Digital Transformation of

Corporate Cash and

Liquidity Management
Contents

Introduction................................................................................................................................................................................................ 3

I. Cash management challenges and priorities of corporates..................................................................................... 4

• Cash management priorities of corporates............................................................................................................... 5

• Expectations of corporate customers in a nutshell ............................................................................................ 5

II. The response of corporate banks............................................................................................................................................. 6

• Virtual accounts upgrade multi-bank cash management............................................................................... 6

III. Digital transformation of cash management................................................................................................................... 7

IV. Conclusion.............................................................................................................................................................................................. 9

About Banking Visionaries Council (BVC).................................................................................................................................. 10

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Introduction
One of the most important functions of a corporate treasurer
is managing working capital, basically balancing current assets
with liabilities to maximize yield. By derivation, cash and liquidity
management is a top focus area for corporates. As corporates
expand their global footprint, they need robust capabilities to
handle multiple currencies and interest rates in different markets.

A unified view of global liquidity, and cash flows, is central to this.

Unfortunately, most corporate treasurers still do not have this
visibility. While retail banking has undergone massive digitization,
corporate banking is still largely carried out face-to-face, by a
team of relationship managers. Even today, treasurers in large
organizations rely extensively on spreadsheets and manual
calculations to manage their company’s financial position.

But change is in the air. As those working in client organizations

encounter increasingly superior experiences in retail banking
and other areas such as retail and telecom, they are starting to
demand the same from corporate banking.

The possibilities in the digital world have led to retail-

like expectations of corporate customers when it comes
to managing the challenges in their cash and liquidity
management. This paper brings together perspectives and
insights from the distinguished body of banking leaders and
practitioners of the Banking Visionaries’ Council, on topics
ranging from the evolving demands and priorities of corporate
customers to the leading digital solutions from banks, and the
emerging opportunities of digitization in the cash and liquidity
management space.

In the next section we look at the key challenges, priorities and

expectations of large corporate organizations.

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 Cash management
challenges and priorities
of corporates
Today, corporates are preoccupied with overcoming
the challenges they face in day-to-day cash and
liquidity management.

The biggest challenge stems from expansion into new

shores. As corporate banks enter foreign markets, they
are faced with unexpected funding requirements and
foreign currency exposure, different levels of investment
risk, and geopolitical uncertainty. Treasurers need to
tread a fine line while managing cash and liquidity to
balance returns and risk.

Regulations are becoming stricter worldwide. In

addition to complying with global regulations such as
the Basel norms, corporate organizations must act in
accordance with a host of regional and local laws in
the markets where they are present. Not only does this
create a huge administrative and cost burden, it also
increases the risk of penalty for non-compliance.

At the time of writing this document, the US Dollar

is surging against most currencies, buoyed by a host
of factors including strong domestic manufacturing
performance and rising risks in several emerging
markets. For corporate treasurers, mitigating risk and
reducing costs in forex operations amidst a volatile
environment, is among the biggest challenges.

Maximizing interest yield in a low-interest – or even

negative – rate environment in the developed world is
another problem. And while interest rates are higher in
emerging economies, they come at greater economic
and political risk.

The proliferation of new technologies is also posing a

challenge to corporate banking customers, many of
whom are not sure about which solutions to invest in.

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Cash management priorities of corporates Expectations of corporate customers in a nutshell

In most corporate organizations, it is these challenges that drive the Specifically, corporate customers expect the following from their
biggest priorities. Hence corporate treasurers and CFOs are putting banking experience:
a lot of energy into improving cash flow forecasting and liquidity
planning to gain insights into things such as committed cash inflows
and outflows, interest rate trends, best money market investment Real-time view of cash flow to improve visibility into
destinations, among others. and control over complex corporate reconciliation
structures spanning currencies, geographies, interest
For years, treasurers have utilized cash pooling and sweeping facilities rates and regulatory regimes.
to consolidate liquidity in one place. Optimizing these processes,
backed by technology is now a key priority.
Global access to domestic and international accounts
Several large companies with global presence have set up “in-house across multiple banks, enabling an integrated cash
banks” to reconcile transactions internally, before entering into management experience. This calls for eliminating
external banking relationships. By doing this, they reduce the number the need to separately log in to each account across
of banking relationships and also avoid duplicating banking products banking relationships, by providing a single
and charges. sign on interface.

Some businesses have also set up payment and collection factories,

which are like in-house banks, but are focused on payments and Innovative liquidity planning and forecasting solutions
receivables. These factories serve to streamline, aggregate and that apply artificial intelligence and automation to
deduplicate payments and receivables processes. historical patterns to make predictions about cash
positions, and provide treasurers with insights that
Corporate treasurers are also adopting virtual accounts. One of the improve yields or reduce interest costs.
leading innovations in the liquidity management space, a virtual
account, as the name suggests, exists only virtually and not in a
physical ledger. It simplifies the management of corporate banking Digital, omni-channel experiences for managing
relationships for companies with vast operations across several liquidity – similar to consumer banking – enabling
geographies, by minimizing the number of real bank accounts in treasurers to work seamlessly on-the-go, on any device
different locations and corresponding currencies. A company can and channel of their choice.
maintain one primary account in home currency and set up virtual
accounts, linked to the primary account. With virtual accounts, 
corporates can vastly rationalize cost of operations, improve funds Integrated cash management, enabled by straight
management and mitigate liquidity risks. What’s more, virtual through processing, which creates synergies by
accounts empower corporates with digital self-serve models that plugging into treasury, payments and receivables
allow them to manage liquidity structures based on emerging needs. systems.

Here an example may be useful. Take the case of a ride-hailing radio

taxi company, whose operations span multiple countries, cities and Flexible integration with ERP systems used for
have several million partner driver relationships. Imagine the mess treasury operations to automate accounting systems
if the company maintained a separate account for each driver on its reconciliation.
roster. Instead, with a virtual account capability, the company can
open a single account at a city/ regional level and assign a unique
virtual account to every driver in that area. All customer payments go Lower cost and administrative overheads while
into these virtual accounts, which the company pools and sweeps to complying with global, regional and local regulations.
make payouts to its drivers.

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Corporate banks step up virtual cash concentration and pooling, remote payments clearing,
and internal netting are some of the innovative products that
corporates benefit from.
On their part, corporate banks are taking several initiatives to
meet their customers’ expectations. In response to the demand for
To provide the digital omni-channel experiences that clients are
integrated cash management, banks are setting up portals that offer
asking for, corporate banks are expanding their digital channel
global access to both domestic and international accounts through
infrastructure. 3HSBCnet is a mobile corporate banking platform
a single electronic interface. 1Barclay’s iPortal offers a consolidated
that has helped corporates manage their liquidity and cash flows
view into several corporate banking activities, including cash
effectively. With faster payments, they enjoy improved credit terms,
management. With such facilities, users can see an instant snapshot
ratings and enhanced growth propositions.
of bank accounts and products, and authorize payments, manage
cash and perform many other actions.
Last but not least, corporate banks are investing in blockchain-based
payment networks to enable real-time payments at very low cost
Banks are enabling digital self-service models which enable corporate
to clients. 4For example, leading banks Emirates NBD and India’s
clients to take control of several operations, including account
ICICI Bank have leveraged Finacle Payments Connect to bring down
structuring, fund transfer, and dynamic investment management.
cross-country payments time to less than a minute, across the world’s
largest remittance corridor.
Using virtual accounts, corporate banks offer payment on behalf
of (PoBo) and collection on behalf of (CoBo) services, thereby
eliminating the need for multiple physical accounts and traditional
products such as pooling and sweeping. 2JP Morgan’s Virtual Account
Management as a platform, provides value added services enabling Virtual accounts upgrade multi-bank cash
corporates with integrated cash management, Forex, liquidity and management
investments management. Multicurrency virtual account structuring,
In the past, multi-bank cash management portals
displayed account information pertaining to accounts
held in other banks. Since the information was received
via SWIFT messages and reconciled at the end of the
day, it was static in nature. As a result, companies
never knew their exact cash position at any given time.
Now, open banking regulations, such as PSD2, are
forcing a change by mandating the sharing of account
information through APIs in real-time. Information from
different banks is being fed via APIs into a virtual account
management system that gives corporate banking
customers a realtime view of their financial position.

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Digital transformation Apart from NLP and cognitive automation that were mentioned
above, other artificial intelligence technologies are also transforming
of cash management this space by improving cash flow forecasting, detecting fraud, and
predicting events relevant to cash and liquidity management.

At the heart of all these developments is a wave of digital

As discussed earlier, APIs are opening up corporate banking to the
technologies. Together, automation, blockchain, big data and
external world, and exposing cash management systems to third
analytics, artificial intelligence, APIs and cloud are steadily
parties, such as Fintech companies and developers to accelerate
transforming the liquidity management space.
innovation in this area.

Thanks to robotic automation, cash management systems are

Cash management using cloud-based solutions is empowering
enabled with self-learning and decision making capabilities, helping
treasurers with access to cash positions at any time and from
improve cash forecasting techniques. With Natural Language
anywhere.
Processing (NLP) solutions, the systems are designed to analyze
intraday balances, various transaction statements, and effectively
With Blockchain, banks can enable cross-border multi-currency
forecast liquidity positions.
payment and settlement in real-time, and bring higher transparency
and predictability to cash and liquidity management.
Cognitive automation takes these capabilities forward by taking
decisions on behalf of humans. For example, it can analyze
Big data analytics on transaction data can help forecast cash position
transactions that impact the various payable and receivable systems,
in real-time, predict other relevant scenarios and improve receivables
forecast projections, make liquidity decisions and handle exceptions.
management.

Fintech companies are at the forefront of cash management’s digital

transformation. 5Flinqer offers innovative tools enabling flexible cash
A global auto parts supplier used over 3 million records
utilization and control over working capital. 6PrimeRevenue has a
of cash management data from accounts payables and
cloud-based application that brings rigor to supply chain finance
receivables, payroll, intercompany netting to build a
management, from design to execution to measurement, and also
bot for forecasting payments flowing in from customers
enables businesses to make better cash-related decisions. 7Growth
based on past patterns. By doing this, the company
Street’s business insights platform offers actionable insights and 90 -
redeployed cash balances more efficiently, reduced
day cash forecasts, while 8Fluidly leverages AI and financial modeling
interest expenses and improved short-term liquidity
to predict cash flow and warn users of an imminent cash crunch.
forecasting accuracy to 97 percent.

A next-generation cash management solution from 9Cashforce

integrates seamlessly with ERP and banking systems to give deep
insights into transactions. The solution can be set up very quickly
even in complex environments. 10CashAnalytics offers software to
accurately forecast cash flow and provide analytics in real-time.

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Conclusion
There are multiple opportunities for banks to reimagine corporate cash
management for their digitally nuanced corporate clients. Infosys recommends
that banks begin their digital cash management transformation journey as soon
as possible. Banks should specifically evaluate the following initiatives and areas
of consideration to transform cash and liquidity management:

Strengthen multi-channel cash management,

Accelerate payment innovations
cash forecasting and payment services

Enable multi-bank reporting and cash S et up virtual accounts, enable PoBo/CoBo

management capabilities including sweeping, capabilities, virtual sweeping, virtual
target balancing and notional pooling pooling and more

Setup aggregated view of customer

Comply with open banking mandates
balances across multiple accounts and a
such as PSD2
view of liquidity positions

Empower corporate treasurers to design E mpower clients with AI led insights into
liquidity structures to achieve the required treasury operations and accurate cash
level of visibility and control over their funds forecasting capabilities

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References:

1. https://www.barclayscorporate.com/products-and-solutions/ 6. https://primerevenue.com/press-release/primerevenue-named-
online-banking-services/internet-banking/iportal.html innovative-fintech-year-rfix-awards/

2. https://www.jpmorgan.com/country/US/EN/treasury-services/ 7. https://www.growthstreet.co.uk/
virtual-account-management
8. https://fluidly.com/
3. https://www.hsbcnet.com/gbm/products-services/online-services/
cash-management-solutions.html 9. https://cashforce.com/

4. https://www.edgeverve.com/emirates-nbd-icici-bank-blockchain- 10. https://www.crunchbase.com/organization/cashanalytics

pilot-network/

5. https://www.flinqer.com/

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About Banking Visionaries
Council (BVC)
Share key market development and trends
Banking Visionaries Council has been instituted by Infosys
observed in respective geos with rest of the group
Finacle to collaborate with senior business and technology
leaders from the banking community to develop actionable
point-of-views around contemporary themes within the Collaborate to develop actionable point-of-view
industry. The purpose of this council is to solve the most on how banks can leverage emerging trends
pertinent problems with research and collective thought
leadership efforts. Currently, the council consists of a twenty-
member-strong board with representation from eleven Openly discuss learning from innovation
countries across six continents. initiatives taken by respective banks

This point of view paper is an abridged version of the

collaborative research work done by the council.

For more information on the council, please reach out to

[email protected]
About Infosys Finacle

Finacle is the industry-leading digital banking solution suite from EdgeVerve Systems, a wholly owned product subsid-
iary of Infosys. Finacle helps traditional and emerging financial institutions drive truly digital transformation to achieve
frictionless customer experiences, larger ecosystem play, insights–driven interactions and ubiquitous automation. To-
day, banks in over 100 countries rely on Finacle to service more than a billion consumers and 1.3 billion accounts.

Finacle solutions address the core banking, omnichannel banking, payments, treasury, origination, liquidity manage-
ment, Islamic banking, wealth management, analytics, artificial intelligence, and blockchain requirements of financial
institutions to drive business excellence. An assessment of the top 1250 banks in the world reveals that institutions
powered by the Finacle Core Banking solution, on average, enjoy 7.2% points lower costs-to-income ratio than others.

For more information, contact [email protected] www.finacle.com

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