Within the space of bank connectivity, there is a range of choices that corporates face when deciding the best way to integrate banks towards their accounting platforms.

E-banking

The most historic option, with users logging into online banking platforms to extract bank reporting and initiate payments. Banking platforms have evolved, with some offering electronic statement download (which can be readily imported into ERPs), and payment status monitoring. Whilst a readily available, easy-to-use solution, it has issues with controls and requires separate platforms for each bank.

SWIFT

SWIFT provides global coverage to a wide range of banks. It is seen as the global standard in bank connectivity, and from a bank perspective we have seen the membership increase.

There are two channels available:

SWIFT FileAct is suited to AP Payments, as ISO20022 message standards permit high volumes of payments in files. SWIFT FIN is more commonly used for treasury integration, due to the historic use of SWIFT MT messages. As ISO20022 is more widely adopted, SWIFT FileAct will become the default choice for messaging channel.

A useful tool to identify if your partner banks are onboard is SWIFT’s Readiness Portal.

EBICS

Originally developed as a financial messaging transmission vehicle for Germany, EBICS has been later extended to France and Switzerland. It provides wide coverage of banks within these countries, but is not in use outside of these countries.

It generally has a lower total cost of ownership than SWIFT. The geographic restrictions mean that this is commonly used for corporates who have strong focus in the German, French or Swiss Market. For corporates operating on a global basis, EBICS does not tend to provide the bank coverage that is required.

Host-to-host (H2H)

H2H connections are direct connections from a corporate’s integration system towards a specific bank.

H2H connections are most suitable where corporates engage with a single core bank who can support local services and branch coverage in all relevant markets. These can have a lower total cost of ownership compared to using SWIFT, but this solution has a level of bank lock-in.

Direct to clearing house (UK BACS)

Within the UK, the primary clearing house is BACS, which ensures settlements of payments between debtor and creditor banks.

It is common practice in the UK for corporates to make payment instructions & direct debit instructions directly to the local clearing house BACS, where the partner bank acts as a sponsor. This requires a BACS service bureau who can act as a gateway into the BACS network. This is commonly known as “direct transmission”.

An alternative to this transfer method is “indirect transmission” where payments and direct debits are sent to the partner bank, via any of the preceding methods before being submitted to BACS itself.

API connectivity

Triggered by the PSD2 initiative, banks are now offering API connectivity.

One of the issues with API connectivity is that modern API design is targeted towards JSON formats, whilst ISO20022 is an xml-based schema. Due to low levels of standardization across different banks and countries, this has meant that ERPs and treasury platforms may require bespoke functionality to cater for these bank-specific APIs.

It is likely that these will become the future of bank connectivity, but will require some level of standardization, which could possibly come under the SWIFT umbrella.

Access to SWIFT

Connectivity of corporates to the SWIFT network has expanded over the last years from the largest corporates with high volumes of bank connections, to small-to-medium corporates with lower volumes of bank connections. To access the global SWIFT network, there are 4 main options that corporates can leverage:

• In-house – SAG
  SWIFT Alliance Gateway (SAG) was the standard connection offered to corporates. It requires specialist SWIFT knowledge and has high complexity. This is no longer encouraged by SWIFT.
• Outsourced – SSB
  SWIFT Service Bureaus (SSBs) remove the complexities of establishing the connection to the SWIFT network. SSBs certified by SWIFT manage the hardware and access configuration. Nowadays approximately 50% of all corporates access SWIFT through a SSB.
• In-house – Alliance Lite 2
  SWIFT introduced Alliance Lite2 to enable smaller corporates to connect to the network. SWIFT proprietary software, installed locally, in combination with a hard token, transfers messages to the SWIFT network. Since each transmission may require an approval, this option is not fit for corporates with high payment volumes/STP-rates.
• Outsourced – Alliance Lite2 embedded within Business Application
  Applications (L2BA) Since 2012, SWIFT has offered Alliance Lite2 including business applications for treasury management systems, bank connectivity providers and in-house banking/payment factory providers. Even though this option is relatively new, it gained popularity very quickly, with corporates looking to externalize bank connectivity whilst keeping total cost of ownership to a minimum.

For corporates having joined SWIFT since January 2018, 64% have opted for the SWIFT Cloud Alliance Lite 2 options. It is likely that the adoption of the embedded Alliance Lite 2 is behind this trend.

HSC’s Treasury to Bank T2B is an Host to Host Peer to Peer offering of Treasury Bank connection embedded within Community Investment and Business Applications. T2B is offered as a software-as-a-service solution by HSC that managed by the Treasury Bank Organization. This is a revived form of Community Investment Programing and funding network, which will be launching in 2025, but with an enhanced offering such as integrated Bank connection.

Embedded within the Peer to Peer Cloud Platform, it provides capability for exchange of financial messaging with partner banks. As well as connectivity to the SWIFT network through an embedded version of Alliance Lite 2, this integration platform offers connectivity to partner banks through EBICS and H2H connections.

From a technical perspective, T2B can perform transmissions using SFTP, REST, SOAP and AS2. We have seen evidence of corporate group IT policies dictating preferred transmission methods, so it is important that bank connectivity tools accommodate these. The platform has 99% up-time, and various failover mechanisms in place.

T2B payments is particularly relevant to those corporates who are looking to move towards direct payment as a strategic software vendor. With many corporates embarking on T2B transformation, it will be popular consideration.

We expect to see this offering as strong competition to other standard payment Service Bureaus going forward, especially where corporates are not leveraging the value-add services that’s offered.

Joost explained that bank connectivity fundamentally concerns how a company exchanges data or information with its banks. For example, as a treasury professional, you would want to be able to access your account balances across all your banks as a basic requirement.

The Traditional Approach: Manual Processes

The traditional way to do this, as described by Joost, is to manually log into various bank portals every morning and then copy-paste the information into an Excel sheet. But this approach, as Joost rightfully pointed out, is time-consuming, prone to errors, and rife with risk, such as dealing with different logins, tokens, and the potential for typos. Surprisingly, even well-known companies continue to follow this labour-intensive process.

Bank Connectivity: The Lifeline for Efficiency

When looking for more efficient solutions, Treasury teams use the term ‘bank connectivity.’ Joost highlights how this concept provides a lifeline to escape from manual processes. It goes beyond just gathering account balances, extending to critical transaction details, like whether customers have fulfilled accounts receivables.

Importance of Two-Way Data Flow

Joost further emphasized the importance of two-way data flow in bank connectivity. This means receiving information from banks and sending payment files to them through the same connectivity. And, of course, you’d want this to be automated.

Benefits of Automation

The advantage? Joost shared that automation replaces inefficient and risky manual processes, especially when dealing with many banks. The more banks you have, the greater the benefits of automation. This allows you to focus on making data-driven decisions instead of getting bogged down with manual tasks.

Joost believes bank connectivity is your passport to more streamlined financial operations. So, it’s time to say goodbye to manually logging into bank portals and embracing the world of automation.

Understanding the Need for Multiple Bank Accounts in Treasury

If you’re new to the treasury world, you might wonder why a company would need multiple bank accounts, as Hussam did. Joost provides an insightful explanation. International companies usually work with numerous banks. Each bank has its strength – one might excel in Asia, while another shines in the Americas or Europe. Even when partnering with top-notch banks, a company can end up with an extensive banking group.

Funding Needs Lead to Multiple Banking Relationships

Aside from operational necessities, companies often seek funds for various purposes, including working capital or investment projects. These funds usually come from several banks. Why? Because specific projects might require a bank with particular expertise. Or, a single project might be so large that it requires funds from multiple banks.

Why Do Treasury Teams Need Daily Balance Updates?

Now, let’s discuss why companies need daily balance updates from all their bank accounts. Ideally, companies strive to optimize their balances across different banks. They want to dodge unnecessary borrowing in one place when excess cash is available elsewhere. While this balance-checking exercise could be performed weekly or monthly, advanced treasury teams prefer daily checks.

Maximizing the Use of Excess Cash

The rationale behind these daily checks is straightforward. You want to avoid lending where it’s unnecessary and don’t want excess cash lying idle where it could be used. In simpler scenarios, a company might want to keep its money in the bank account, offering the highest interest rate. Although interest rates have been low recently, this approach is becoming relevant again as rates shift.

As Guillaume sums it up, it’s all about cost and cash optimization. You want to utilize the group’s funds as much as possible and borrow only when necessary. With Joost’s expertise, we better understand the logic behind having multiple bank accounts and the necessity for daily balance updates. Therefore, it’s not just ‘Treasury 101’ but an essential practice for efficient financial management.

Decoding the Connectivity Technology in Treasury

If you’re delving into the depths of the treasury, Hussam’s question about different types of connectivity technology might pique your interest. In response, Joost introduces us to the SWIFT network, a significant player in the interbank world. If a corporate treasury team wants to connect their systems to the banks automatically, it must decide on the technology to deploy. SWIFT is a well-known option.

Now, you might wonder: “What’s the catch?” Well, SWIFT is an interbank network that can be quite costly. Moreover, different banks interpret the network’s standards differently, leading to discrepancies.

The MT940 Format: A Standard with Variations

Here’s an example of such discrepancies: the MT940 format. You might assume that MT940, a standard message template used to send transaction and account balance information, would be identical across all banks. Unfortunately, that’s not the case. The structure and content within the MT940 messages differ from one bank to another, making it a bit tricky for corporate use.

Host-to-Host Connectivity: A Preferred Choice for Corporates

So, what’s the solution? According to Joost, many corporates prefer traditional host-to-host connectivity over SWIFT. The advantages? This technology is accessible to many bank clients, and the exchanged files can contain much detailed transaction data. Plus, since it’s an old technology, most people know how to work with host-to-host connectivity, making it easier to adopt. Lastly, it’s light on the client’s infrastructure, which adds to its simplicity.

In summary, different connectivity technologies like the SWIFT network and host-to-host connectivity are used in treasury. While each has strengths and drawbacks, understanding these technologies helps treasury teams streamline operations and make better-informed decisions. It’s another layer of complexity that makes treasury such an intriguing field.

Understanding Host-to-Host Communication and Bank APIs

Hussam inquires if host-to-host connectivity resembles a custom communication setup between two banks. Joost affirms this for the corporate use case. Although custom-made, the beauty of this technology lies in its simplicity. Even if you aren’t tech-savvy, you’ll find it easy to comprehend as it can be straightforwardly explained and neatly bundled in a manual.

Host-to-Host vs SWIFT: Making the Choice

You might wonder why I should choose host-to-host over SWIFT or vice versa. Here’s where Joost sheds some light on the pros and cons of each. SWIFT, although powerful, tends to be expensive to deploy and maintain. Meanwhile, host-to-host channels excel at providing rich data, which is crucial for automating reconciliation processes. However, this depends on the quality of the sending bank.

There’s a catch for smaller entrepreneurs: some banks only offer host-to-host services to their corporate plus clients. So, if you’re a small-sized company, you may not always have access to this technology. But don’t fret! Manual downloads can still be your friend.

The Future: Bank APIs

APIs (Application Programming Interfaces) have created buzz for years, promising to transform how treasury departments work. They can potentially deliver data on demand, a significant advantage for treasury operations.

But remember, not everything that glitters is gold. While the technology is straightforward, the APIs are unique to each bank. Once you receive the data, you must harmonize the incoming data feeds into a format you can use. Moreover, there’s a considerable variation between banks regarding data richness provided through the API.

So, weighing the pros and cons is crucial, whether choosing between host-to-host and SWIFT or contemplating using bank APIs. The right choice can simplify your operations and provide the data you need for effective decision-making. Remember, it’s not about choosing the most popular or advanced technology but the one that best suits your needs.

Cost Comparison and Connectivity in Different Channels

In the quest for cost efficiency, Hussam questions the price aspect of APIs compared to host-to-host and SWIFT. According to Joost, there’s no one-size-fits-all answer. He explains that, in theory, deploying API connections could be cheaper because they’re efficient.

On the other hand, the costs might be similar to other methods because the benefit you receive from getting your account balances or transaction information is pretty much the same, regardless of the channel.

This leaves us with different possibilities. However, what’s certain is that you must evaluate your needs, assess the pros and cons, and make a decision that fits your budget and requirements.

Global vs Tailored Connections: SWIFT, Host-to-Host, and API

Guillaume puts forth another interesting perspective. With SWIFT, you have a global connection that lets you connect with a wide range of banks and financial institutions. In contrast, host-to-host and API connections are tailored per bank. So, if you’re dealing with multiple banks, you need to establish individual connections with each.

Joost validates this but introduces a fascinating alternative. Firms like his operate several host-to-host channels with their frequently collaborated banks. This provides an added benefit to their customers. They don’t need to set up their host-to-host channels. Instead, they can simply leverage the company’s connections with various banks.

So, for instance, if you work with a company that already has these host-to-host channels in place, you get a ‘mini SWIFT network.’ You can connect to your banks via the company’s pre-established connections. It’s like getting a shortcut, saving you from the hassle of establishing these connections yourself. This can be a significant time and cost-saver, especially for businesses with multiple banks.

Handling Complex Bank Connectivity and Implementing EBS for Small Companies

Hussam dives into the question of regional connectivity. He wonders if a company like Joost’s establishes individual connections for different regions of the same bank, such as Barclays UK and Barclays Europe.

Joost acknowledges this as a tricky part of working with global banks. While some banks have a uniform backend across regions, others do not. However, Joost reassures customers that they shouldn’t worry about this. His company handles the complexity and ensures seamless connectivity, whether it requires one, two, or more backend connections.

For US-based businesses, the situation may vary. The US market comprises numerous small local banks requiring different host-to-host connections, if available.

Electronic Banking Systems (EBS) and Small Companies

Guillaume shifts the conversation to smaller companies that might need to manually download and reconcile files. He inquires about the role of Electronic Banking Systems (EBS) for these businesses.

Joost confirms that EBS is indeed one of the two main avenues for these companies. Within the EBS, they can typically find an area to export reports in various formats, such as CSV, PDF, or MT940.

He also mentions some banks offer plugins compatible with local domestic accounting software. However, these are very region-specific and might not cater to global corporations.

Visa and Mastercard in the Picture

In the final part of this segment, Hussam brings up Visa and Mastercard, wondering why they can’t be used in place of all the discussed methods.

Joost explains that while different, they are complementary. They come into play when a company wants to integrate card transactions into their overall transaction overview or include online wallet balances in the overall cash overview.

So, if you want to include cash stored in PayPal or Adgents or card transaction information within your financial software, companies like Joost’s can help. They enable the integration of this data, making your daily cash overview comprehensive and easy to manage.

Types of Information Exchanged in Bank Connectivity and Overcoming Format Challenges

Guillaume starts this segment by confirming that Joost’s company also connects with card payment networks like Visa and Mastercard and banks. Joost acknowledges this, setting the stage for further discussion on the intricacies of bank connectivity.

The Complexity of Payment Formats and Templates

Moving the conversation forward, Guillaume wonders about the information exchange in bank connectivity. Specifically, he wants to understand what goes from the corporate side to the bank.

Joost highlights this as a critical corporate area, primarily due to the associated risks. He outlines that while status reports and tracking of payments is one aspect, the real challenge starts with managing payment formats and templates.

These formats and templates vary across banks, payment products, and countries. So, when you need to send a large payment batch from your accounting software to the right bank in the correct format, it becomes a daunting task for the specific payment product,

Joost underlines that tackling this challenge alone is nearly impossible for corporations. Here, software solution providers come into play. His company, for instance, takes a large payment batch from the corporation’s system, splits it, and converts it into smaller batches per each bank’s requirements.

Risk and Complexity in Incoming and Outgoing Payments

Though incoming payments (bank statements) have less risk attached as they involve only information receipt, their complexity in terms of formats is the same as outgoing payments.

The last part of the conversation revolves around the function of bank connectivity tools. Guillaume confirms that these tools receive a bulk of payment information from a corporate entity, process it, and ensure that the right amount of money is sent to the correct bank with the accurate transmission of information. Joost agrees with this summary, concluding the discussion on this subject.

Ensuring Proper Execution of Payments and Additional Features of Bank Connectivity

Tracking Payments with a Traffic Light System

Moving on to the next question, Guillaume asks how to ensure that sent payments have been executed correctly or are on their way to the right destination. He wonders if there’s a status report that banks can send through their connectivity channel.

Joost mentions that there are various technologies available for this purpose. One of the most intuitive methods he discusses is using a “traffic light” system. This dashboard allows users to track the status of their payments. It informs them whether the payments are in process or accepted by the receiving bank.

Role of Bank Connectivity in Bank Account Management

Turning the conversation towards other potential uses of bank connectivity channels, Guillaume seeks to know if there’s more to bank connectivity than payment execution, payment status reports, and bank statement information.

Joost brings up bank account management, a feature that many clients inquire about. Although he admits that the uptake of electronic bank account management (e-BAM) at the bank’s end is limited due to the lack of a market standard, Joost highlights an interesting side effect of having a centralized payment software-as-a-service solution, or a “payment hub.”

Once the payment hub is in place, managing users’ authorizations, approval rights, and payment approval processes becomes straightforward. In essence, it adds an extra layer of security and organization. This feature is a significant driver for companies to explore bank connectivity. Joost explains that when a new employee joins or leaves the company, the changes can be managed through this single platform without informing all individual banks about the personnel changes.

Overview of Bank Fees Through Bank Connectivity

Finally, Guillaume asks whether bank connectivity can provide an overview of bank fees. Joost explains that the reporting of this information isn’t standard. However, if a bank sends explicit information, it is possible to generate automated reports based on transaction codes. But, the bank must send this information in a structured way, which may not always be true.

So, from this part of the conversation, we learn about some of the additional benefits of bank connectivity, including the tracking of payments, ease of managing bank account authorizations, and potential visibility into bank fees.

Setting Up Bank Connectivity: What’s the Process?

Setting up bank connectivity primarily depends on the partner company you are working with. Joost mentions two scenarios:

1. When the bank is within the partner’s network: Here, the partner company can manage most of the process. The client simply informs them which bank they want to connect with, and the partner takes it from there.
2. When the bank is outside the partner’s network: In this case, the client initiates a discussion with their bank to establish a connection with the partner company. After this introduction, the partner company handles the complex details.

In-house Team vs Software Vendors

Joost confirms that they rely on an in-house team when asked whether his company uses software vendors or an in-house team. He highlights two key teams:

1. Bank Implementation Team: This team specializes in setting up bank connections for corporate clients.
2. Client Implementation Team: This team aids clients through their implementation process, providing help with documentation, setting up the portal, and managing users on the platform.

Type of Connectivity

As for the type of connectivity offered, Joost’s company provides host-to-host (or peer-to-peer), API connectivity, and SWIFT. The choice of technology is determined based on the client’s specific needs and the bank’s capabilities. They keep the process simple by suggesting the best technology for the client and taking care of its deployment.

In summary, the entire process is designed to minimize complexity for the client, ensuring a smooth and hassle-free experience when setting up bank connectivity.

Impact of Fintech Acceleration on Bank Connectivity and the Role of PSD2

The rising trend of Fintech companies has sparked significant changes in the banking world. Joost believes that these companies have forced banks to become more client-focused. They’ve encouraged banks to think about what treasury teams genuinely need and how they can meet these needs.

Fintech companies help bridge the gap between banks’ commercial and technical teams. They fulfil a critical role in navigating the technology landscape. As a result, Fintechs are helping reshape bank connectivity, making it more client-centred and efficient.

Understanding PSD2

When Guillaume asked about PSD2, Joost explained that it’s a regulation forcing banks to open their account data to third parties. This initiative mainly benefits the retail sphere, empowering third parties to assist end consumers with their banking needs.

The experience consumers get from this open banking also sets their expectations for their professional lives, which is where treasury teams come in. Therefore, in a nutshell, PSD2 is the foundation of open banking, offering more transparency and accessibility for consumers and businesses alike.

In conclusion, the accelerated growth of Fintechs has significantly influenced bank connectivity, making it more flexible and customer-centric. And regulations like PSD2 are crucial in making banking data more accessible and transparent, shaping how we understand and experience banking today.

Integrating Bank Connectivity Tools with Corporate Systems

Guillaume questioned how bank connectivity tools, like the one provided by COBASE, integrate into a corporate’s infrastructure. Is it through Enterprise Resource Planning (ERP) or the Treasury Management System (TMS)?

Joost answered by stating that it all depends on what the client wants. For some, a simple dashboard to initiate payments to different banks without dealing with different portals is enough. For them, COBASE provides an online cloud solution where they can log in, have all their banking information in one place, and make transactions easily.

The Role of COBASE in Streamlining Bank Connectivity

Most corporate clients, however, want to use the information downstream or upstream. In these cases, COBASE does more than just provide a dashboard. COBASE aggregates all account information, balances, and transactions and then converts and harmonizes this data into a single format called the “COBASE format.”

This uniform data is then made available to the client’s ERP or TMS, effectively integrating bank connectivity with the client’s system. This automated and integrated solution allows corporate clients to consume and utilize their banking data more efficiently, enhancing their operational efficiency.

In summary, integrating a bank connectivity tool like COBASE with a corporate’s system allows for efficient data utilization. This process is tailored to the client’s specific needs, ensuring that the data is made available in a way that suits their operations. This leads to better operational efficiency and improved banking processes for corporate clients.

Different SWIFT Connection Types and COBASE’s Service Offerings

Guillaume, eager to learn more about the connectivity aspects of banking, asked Joost about different connection types when it comes to the Society for Worldwide Interbank Financial Telecommunication (SWIFT).

Joost clarified that while he’s not a SWIFT specialist, he often discusses alternatives to SWIFT with treasury professionals. These alternatives include the SWIFT Alliance Lite, which requires the operation of a local server to receive documents and files. However, COBASE mostly utilizes SWIFT by participating in its network to benefit its clients. Using the COBASE BIC code, they can receive transactions on behalf of their customers.

This gives COBASE’s customers a simple way to connect to less common banks that don’t offer host-to-host services.

COBASE Service Offerings

Hussam then asked Joost to elaborate on the services provided by COBASE.

Joost highlighted three main offerings:

1. The COBASE Bank Connector: This tool links banks and specific ERP systems strongly. It converts bank data for use within certain ERPs, with Oracle NetSuite as an example.
2. The COBASE Payment Hub: This service isn’t limited to a specific ERP and offers a richer Graphical User Interface (GUI) where users can enter manual payments. It also has more advanced workflow designs and improved reporting and dashboarding functionalities.
3. Treasury Management System (TMS): This payment hub with extra functionalities like dealing with Foreign Exchange (FX), hedging FX risks, in-house banking, liquidity forecasting, and balance optimization.

All these offerings are cloud-based and include a fully managed bank connectivity and file transformation service, making it easy for COBASE to maintain and secure for their clients.

Clarity on Cloud-based Solutions

Guillaume and Hussam then sought clarity on what being cloud-based means for these offerings.

Joost confirmed that all of COBASE’s services are cloud-based, meaning they don’t install software on their clients’ servers. Clients connect via the Internet, which simplifies deployment and enhances security.

So, to sum it all up, while SWIFT connectivity is important, COBASE focuses on providing efficient, easy-to-use, and secure alternatives for bank connectivity. Their services are designed to streamline banking and treasury operations, taking complex processes off their clients’ hands and ensuring the safety of their data in the cloud.

How Does COBASE Help Corporates Connect to Their Banks and Stand Out from Other Service Providers in the Industry?

Guillaume poses a great question to Joost, asking him to share how COBASE assists businesses in connecting with their banks. He also wants Joost to highlight how COBASE sets itself apart from its competitors.

Joost explains that COBASE holds a unique position for a few key reasons. Firstly, the Dutch Central Bank has issued a license to COBASE, which reassures their clients of their commitment to maintaining the highest standards of system and process security.

Secondly, COBASE provides a standard service that includes file transformation and maintenance at no extra cost. So, clients don’t have to worry about additional fees when the bank formats change (which they often do). COBASE works behind the scenes to ensure a seamless experience for its clients.

Lastly, Joost emphasizes their high service levels. He shares that their clients appreciate their commitment to service, especially after the initial sales process is over and the more challenging implementation phase begins. He cites an interview with Joanne, the Group Head of Cash Management, published by TMI, as an example of their happy clients.

COBASE’s Geographical Scope and Client Focus

Guillaume, eager to know more, asks about the geographical operations of COBASE since their cloud-based solutions can technically be anywhere in the world.

Joost clarifies that while they connect with banks and work for legal entities worldwide, their marketing focus is on European treasury centres. This focus includes both European companies and European treasury centres of non-European companies.

The reason for this geographical focus is simple: COBASE likes to work with local implementation teams and deliver on their promises. Working during European business hours with European treasury teams ensures they can do just that.

However, if those European treasury centres need to connect with global banks or have entities globally, COBASE can fully accommodate these requirements. They do this daily, making them a reliable partner for treasury teams worldwide.

In conclusion, COBASE’s commitment to security, transparency in cost, excellent service levels, and global-yet-local approach makes it a go-to service provider for European treasury centres seeking effective bank connectivity solutions.

COBASE Solving Connectivity Issues for Rapidly Growing Companies

Guillaume is curious about the practical applications of COBASE’s solutions. He asks Joost to share an example of where COBASE’s bank connectivity solution has been implemented and the benefits derived from it.

The Challenge: Rapid Expansion and Acquisitions

Joost starts by mentioning a common situation encountered by COBASE: companies that are growing and expanding quickly. These expansions can occur organically or through acquisitions. In such cases, every new acquisition brings along its unique banking environment, financial software, ERP systems, and the team of professionals.

This variety introduces a challenge. The acquiring company finds it difficult to gain prompt financial insight into the newly added entity and control over local operations.

The COBASE Solution: Providing Insight and Control

Joost clarifies that while COBASE’s software may not centralize every aspect, it provides two crucial benefits: insight and control. With COBASE, companies can understand the authorization rights in the newly acquired entity and monitor the cash balances, even if payments are still approved locally.

This level of insight and control is why clients value COBASE – it can grow with them.

Catering to Constant Growth and Expansion

COBASE caters to companies continually acquiring new entities or those branching into new markets organically. When a company enters a new market, it usually begins working with a local bank. With COBASE in place, incorporating this new bank into the existing financial structure becomes easier and less complex.

For growing companies dealing with many tasks, COBASE removes one major worry: bank connectivity. By providing insight, control, and scalability, COBASE is an invaluable partner for businesses on the rise.

COBASE: Making Bank Connections Easy for Expanding Clients

Guillaume raises a valid question about the practical aspect of connecting with a new bank, particularly in an unfamiliar country, when a company is expanding. He wonders whether COBASE clients have to carry out this process themselves or if the COBASE team handles it for them.

COBASE: Handling Complex Tasks with Ease

Joost reassures that while the task might not be easy for COBASE, the goal is to simplify it for the client. The COBASE team, backed by their experience, takes on the challenge of setting up the new bank connections. Their mission is to ensure that the process is as smooth and painless as possible for the client.

Building Connections with New Banks

Next, Guillaume delves deeper into the scenario. He wonders if COBASE establishes a connection when the client’s desired bank isn’t initially part of the COBASE network. He wants to know if these new connections extend COBASE’s portfolio, benefiting future clients.

Joost agrees and explains that this aligns with how COBASE likes to work. The client, who already has a relationship with the bank, introduces COBASE to the bank, asking it to make its data available via COBASE.

Exploring Different Routes: Working in Client’s Interest

COBASE tries to establish a channel in its name, meaning they act as a hub for clients to connect with the bank. If they can accomplish this, they can add more clients later, building a “library” of connections. Some banks, familiar with such tech-side operations, cooperate.

However, many banks find this novel and prefer a more traditional approach. In such cases, while the same channel might not serve multiple clients, the established relationship with the bank aids in setting up connections for new clients. This way, COBASE builds a network of banks that understand how to work with them, providing an ever-expanding list of potential connections for future clients.

A Word of Advice from Joost Kevelam

After thoroughly discussing COBASE and its functions, Guillaume asks if Joost has any additional insights on bank connectivity or COBASE that they might not have covered yet.

Joost takes this opportunity to stress the importance of exploring and understanding bank connectivity. His advice to the listeners is to do their market sounding, that is, gather feedback from the market about their product or service. This process helps them to understand what questions they should be asking. He warns there’s a vast difference between what’s marketed and what’s delivered in this complex field.

CDD checklist

CDD helps companies minimize the number of illegal activities conducted through their platform, including identity fraud or money laundering. 

In case a company fails to implement efficient CDD procedures, criminals may abuse it for money laundering and other crimes. And if this occurs, the company may be held liable. 

To stay safe and compliant, companies need to ensure they perform essential CDD procedures, which are covered in the list below: 

#1. Collect necessary data

A company should decide whether a client suits an established risk profile before establishing any kind of relationship with them. Most jurisdictions require the following information to be collected during the onboarding process: 

• Full name;
• Date of birth;
• Residential address.

If identifying a business, regulators usually require companies following to collect:

• Full name;
• Registered office in the country of incorporation;
• Principal business address.

After collecting personal information, the company should verify it through comparison with government-issued documents. 

How: Companies can conduct verification manually or with an automated solution. Manual solutions can allow companies more control over the verification process, while automated solutions can process large amounts of data and onboard more customers. Sumsub’s experience shows that automated approaches can save up to 40% on verification.

Suggested read: Managing KYC Dilemmas: In-house vs. Outsourced Solutions.

#2. Employ third-party providers

Some data needed for CDD is only accessible through reliable third-party sources, such as banks, lawyers, or auditors. These can improve a company’s ability to verify customer information and determine their involvement in criminal activity.

How: It should be noted that companies need to ensure that their third-party providers are trustworthy and that the shared information is reliable. This is because companies can be held liable for mistakes made by third parties. Therefore, it’s essential to check the third-party data provider’s certification prior to hiring them.

#3. Determine the customer’s risk level and take additional measures

Based on the customer’s risk level, companies should choose between two types of due diligence: Simplified Due Diligence (SDD) for low-risk clients and Enhanced Due Diligence (EDD) for high-risk clients. 

How: When a company implements the EDD process, it should include the following steps:

• Employing a risk-based approach;
• Obtaining additional identifying information;
• Analyzing source of funds;
• Transaction monitoring;
• Adverse media and negative checking;
• On-site visit;
• Ongoing monitoring.

If using SDD, companies can loosen the checks by adjusting:

• The timing of CDD;
• The quantity of information obtained for identification, verification, or monitoring purposes;
• The quality or source of obtained information;
• The frequency of CDD updates and reviews of the business relationship;
• The frequency and intensity of transaction monitoring.

More information about detecting and dealing with low- and high-risk customers is available in our complete guide to the UK (which also applies elsewhere).

#4. Organize secure and compliant data storage

Not only does a company need to verify its customers, it also needs to store the collected information in case regulators request it. 

How: Each country sets a timeframe during which all information about customers and their transactions must be kept. The minimum period recommended by the FATF is five years. 

For example, in the US, India, and China, companies are obliged to retain information about clients for five years after the end of the customer relationship or five years after the completion of an occasional transaction. Other countries, such as Saudi Arabia and Qatar, have established a period of ten years. In El Salvador it’s even longer, at 15 years under the Bitcoin Law

The clearing account is used as an external zero balance commercial bank product. It is the initial receiver of high value private funds. Private funds are transferred as straight through “Real Time Payment RTP” from Treasury to Bank lending.

Private funds are debited from the Treasury Bank over the internet to HSC’s Clearing Account with Clearing Bank under

• compliance clearing measures
• assurance of regulatory rules,
• credit threshold limits with correct LTV ratio; and
• registered statement filed with the Federal Reserve under regulation U.

After clearing, HSC book transfer funds to members settlement account leaving a zero balance within the it’s clearing account with clearing bank for CIP Participants.

CIP Participants are:

• Public Body – SAR, Yield and Service and Products Beneficiaries
• Developer – Administrator, Contractors and Vender – Development Fees
• Clearing Bank – Correspondence – Collection Fees

Public Body means international Family and Community Members participate with in the CIP.

Developers means Treasury Bank Accountholder as Administrator Stakeholders, Contractors, and Subcontractors. 

Clearing Bank means a payment collection bank and acquirer for CIP public body and merchants as direct deposit or direct card top-up. In the form of Accountholder yield and development fees as Settlement. 

T2B Integration

Treasury to Bank T2B is a direct straight-through open bank relationship using HSC as Clearing Corporation. 

HSC create an open bank integration solutions for Treasury Bank T2B relationship commercial bank clearing account as H2H SFTP SSH connection by utilizing the following: 

• Treasury Bank – development, securities deposit 
• HSC – compliance clearing and liquidity 
• Bank and Card payment processor 
• Clearing Bank – Acquirer
• Clearing Account – Master bank account
• Settlement Account – Sub-bank account  

HSC clearing aiming to turn complex digital asset cash management tasks into simple processes.

Treasury Bank specialize in total cloud base T2B Technology solutions to integrate with third- party Clearing Bank core. 

Integration and Payment 

Treasury Bank has partnered with Third Partner Payment Processor TPPP a modern fintech company with multi level bank formats to make sure your our members and our clearing bank communicate seamlessly through our core cloud-based solutions.

Treasury Bank TTTP allow seamlessly integrate of HSC and Treasury Bank’s cloud-based ERP core systems with our respective clearing banks. This integration enables Treasury Bank to conveniently send payments and effortlessly receive Balance and Transaction Information directly within its ERP system.

Clearing account clear and liquidated data under security entitlement and interest under UCC 8-501. under choice of law of funds-transfer system rule pursuant to Louisiana commercial code j§10:4A-507.