller phases:
Step 1: Account Opening
Step 2: Payables
+ Domestic Pooling
Step 3: Receivables
+ Regional Pooling
Step 4: Legacy Account Closing + Global
Pooling + Automated
Connectivity
© 2017 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 18
Implementation Considerations
• Location of resources • Degree of expertise • Capacity to help
Treasury / Local Finance Resources
IT
Legal/Tax
Project Management
• Technical resource availability • ERP environment
• Approval of strategy • Account opening documentation requirements
• Stakeholder coordination • Status reporting • Executive communication
Bank Resources • Location of resources • Experience
Benefits
© 2017 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 20
Expected Benefits
• Local banking products to eliminate operational business risk • Resident expertise • Reward banking partners
Business Continuity
Compliance
Operations
Strategic
• Actively monitor and comply with limits mandates • Bank, country, currency, etc.
• Improve audit, compliance controls (e.g. 404 testing)
• Improve bank account signatory / mandate management • Enhance integration to ERP, TMS to drive GL postings • Reduce month-end close process
• Integration with free cash flow forecast measure forecast error & improve accuracy • Trend analysis & target balance thresholds • Intercompany cash mobilization to fund capital allocation strategy
© 2017 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 22
Thank You for Attending
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