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EuroFinance's International Treasury Management Conference 2019 took place in Copenhagen this year and is described as "The most important treasury event of the year".

Bottomline's Marcus Hughes goes over the key topics from the event and his key takeaways. 

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Podcast Transcript

Rich Williams: Hello. Welcome to the Payments podcast. I'm your host, Rich Williams. And today, we're going to talk about the highlights and takeaways from Euro Finances International Treasury Management Conference, which took place in Copenhagen last week. It's their flagship conference and described as the most important Treasury event of the year. We're joined once again by Marcus Hughes, head of strategic development at Bottomline. Marcus, it's great to have you back here with us.

Marcus Hughes: Thanks, Rich. It's always a pleasure to share a few thoughts with you and with our listeners, of course.

Rich Williams: Great. So for anyone not familiar with Euro Finance, could you begin by telling us how you described the event, please?

Marcus Hughes: Yes, I'd agree. Euro Finance is the largest and most important European Conference of the year, specifically for corporate payments and cash management. This year, the three-day event was attended by 2100 delegates from over 50 countries. And it's really a great opportunity for corporate treasurers, transaction bankers and fintech firms like Bottomline to meet up and share ideas.
And the event brings together some of the smartest people in the industry. So frankly, it's a date not to be missed. At this year's event, there were over 100 exhibitors and 200 speakers and they were sharing a wide range of case studies, best practice, and insights for all aspects of corporate treasury. As always, it was a highly enjoyable and informative conference with really great networking opportunities.

Rich Williams: Having recently attended, What were the biggest topics in your opinion, Marcus?

Marcus Hughes: Well, as usual, discussions covered a wide range of topics, foreign exchange, hedging techniques. Treasury management and exotic geographies like China and Brazil. Data security. The widespread adoption of supply chain finance. And the impact of new regulations as usual. But for me, from the payments in cash management perspective, the four big topics were the treasurer's views on regulations like open banking, PSD2 along with the wider adoption of APIs. Probably the most important topic was the digital transformation of Treasury.
Third, how an initiative known as SWIFT GPI is making cross-border payments faster, easier to track and more transparent. And finally, I'd say another big theme was the worrying level of geopolitical uncertainty around the world and how to cope with this volatility.

Rich Williams: Plenty to explore there in more detail during this episode, and regular listeners will certainly not be surprised to hear those themes crop up again. Let's look specifically at the impact of open banking. PSD2 and APIs. How will they affect Treasury markets?

Marcus Hughes: Yes, of course. At Euro Finance, there was definitely a lot of talk about open banking in PSD2, a big question was whether APIs will one day replace SWIFT, which today is widely used by large corporates to manage their global payments and cash management.
The general thinking of treasurers was not quite yet, but probably someday in the future. To be realistic, today, there are still only a limited number of banks who are offering APIs for treasurers to access those banks for corporate payments and cash reporting.
I think this will become available gradually, but it would take quite a few years before this is global. It's important to be realistic and recognise that this gradual rollout of APIs internationally isn't going to happen overnight. PSD2 only covers the European Union and other countries are only just beginning to announce initiatives to encourage or require the adoption of APIs for these secure exchange of data. In other countries, some banks are opting to offer open APIs on a voluntary basis, but it's going to be quite a long time before APIs can provide anything like the global coverage of multi-bank connectivity, which is available already via SWIFT.

So in the meantime, the market faces really a considerable challenge with the disparate range of APIs that are currently being developed. This situation creates a high risk of fragmentation unless there's a greater harmonisation and some central coordination point for this. For me, this could be the perfect job for SWIFT given its existing really valuable work as a registration authority for ISO 2022. As many of our listeners will know, this is a messaging format which is API friendly and extremely important in the major program that's underway to standard global payments.

Once balance and transaction reporting and treasury payments are widely available from banks using APIs then many treasurers at Euro Finance said they would also like to access bulk payments via API and also information relating to a number of activities like their transaction limits, account signatories, credit and overdraft facilities and fees, of course. So there really is still a lot of work to be done.

Rich Williams: You mentioned earlier the digital transformation of Treasury. Could you give us some clarity and some examples of what you mean by this? Yes, this was a big topic with a number of approaches being discussed. Not surprisingly, cloud is already widely adopted by many treasurers, especially the mid to large corporates. But for some of the largest corporates and multinational corporations, which are more conservative, they still prefer their solutions on-premises. I think the best way to illustrate what I mean by digital transformation is to describe the case study, which I co-presented with the group treasurer of our customer Trillium Flow Technologies.
Our presentation in the plenary room to hundreds of treasurers was entitled ‘An Easier Path to Digital Treasury Transformation’. I was truly delighted to present it with Patrick Verspecht, who's a highly respected and experienced treasurer who holds an impressive number of senior posts in trade associations. Is a board member and secretary of the Belgian Association of Corporate Treasurers.
Also a member of the Luxembourg Association of Corporate Treasurers. He is co-ordinator of the FinTech Work Group at the European Association of Corporate Treasurers and is also Belgian representative at the International Group of Treasury Associations, so quite a line-up there. And last but not least, I'm really delighted to say that Patrick has chosen Bottomline’s cloud-based payments and cash management solution not just once, but twice in different Treasury roles.

So in our case study, we explored how Patrick has solved the big pain points from which many treasurers do suffer today. We told the story about how a treasurer can achieve digital transformation more quickly, more easily and more cost-effectively than has been possible historically. We felt this was really relevant not only to large corporates but also to mid-sized corporates. And we certainly got very positive feedback. Patrick explained that Treasury projects have a bad habit of taking a long time with headcount and a lot of money being required. And what a treasurer really needs is reliability and speed to go live. They need rapid results so they can quickly demonstrate that a project is delivering value. So in implementing our solution, Trillium Flow Technologies were live and receiving prior day and real-time statements from the main banks within just a few weeks.

Rich Williams: Could you tell us how the team achieved the impressive speed to go live in this project, Marcus?

Marcus Hughes: Well, the whole approach was different because they divided the implementation project into small and very manageable steps. The first big difference for many other conventional projects was that Patrick decided not to join SWIFT immediately. That would probably come later in our programme. But he wanted the advantages of SWIFT's global reach and multi-bank connectivity from the very start. So we found an easier and quicker way to get started. Instead of Trillium Flow Technologies joining SWIFT, we used the new Bottomline bIX, which has a SWIFT address and that was our big- as a service offering. So we have our own bIX, which belongs to a regulated entity. Bottomline Payment Services Ltd. And earlier in 2019, this Bottomline subsidiary joined SWIFT as a supervised financial institution because it is regulated by the Financial Conduct Authority in the UK.

This special status sets us apart from most other fintech or Treasury management systems firms. More importantly, this means that we can send and receive SWIFT messages on behalf of our customers, such as corporates or asset managers. Without these businesses needing to go through the hoops to join SWIFT themselves and for a corporate, this means that a Treasury team can very quickly view balances and transactions at their banks on an easy to use portal. They can also allow users working outside Treasury to view statements relevant to their line of business or region. In the background, the way this works is that the corporate instructs its bank to send via SWIFT MT940 messages, which are prior day statements and MT942s, which are interim updates to Bottomline’s bIX, which is our address on the SWIFT network.
In turn, Bottomline exposes this data on their cloud based payment and cash management platform. So the corporate’s entitled users can view their statements using real-time dashboards and easy to use search functions. At the same time, the transaction data can be loaded automatically into the ERP system. Usually, after some automated data transformation to meet the ERP’s format requirements such as SAP iDocs.

Rich Williams: And were there any other factors which helped make the implementation faster than usual here?

Marcus Hughes: Yes, our payments and cash management solution is really highly standardised and many aspects are pre-configured. This has a really positive impact on implementation timelines because of the reduced complexity and the [packet’s 0:10:52] nature of this solution. So with its automated standard deployment, the customer can start testing really early. If required, the standard package can then be adapted for a customer's specific needs. The platform has standard workflow, which can be modified easily by the systems administrators through the cloud based user interface and with limited training, systems administrators can add new banks and business units. The payment and cash management standard environment comes with embedded routing rules and standard format integration, and it automatically processes a range of formats.

For example, MT940, 942, PANE 002 which are payment status reports. MP101, PANE 001and BACS standard 18. All this means that we will be able very quickly to take the customer through the various project phases. That's development, quality assurance, user acceptance testing and then live. So dividing the overall project into small steps, each step with specific and measurable benefits means that Patrick was quickly able to demonstrate to his team that Trillium Flow Technologies was getting genuine value from the projects. In other words, they got a quick win, which is really very important indeed. This helps a treasurer's credibility with his or her chief financial officer or chief executive, and it makes it easier to ensure money for the project and very important to obtain budgetary approval without a big fight.
So as you complete one step of the project and you are satisfied you're gaining tangible benefits, you can move swiftly on to the next phase. So it was a major advantage to divide the project scope into meaningful deliverables that can be attained within short timeframes. This way, we really completely avoided that Groundhog Day situation of never-ending project management meetings, which are missing deadlines and using up more resources and more cash than planned.

Rich Williams: Would it be fair to say that a treasurer's greatest priority is cash visibility?

Marcus Hughes: In many organisations, yes it is. As treasurers often say, cash is king. Cash flow is the very lifeblood of any business, and it's essential for a corporate to know how much liquidity it has. Where this cash is located and how easily funds can be moved and used for the benefit of the organisation. The challenge, which almost all large corporates have in common, is that they've got hundreds, even thousands of bank accounts and numerous banking relationships. The practical reality of this situation is that many corporates still don't have the instant visibility of their bank balances or the control which they need in order to optimise their working capital.

For most corporates, cash reporting across disparate internal systems and multiple banks is extremely challenging and it requires time-consuming data compilation all drawn from multiple sources. Many Treasury teams are over-reliant on Excel spreadsheets and other manual processes, which they're using for gathering account information and for calculating their cash position.
This labour-intensive activity can be error-prone and lacks security. It's difficult, of course, to maintain version control. This daily task can take hours. If the information is downloaded manually from various banks, e-banking platforms and this is still often the case, unfortunately in many corporates, to optimise these processes, it's important for a corporate to be able to capture data from overnight statements and to combine this with intraday statements.

This can be fully automated using Bottomline statement manager, which uses MT9 series messages as well as ISO 2022 messages and other formats. So by gathering all of your bank account and transaction data in one place, you obtain an accurate picture of where your cash is and how much you hold. This is a key activity for any treasurer. So automating this process is really a major win, saving time and money.

Rich Williams: It would be really interesting to know what the next plans are for Trillium Flow. So now they have that all-important cash reporting in place, would they then focus on payments capability itself using Bottomline bIX service, for example?

Marcus Hughes: Yes, exactly.
Bottomline is expanding its list of standard MT101 service level agreements with a growing number of major banks and new names can be added quite quickly on a standard bank documentation form. So this provides a clean and quick solution for high-value treasury payments. All of this on a bank independent cloud-based platform which has strong control and strong security features.
Patrick recommended that the best structure for managing payments across multiple bank relationships is a cloud-based payment hub. This has the important advantage of ensuring bank independence. It was the global financial crisis that showed all of us the importance of being able to switch cash balances and to be able to move payment flows from one bank to another.

A payment hub gives you the flexibility and connectivity options to multiple banks and allows you to change these arrangements quickly in case of need. This is truly preferable to being locked into a single bank’s e-banking platform as bitter experience has shown over the financial crisis.
So using our payments manager dashboard, the Treasury team can see the status of all payments. We consolidate data from multiple reliable sources such as banks payments status reports which confirm when payment instructions have been received by the bank and when they've been processed by the bank. This information is all consolidated on an easy to use dashboard and this allows users to follow payment lifecycle monitoring by region, by bank, by currency and by business unit all with a drill-down capability to see the required details if necessary.

Rich Williams: And what about the story that some banks are starting to offer customers’ balance information via API calls?

Marcus Hughes: Now, this is beginning to happen, of course. And what we've done is we've developed an innovative approach which combines open banking and PSD2 with our SWIFT capabilities. So we're already connected to a good number of banks’ APIs to allow our customers to access multi-bank account information services, as well as payment initiation services.
As more banks open up their APIs, we’ll add more banks to our platform. This hybrid will make the longer-term transition to API connectivity much easier. So as I mentioned earlier, as a regulated payment institution, at Bottomline, we can use our own bIX or SWIFT address and we can offer a payments and cash management solution to corporates without any need for that corporate to join SWIFT.
In addition, we're accredited to provide PSD2 and open banking account information and payment initiation services. So this solution combines APIs as well as SWIFT to capture balance and transaction data for customers who have multiple bank relationships and enables them also to manage their payment initiation.

This forms part of our flexible multi-network and multi-protocol connectivity options. The hybrid approach we've adopted has a big advantage of future-proofing a treasurer from any change. It would be quite a long time before API has had the global reach of SWIFT for a corporate treasurer, but our model offers the best of both worlds and maximum flexibility.
So the combined offering has a significant advantage over other fintech solution providers, which are only aggregating data which they've captured via APIs. Since this new API market is really still fragmented and only evolving gradually. Our innovative approach means customers can get live very quickly, which is highly valuable to a treasurer. Within a few weeks, the Treasury teams could be receiving statements from their key banks or via a single user interface with dashboards, which really is a major win for cash management.
Another innovation and accelerator which we’re about to introduce is API connectivity between our corporate customer's systems and our own cloud-based platform. So this new payment rest public API will make it easier and faster for customers to connect with us securely and the customer will even be able to test our solutions in our sandbox that the new API will be available for messages based on CGI, ISO 2022 and traditional fin messages.

Rich Williams: Regarding bulk payments, what options does a customer have to streamline this in particular?

Marcus Hughes: Well, we offer a range of flexible connectivity options which will suit different requirements and scenarios. So this includes SWIFT, of course, as well as EbIX and host to host and direct access to BACS in the UK. So a corporate can use our host to host capability to connect with their main payment banks in a cost-effective way. That way, a corporate can manage its bulk payments and SEPA direct debits, for example, in a more efficient way. The most flexible model is a hybrid solution which offers a range of connectivity options.

For example, a combination of SWIFT for Treasury that is capturing up to date and even real-time statements from multiple banks and also managing treasury payments. But for bulk payments, it's more cost-effective to link with a small number of core banks using host to host.
EbIX has also another useful option for corporates whose banks are concentrated in Western Europe. Countries like France, Germany and Switzerland. Bottomline offers all these options, and although Patrick chose to use Bottomline’s bIX as service at the outset, he still has the flexibility to join SWIFT’s score at a later date. Through our three SWIFT service bureaus in London, Geneva and Singapore, Bottomline’s got plenty of experience of helping corporates to join SWIFT and to get their own bIX. So becoming a member of SWIFT’s score is a logical step which a business can take at any time as their needs evolve.

Rich Williams: So once the customers put in place the multi-bank payments and the cash reporting, what are the steps can Trillium Flow take to manage their cash more efficiently?

Marcus Hughes: Well, you can use your payments and cash management platform to set up a cash concentration structure. This means you can consolidate surplus funds in accounts by currency and optimise the return on investment, which you make on these credit balances. Cash concentration also minimises any interest charges on overdrawn accounts. So our cash manager module allows the customer to establish a set of rules for individual accounts.

For example, at the end of each day we can transfer any funds above a certain threshold or to a concentration account. The threshold can be zero or any other reasonably low figure such as 20000 euros or something like that. The system can be configured to automatically initiate these payments. Or alternatively, the system can simply propose the optimal set of payments to meet the cash concentration objectives.
But it's then the treasury team who need to go through a payment approval process or workflow before releasing those payment instructions to the relevant banks to achieve their, you know, desired objectives. So some banks charge for a cash concentration service, but with a multi-bank payments and cash management platform, you can automate the process yourself and modify it at any time, giving you increased flexibility.
This means you can rationalise your bank relationships and avoid overreliance on any single bank. So this in turn truly mitigates your bank counterparty risk, which is a very important aspect for any treasurer. So in trying to summarise a Euro Finance case study with Trillium Flow Technologies, I'd say that the top three tips that we shared for successful and rapid digital transformation are, 1)start, simple and smart. So for example, our statement manager and bIX as a service to get up and running with a quick win, then, 2) expand and roll out in a controlled way for it.

For example, our payment manager with real-time dashboard and multiple connectivity options which streamline first treasury payments and then bulk payments, and then 3) and finally, rationalise and automate. So use, for example, our cash manager to concentrate cash, manage short term liquidity planning and optimise your working capital.

Rich Williams: Thank you, that was a nice overview there of how a treasurer can achieve digital transformation more quickly, more easily and more cost-effectively. If we move on now to some of the other themes from Euro Finance. You mentioned at SWIFT GPI was discussed at the event. Now, what can you tell us about SWIFT GPI? What it is and how it can make payments for a business that uses it more efficiently?

Marcus Hughes: Yes, of course. Another closely related hot topic of Euro Finance was SWIFT GPI, which stands for Global Payment Innovation. This exciting innovation was launched only three years ago, and it's already enabling fast, traceable and transparent cross-border payments on a large scale. Its traction and success have been impressive to the point that for me, GPI is probably the single most important initiative by SWIFT in the last 20 years. The statistics are impressive. 500 banks live, over 50 percent of SWIFT cross-border MT103 messages already go via GPI. That's more than 300 billion dollars of payments per day.
And 40 percent of those GPI payments are actually being credited to the beneficiary within just four minutes, despite being cross-border. That's truly impressive. And 90 percent of GPI messages are settled the same day. So this brings significant benefits to a treasurer in terms of speed, reliability and predictability.

The treasurer is also able to track where payments are and to know in advance the fees payable. At Bottomline, we're exploring an exciting enhancement to GPI as part of our cloud-based payment and cash management platform, with a few exceptions, at present, multi-bank corporates can only access GPI by the e-banking platforms of their various banks who are offering GPI. This means today they can only see information relating to each bank on its separate e-banking system.
That's instead of all the aggregated information being available on one consolidated platform. So enabling corporates to access GPI via a multi-bank payment hub will make it easier for the corporate community to benefit more fully from GPI in a multi-bank environment.
The corporate payment hub will apply a unique end to end transaction reference, which is attached to the payment throughout its lifecycle. This makes it easier to track and to reconcile and provide accurate reporting. This applies to all cross-border payments, whether MT Fin or XML formats and the payment hubs dashboard allows users to track payments and more importantly, to manage exceptions more easily.
And what's more, GPI’s roadmap is full of value-added solutions. These will help improve the speed and efficiency of payments, for example, by the end of 2020, all 10,000 banks on the SWIFT network must provide universal confirmations. This means a treasurer will be able to receive confirmation that funds have been credited to the beneficiaries' accounts. Looking slightly further ahead, SWIFT also has plans for a stop and recall service that's for payment instructions after they've been released into the SWIFT network.

Also, a new pre-validation scheme is going to allow banks to send and receive API calls over SWIFT to check beneficiary information with the ultimate receiving bank. So this information checking is performed before the payment is made. So banks will be able to quickly correct any errors and thereby reduce delays and costs of payments getting misdirected.
The new service is really going to improve straight-through processing rates and will also reduce the risk of fraud. The cross-border pre-validation solution is actually a bit like the confirmation of PAYE solution, which Bottomline are launching next year in the UK and this is going to help reduce the risk of payments being sent to the wrong party.
Today, there's still no standard cross-border collection instrument, even though many countries, of course, do have their own domestic instruments like direct debits. And in response to the big demands from treasurers for easier cross-border collections, SWIFT and their partners are developing a cross-border request to pay instruments. This cross-border model is similar to the request to PAYE instrument which Bottomline is now testing and launching in the UK in the next few months.

Rich Williams: So aside from cash, visibility and reporting, what else are the key worries that would keep a treasurer up at night?

Marcus Hughes: That's a classic question. Well, it seems to me that the elephant in the room continues to be cyber fraud and financial crime. This is a major problem for any organisation, especially those doing business internationally. The increased risk here is proven by the growing number of banks and other corporates which are falling victim to cyber-attacks. What is clear is that cyber fraudsters are increasingly sophisticated and these criminals invest significant time and money in planning highly skilled cyber-attacks, making use of malware and other techniques to conceal their illegal activities both before, during and after the heist.

With this increase in cyber fraud, it's really essential that organisations up their game, but they've got to ensure they have multiple layers of defence which help them keep ahead of the fraudsters. Obviously, security policies and procedures as well as training, they're all vital for protecting an organisation against cyber fraud. But technology also has a key role to play. It's of course, essential to encrypt data when it's at rest or in transit. But it's not just a case of protecting customer data. It's also vital to do everything possible to detect and prevent fraudulent payments. Payment systems obviously have to have a secure internal control framework.

Like secure access, segregation of duties, four-eye approval workflow, full audit trail and multi factual authentication. On top of all that, one valuable technique which has seen growing adoption is to deploy a cloud-based system which monitors transactions and user behaviour. This helps detect unusual activity, and this strategy should really form part of any organization's layered cyber defense.
Advanced analytics and profiling of user behaviour and transactions, this can enable a system to understand what are normal transaction patterns and normal user activity. The data can then be used as the basis for detecting abnormal and potentially fraudulent transactions. All this in real-time. So a powerful fraud analytics system combines ruled based detection with machine learning.
That's because this enhances the rules engine to reduce false positives as machine learning updates the system continuously. A payment fraud prevention system must also have the ability to flag suspicious transactions and block these potentially fraudulent payments. Again, all in real-time. It’s vital these suspicious transactions are stopped before they're released onto the payment network. In that sense, unfortunately, the growth in real-time payments also means a risk- Sorry, I'd say a rise in the risk of real-time fraud problems, only with a few seconds to react. So payment fraud solutions must work in real-time across multiple payment channels.

Rich Williams: Another elephant in the room here. There's a lot of political tension around the world right now. Was there any advice that was shared for treasurers on how to manage the heightened risks that may result from that in particular?

Marcus Hughes: Yes.
At Euro Finance, there was a lot of discussion about increased political tension around the world, such as the China-US trade war, political unrest in the Middle East and many other examples. With so much uncertainty and the US government's habit of imposing sanctions on countries at extremely short notice, there's, therefore, a growing need for real-time sanction filtering. These constant updates to sanction blacklists make it highly challenging for organisations to keep up to date in these politically volatile times.
So banks and other regulated financial institutions are, of course, in the frontline of this fight on financial crime and money laundering. But nowadays, with the increase in enforcement action against corporates by the US Office of Foreign Assets Control, which is better known as OFAC, this underlines that corporates can no longer simply rely on their banks to prevent payment to an entity, a person or a country on a sanction list.

Increasingly, it's the corporates themselves which should consider implementing their own increased controls for sanction filtering. This not only ensures they remain compliant, but they're also able to provide a full audit trail about any suspicious beneficiaries and payments or transactions which are flagged by their banks. So if a corporate is able to screen a transaction against a sanction list before releasing the payment instruction to the bank, the management team is certainly going to have additional piece of mind.
And this technique avoids the reputational risk of being identified by your bank as having proposed payments to blacklisted organisations or individuals or countries, of course. So cloud-based sanction screening software for corporates makes it easier for a business to identify and mitigate risk by filtering all transactions in real-time against constantly updated sanction lists.
So in creating a cloud-based payment hub with its integrated sanction screening capability, is a big advantage in this fight against financial crime and as well as screening transactions against official lists, an organisation should really develop their own in-house good lists and bad lists. So, for example, screening solutions can be used to identify and stop any inappropriate payments which have been directed towards employee bank accounts.
This is going to help prevent internal fraud issues. And meanwhile, good lists can be created to cover special beneficiaries which are allowed to be paid despite operating in sanctioned countries. So if, for example, the Red Cross providing medical aid in a war-torn country. So in this way, good lists can greatly reduce the task of managing many false positives and repeat payments.

Rich Williams: Cross-border payments are generally perceived to be expensive and complex. What was shared about the strategy to reduce the volume and as a result, the cost of these cross-border payments?

Marcus Hughes: Yes, this is an important money-saving subject. So as I've already mentioned, GPI is helping to make cross-border payments more efficient and transparent. But this does not necessarily reduce the costs, including foreign exchange conversion charges. So the additional advice offered at Euro Finance was to glocalise [sic] payments.
This strange word is a combination of local and global. An example would be converting cross-border payments into domestic ACA instruments, by using disbursement and collection accounts in country. This is a highly recommended best practice for any countries where a business has a concentration of payments.

This typically means that a cash manager's policy in a sophisticated corporate is going to be, wherever possible, convert cross-border payments into local domestic payments. Generally, this approach delivers lower costs and higher straight-through processing. Treasurers should bear in mind that if they have many payments to a particular country, it is cost-effective to open a local disbursement account in that country.
This disbursement account can be funded with a single wholesale cross-border payment from the head office to the overseas disbursement account. And this cross-border payment would be for the aggregate value of all the payments due to be made locally over the coming days. Once the funding is on the account in country, a file of domestic payments is sent to the local bank with instructions to make these disbursements via ACH, most typically or potentially via local wire, depending on the urgency of such payments.

Any of these techniques will be less costly than making a separate cross-border payment for each amount that's due to the end beneficiary and country. So currency accounts with a bank in another country can also be used to receive local payments from your customers.
This makes it easier for a business’s end customers to pay them with local currency domestic payments, therefore avoiding the customer-facing the cost and complexity of cross-border payments. Using currency accounts helps a business to mitigate its exposure to volatile exchange rates.
This is thanks to the matching of flows of inward and outward payments, and this reduces the need to make multiple foreign exchange purchases and sales, which is of course, costly. If a significant balance accumulates over time, occasional cross-border payments can be used to repatriate those surplus funds for main bank accounts held at the head office level.

So collections or direct debits can be handled in a similar way. Domestic format DSs are sent to the local bank, which in turn submits these to the local ACH. Once these moneys are received, the treasury may decide to leave the funds in country, especially if there are imminent disbursements to make or any surplus funds could of course be swept back to the head office or regional bank accounts.
So in developing a corporate payment strategy, it's vital to take into account any local differences in markets where organisations have a significant flow of payments in collections. So, for example, UK payment schemes allow direct corporate access to BACS. That’s the UK’s ACH and to the faster payment service. So this is different to other countries where corporate payment files are submitted to the local ACH via their payment banks. So it's important to find a payment hub which incorporates these local requirements in order to benefit from maximum flexibility and lowest cost routing.

Rich Williams: As we come to the end of this podcast now, do you have any final thoughts on this year's Euro Finance event?

Marcus Hughes: Yes, of course.
In the near-term, I see a rich widening of payment instruments and systems which treasurers will be able to use to make their tasks easier and faster. Just a few examples are, request to pay, confirmation of pay, which we've looked at as well as Visa B2BConnect MasterCard Track. And there are plenty of others too, of course

But with so much choice, treasurers are going to need trusted solution providers which can help them access these multiple networks and solutions that best suit them. One challenge that won't change is the mid-sized corporates and large corporates are going to continue to operate multiple bank accounts and they'll be faced by the same task of connecting to multiple banks and payment networks or to manage their global payments and cash more efficiently. At Bottomline, we’re certainly well-placed to help our customers make the right choice and put in place solutions that are simple, smart and secure.

Rich Williams: That's great, Marcus, thank you so much for coming and sharing your thoughts on this year's Euro Finance and great to have you with us again.

Marcus Hughes: My pleasure. Until next time.

Rich Williams: So, unfortunately, that's all we have time for today. We'll be back with some more podcasts very soon. And in the meantime, you can listen to more episodes on all things payments at the touch of a button using your preferred provider. And we'll see you all next time."

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