True integration for companies: what does it really mean?

COPYING AND DISTRIBUTING ARE PROHIBITED WITHOUT PERMISSION OF THE PUBLISHER: SContreras@Euromoney.com

By:
Published on:

Every corporate treasurer faces challenges in improving their business processes. For many years, straight through processing (STP) has been held up as the solution to these challenges. It has been shown to increase efficiency, raise productivity, lower the cost of doing business and consequently enhance profitability. Unsurprisingly, STP has long been the stated goal of leading corporates.

Supplement: Technology in Treasury Management Guide


Standard Chartered


Until recently, STP has been focused solely on improving transactions processing. While processing transactions without manual intervention and unnecessary delays is a laudable – and profitable aim – the scope of STP must be broadened to encompass the client’s business from end to end if its full benefits are to be gained. The stakes for STP have therefore been raised: the goal for corporates must mandate STP for reconciliation as well as transaction processing – hence moving from the traditional one-way STP definition to a two-way definition that takes into account the client’s business as a whole. 

This expanded view of STP is driven by the fact that companies are increasingly operating globally and want to be able to transact with suppliers or customers regardless of location. “Corporates are changing how they manage their business processes,” says Jiten Arora, global head of channels and solution delivery, Transaction banking in the wholesale bank at Standard Chartered Bank (SCB). “To do this effectively, a company requires full visibility of their business, and two way STP is a major factor in achieving that level of transparency. ”

Companies are no longer content to just think about single transaction processes such as sending a transaction to a bank, according to Arora. Instead, they want to be able to visualize that transaction in the context of their global operations – taking account of opportunities such as supply chain financing. Perhaps most importantly, companies want to integrate transactions into a much broader global STP business process.

The benefits of such seamless integration are self-evident. “It makes it possible to increase control and efficiency, plus the transparency of the process aids reconciliation,” explains Arora. “For example, it may be clear to an exporter why they are issuing an invoice, and it may be clear to the accounts receivable person in the same company that a payment has been received, but the reconciliation of the two may not be so straightforward – and that is a key barrier to effectively managing your working capital.”

Deeper banking relationships

As companies evolve toward more centralized and standardized operational business models they inevitably rationalize their banking relationships to reduce costs, harmonize processes and manage liquidity more effectively. They require a platform that supports the centralisation of corporate structures by providing a rich information stream and automatic reconciliation.

“In those circumstances, corporates need a platform that can adapt itself to a company’s own organisational structure,” says Arora. “They need an anywhere, anytime banking platform.” The platform should also be able to aid companies’ business convergence by serving their working capital needs – be it cash management, trade finance or FX – on a single system.

SCB has worked with its customers to analyse their needs and developed an integrated working capital platform called Web Bank, which is accessed through a single sign-on.  Given that the platform needs to work across geographic boundaries and time zones, it is internet-based using open standards and can be easily integrated into a company’s existing systems. “Web Bank, which is available throughout SCB’s network in US, UK, Asia, the Middle East and Africa, will lead the way in offering working capital capabilities for corporates,” says Arora.

Standard Chartered’s group head of transaction banking, Karen Fawcett adds: “Web Bank will offer cash management, trade finance and FX in a manner which allows our clients the benefits of the synergies that come from considering working capital in an integrated way. It will blend into corporates’ operations so well that companies will be able to leverage it to reorganize their own business processes. It allows corporates to get better value for money in every way.”