Creative approach fosters treasury innovation

Tracking payments can be a time-consuming process for corporates, especially those who have established payment factories. While the majority of transactions are processed on schedule, dealing with enquiries from suppliers requires costly manual intervention, mostly for payments delayed or lost, as well as for sensitive transactions under the scrutiny of the counterparty. 

Last year, the BNP Paribas treasury board met with corporate treasurers from across Europe to discuss how they could work together to address this and other pain points faced by the typical treasurer – a common process within BNP Paribas’s commitment to ‘co-creation’ with clients.  

In such partnerships, the corporate customer is directly involved in the creation and testing of a new service and acts as a sponsor for the initiative. While these may start out as bespoke solutions, the intention is that they will be of interest to a wider audience.  

An example of solutions developed as a result of this co-creation process is Benetracker, which makes beneficiaries aware of the status of specific payments that are due to them – a solution that complements SWIFT’s global payments initiative (gpi). 

“In this use case our customer (L’Oréal) was running a payment factory and sending an advice for each beneficiary payment,” says Wim Grosemans, head of product management payments & receivables at BNP Paribas. “However, its subsidiaries were receiving enquiries from their beneficiaries on the payments’ statuses, asking why payments had not yet been made and when they would be received.” Many of these payments are cross-border, where the predictability is more challenging and scope for delay is greater. 

This created a large volume of communication between the subsidiaries and their counterparties and between the subsidiaries and the head office. “This functionality was initially used to offer track-and-trace services to the BNP Paribas customers initiating the payment,” adds Grosemans - capitalizing on the track-and-trace capabilities of SWIFT gpi. “We decided to offer to the counterparty of this payment the same experience of being able to trace the payment until it arrives in their account.”  

What makes the service unique is the access it gives beneficiaries to payment information. Steven Lenaerts, head of product management global channels at BNP Paribas describes it as a “paradigm shift in payment tracking”. Beneficiaries access a website where, by using the unique end-to-end transaction reference (UETR) attached to the payment, they can see real-time when the payment was initiated, the stages it has gone through and when it will arrive. 

The service also allows direct reconciliation between the payment data the corporate receives from the counterparty that has initiated the transaction and the tracking and tracing data coming from the network. 

“This removes the manual work of reconciliation investigations,” says Lenaerts. “It also offers a means of handling unusual or sensitive transactions – for example, those relating to large trade agreements or mergers and acquisitions – without the need for manual interaction between banks.” 

From the initial conversation to rolling out the service with L’Oréal (scheduled for January 2020), the development process will have taken approximately six months. 

“Based on the brainstorming sessions we have held at our treasury board meetings, we are confident this service will be useful to other corporate customers,” adds Lenaerts. “This is an example of BNP Paribas leveraging its access to data in a controlled way to bring beneficiaries into our SWIFT gpi ecosystem.” 

The service is also applicable to small companies that import goods, and offers an alternative to trade finance products. The assurance provided to the counterparty is less formal than a letter of credit, but it would also be much less expensive for the company making the payment. “Any company that makes international payments would have an interest in a service that allows them to proactively show a beneficiary that they have initiated a payment,” says Grosemans. “In the past this would have only happened when the beneficiary made a direct enquiry.” Today, this transparency on all gpi transactions will proactively foster trusted relationships between the corporate and his beneficiaries. 

In addition, BNP Paribas is developing a number of services providing visibility of incoming transactions in partnership with SWIFT and the other key transaction banks within the gpi working groups. The first service to go live within SWIFT gpi for corporates is Pay and Trace, which allows corporates to initiate their UETR (rather than getting it from their bank) and receive proactive status messages. 

Via Benetracker, BNP Paribas currently provides visibility on incoming flows for the beneficiaries of its clients but not yet visibility on their incoming flows for the clients themselves. 

Consequently, the next service to be introduced will be gpi inbound tracking, which will allow corporates to obtain a complete view of all incoming transactions that have been initiated anywhere.  

“The challenge for BNP Paribas is how to pass on the maximum value of SWIFT gpi to our clients through new services as well as refinements to existing banking products,” concludes Grosemans. “Benetracker is just the first example of how we are meeting that challenge.”