How digitising treasury can drive sustainability
In the first of a series of articles, Param Thind, APAC head of digital channels at Bank of America, looks at the crucial role digitisation plays in helping clients meet their sustainability objectives and how artificial intelligence is improving analytics and automating manual processes.
Hybrid working as a post-pandemic norm has fuelled many changes for corporates in Asia, one of the most significant being an acceleration of the move away from paper-based processes, enabling companies to reduce their carbon footprint as well as save time and money.
The potential benefits of a more sustainable business are considerable. According to McKinsey, the addressable market for green businesses in Asia could be worth as much as $5 trillion by 2030.
It is not just in the areas of payments and account reporting where we have assisted clients in this transition away from paper. By supporting features like online document exchange and e-signatures, our clients no longer need to print out and sign pages and pages of KYC and other onboarding documentation.
This digitisation trend has also produced improved control and security mechanisms by giving companies better visibility of their financial operations, boosting governance, and removing time consuming manual processes.
For Bank of America clients, these developments are facilitated by CashPro – a fully integrated, multichannel platform that helps companies improve control, visibility, and processing of their banking activities. Using CashPro Online and the CashPro App, clients can receive, review and sign documents electronically – removing the need to print, sign and physically courier documents.
This digitisation trend has also produced improved control and security mechanisms by giving companies better visibility of their financial operations, boosting governance, and removing time consuming manual processes
Another example of where we have introduced more sustainable processes is in the electronic banking login process. While historically, transaction banks gave their clients physical plastic tokens which were used to generate a one-time password for accessing the platform and approving payments; we have provided our clients with the ability to use environment friendly electronic tokens accessible through our mobile app.
Bank of America has also recognised the potential of artificial intelligence (AI) for increasing the efficiency and automation of reconciliation processes, eliminating paper-intensive manual processes. Our Intelligent Receivables solution, for instance, uses AI and machine learning to bring together incoming payment information and associated remittance detail from a variety of payment channels and other sources, and match these payments to open invoices.
The system not only collects data from the client’s open invoices, the bank(s) from whom the payments have come, and the remitters of these payments – it also learns from previous experience, enabling clients to automate previously manual, repetitive processes to a very high level of accuracy.
Many treasury processes are relatively predictable, so it makes sense to use workflow technology that can recognise patterns and automate processes. The treasury space has huge potential for automation and clients increasingly expect their banks to partner with them to provide these solutions.
Part of our strategy for meeting this demand is partnering with fintechs that are using emerging technologies to address the key issues faced by treasury departments, such as cash forecasting.
For instance, CashPro Forecasting is one such solution that was developed in collaboration with a fintech that specialises in applying machine learning to cash forecasting to enable companies to measure future cash needs without significant manual effort or costly technology investment.
The tool uses a variety of machine learning models to learn from a client's historical cash flows, automatically selecting the most accurate one for each account and using it to forecast future cash positions.
Our corporate clients generate volumes of data that simply cannot be interpreted through manual analysis. By employing innovative technologies, we can help them convert that data into meaningful insights that can then be used to inform better decision making – by us as well as them.
Below are some real-life examples of where we have been able to work with our clients to help them achieve efficiencies in their treasury processes while implementing environmentally-friendly and sustainable solutions to their everyday challenges.
One solution solving multiple challenges
A major provider of mobility services was looking for a solution that would enhance visibility of its cash position and banking activities in Australia and New Zealand; close a core reconciliation gap in its ERP system; maximise the efficiency of its reconciliation and cash application processes; and address inconsistencies associated with the collection of remittance advices in a seamless transition.
Bank of America proposed a single banking platform solution covering Australia and New Zealand with a domestic cash concentration structure, consolidating funds via an end-of-day, one-way zero balance automated sweep to an AUD and NZD header account.
Implementing our intelligent receivables solution for collection accounts enabled straight through processing (STP) of 91% of the company’s open receivables and timely cash application within its ERP system. It also allowed for the rationalisation and elimination of a number of bank accounts.
Data rich dashboards within the platform provide insights into cash application STP rates and exceptions, open accounts receivable analysis, and forecasting.
Simplifying payments complexity in Japan
Paper-based instructions and manually initiated fund transfer payments are still widely used in the Japanese market despite concerns regarding fraud risk, operations risk related to incorrectly inputted amounts or other information, and the potential for the use of incorrect beneficiary information.
Many large corporations based in or active in Japan use multiple bank accounts for historical reasons, including locating the lowest FX pricing. For example, one of our largest Japanese clients, a general trading company, has accounts with more than 30 banks in many different currencies.
With such a large number of banking relationships, if a company wanted to use online banking services with each bank it would have to manage a huge list of users with multiple IDs, passwords, and security tokens and other associated administrative tasks.
To avoid the maintenance cost and operational risk associated with coordinating this sensitive information, many companies prefer to use paper instructions for initiating their payments.
To simplify this process, Bank of America proposed that the client use the multibank capability available via CashPro Online to manage balances and payment processes across all banks from a single platform.
The client is now able to download payment initiation data pertaining to various banks from its host system and upload it into CashPro, reducing operational and fraud risk by limiting the number of banking access points to a single bank
The road ahead
Corporate treasurers would do well to have a 3-5 year blueprint for their treasury transformation program which is aligned with the overall sustainability goals of the organization and clearly spells out the specific steps that will be taken by treasury to contribute to the company’s sustainability goals.
For this it is critical that the treasury team identifies the right banking partner that can guide them along the path and help them reach their objectives. Below are some of the key takeaways to keep in mind on this transformation journey:
Digitisation is enabling companies to materially reduce their carbon footprint in parallel with enhancing financial management, boosting efficiency and governance
CashPro helps companies improve control, visibility, and processing of their banking activities
Bank-fintech collaborations are providing cutting-edge automated solutions such as machine learning in cash forecasting and accounts receivable reconciliation.
According to McKinsey, a firm commitment to sustainability can be highly rewarding for businesses that move early. By supporting clients at all stages of their sustainability journey, Bank of America is helping put treasury teams at the centre of this transformation.
This article is the first in a series that will illustrate what corporates can do to incorporate sustainability into their treasury operations, showing how we help clients put sustainability at the heart of their digital treasury strategy and leverage sustainability into financing to meet their ESG commitments.