FIS

User Experiences with Virtual Bank Accounts

Report date: 
20 May 2025

Commentary

All your cash in one place – but with each transaction tagged so it can be identified and allocated automatically. This is the promise of virtual bank accounts: the first offering was a unique IBAN for each customer to pay into, although all the cash really goes into the main account. This makes it easier to reconcile the receipts to invoices – the customer is already identified.

The second step is to keep one bank account, but give each subsidiary or division its own IBAN: no need for cash sweeping or pooling – all the cash is in one place. But you can then use the tags on the records to constitute and account for each entity. This structure is used by many in-house banks.

Banks have been marketing virtual accounts for more than a decade. In a recent CXC poll (results here) , 30% of respondees said they use them: of these, 84% found the product met or exceeded expectations, while 16% were disappointed.

So – what is happening? Why hasn’t the product taken the world by storm? 

Overall:

Some peers have effective solutions, which vary from complete in-house banks to receivables and payables solutions with varying degrees of sophistication.

Others have found that they are able to achieve many of the objectives of virtual accounts by using the enhanced data recognition and machine learning capabilities of more recent ERPs. These peers generally found virtual accounts added limited value.

During our call, we learned of unexpected uses of virtual accounts. These included managing payroll confidentiality, enforcing limits on employee credit cards, and segregating customer cash.

Positive cases:

  • One peer achieves significant benefits, not only from cash pooling, but from eliminating the need to do intercompany settlements. Several peers have implemented...
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Topics covered in this report: 
Virtual accounts, POBO/ROBO, COBO, in-house bank, Cash Pooling - cross border, Cash Pooling - domestic, payroll
Service providers discussed in this report: 
BNP Paribas, Citi, JP Morgan, Wells Fargo, Barclays, HSBC, FIS, Coupa, Blackline, SAP, Deutsche Bank

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Approaches to Investing short-term cash in Corporate Treasury

Report date: 
22 Apr 2025

Commentary

Risk versus reward. 

Treasurers face this eternal trade-off directly when investing short term cash. There is pressure to increase earnings, and a constant search for new solutions, but the priorities remain, in order:

  1. Safety
  2. Liquidity
  3. Yield

Companies put a lot of effort into making money and bringing in cash: the potential downside to losing money outweighs any yield benefit risky investments may bring.

As always, there is a lot of complex detail, depending on the size, the cash balance and the culture of the company.

  • Most companies have a formal investment policy, often approved by the board.
  • One of the benefits of centralising cash is to avoid paying the bid/offer spread of having cash in one place, and debt in another. Several peers used notional pooling (BMG and JPMorgan were mentioned) to achieve this. Both banks offer deposits for the cash in the pool.
  • The most used instruments are bank deposits and MMFs (Money Market Funds). A few peers invest directly in high quality sovereign bonds, as well as repos. The rules can be more flexible in highly regulated countries, such as Turkey and Angola.
  • Some peers used bank deposits as a means of balancing wallet share with relationship banks, but most take advantage of the higher rates provided by MMFs.
  • Others left pools of cash in different countries and regions: in these cases, the short term investments were frequently managed by a team in central treasury.
  • One peer managing Latin America was pleased with the better yield offered by some currencies with higher nominal interest rates, though this was not a common approach. Most of the commonly used instruments are available in...

 

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Topics covered in this report: 
Money Market Funds, Investing, Risk - counterparty, Bank Accounts
Service providers discussed in this report: 
Westpac, Bloomberg, JP Morgan, Bank Mendes Gans, spotfire, Blackrock, Cachematrix, FIS, 360T, Santander, Itau, Citi, Bank of America, Deutsche Bank, Credit Suisse, Pictet Asset Management

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Corporate Treasury Technology Roadmaps

Report date: 
1 Sep 2023

Commentary

Technology is changing the way many businesses work: with online commerce, many traditionally B2B businesses are moving to B2C. Logistics and supply chains are being transformed. Ride hailing and food delivery services operate real time payment systems. Assets we used to buy are increasingly available as a service, often linked to the internet of things.

Where are our banks in this turmoil? And how are treasurers adapting? We wanted to get a first view. Judging by the response we received, we are clearly not alone in being very interested.

This report is long – even the summary takes several pages, and it does not capture all the nuances. It is well worth reading the detail – it clearly lays out the challenges treasurers are facing.

Business transformation

For the time being, treasurers are adopting a wait-and-see approach to business changes. When the business moves to B2C, or becomes a full asset as a service enterprise, treasury will adapt accordingly. In the meantime, treasurers see no need to get ahead of the business, or even necessarily be a change agent.

On the other hand, CXC members who are in the new, online enabled industries are, of necessity, proving to be early adopters of the new technologies.

Communicating with banks

Over the years, centralised global and regional treasury management has been enabled by online banking tools with balance reporting, remote account management and payment initiation.

This has brought enormous benefits to treasury management. But it is not perfect:

  • Mostly, the data is not real time. It is often yesterday’s balance and transactions
  • There are many different tools: host to host, e-banking systems, SWIFT reporting, APIs
  • Security protocols remain a conce

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Topics covered in this report: 
API, Technology
Service providers discussed in this report: 
Kyriba, FIS, Reval, Ion, Wall Street Systems

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