Day 1
What drives the market for International Payments and Cash Management services? Who are the market participants?
Financial Objectives of corporate customers and banks
- The corporate’s Balance Sheet and Account chart
- Order-to-Cash & Purchase-to-Pay
- Key ratios
- The bank’s balance sheet and P&L account
- Sight balances, Deposits and other sources of liquidity for banks
- Non-credit services revenues
- Tier I and Tier II Capital
- RoA, RoC, RAROC – Basel I and Basel II
Case studies: delegates calculate corporate ratios, and banks’ returns on diverse financial transactions under the Basel I and Basel II methodologies
Service domains of the Payments and Cash Management business
- Electronic Banking
- Account Services
- Payment and Collection Operations
- Clearing systems
Case studies: delegates evaluate the differences between proprietary electronic banking and SWIFT Corporate Access, and understand the distinction between Net & Gross Settlement Clearing Systems
Who is the Corporate ICM Customer and what is their internal structure
- Geographical organisation
- Legal entity types
- Management organisation
Case studies: delegates gain insight into organisational models of major companies using WPP Group plc and Logica plc as examples
What is the physical and financial supply chain of the Corporate ICM Customer
- Physical supply chain of international companies
- Usage of offshoring and outsourcing
- Organisation of the Finance Function
- Accounts Payable & Receivable and Shared Service Centres
- Requirements for the Payments and Receipts processes
- Managing the external and internal supply chains
- Multilateral Netting
Case studies: delegates evaluate supply chains with different level of physicality with reference to Tesco plc, Symantec and International Paper
Where do the functions of Treasury kick in?
- Cashflow Forecasting
- Treasury functions, policies and financial instruments
- Treasury Centres
- Dealings between subsidiaries and Treasury Centres
- Dealings between Treasury Centres and banks
Case studies: teamwork exercise to run a multilateral netting process, create a cashflow forecast and conduct treasury operations against it with an internal Treasury Centre
Day 2
Market structure and basis of competition in International Payments and International Cash Management – and threats and disruptors
Users and suppliers of International Payment services
- Profiles of different Financial Institution users – banks, insurance, pensions, secondary banks
- Non-FI users - Public authorities, multinational corporate, Import/export businesses, SME, Private individuals, in particular migrant workers
Basis of competition in International Payment services
- Reach
- Fees
- Value-dating
- Cycle time
- Integration
- Customer service and support
Case studies: teamwork exercise on options available to large financial institutions using as examples working through correspondents and becoming direct members of clearing systems like EBA Euro1
New entrants and substitutes in International Payment services
- Traditional business model with clearings and correspondents
- Money Remitters (Moneygram, Western Union)
- Cards (Visa, Mastercard)
- Internet payments companies (PayPal, Earthport)
- Mobile payments (Safari.net)
- Catalysts for change such as ISO20022, SWIFT MX and the EU Payment Services Directive
Case studies: teamwork exercise on options available to SMEs and private individuals using PayPal, Earthport and mobile as collateral
What is the basis of competition in International Cash Management? Who are the incumbents and who is trying to get in on the act?
- Global Banks
- Partner Banking
- IT vendors and service bureaux
- SWIFT FIN Payments and Information message sets for ICM
- SWIFT – new kid on the block as a direct participant in ICM
- as MACUG
- as SCORE (Standardised Corporate Environment)
Case studies: delegates discuss the Value Chain and key issues of multibanking and monobanking, with reference to Citibank, the IBOS Banking Club and PayPal as a user of SCORE
Catalysts for change to the ICM market: what is shaking the foundations for the incumbent service providers?
- New Entrants and Substitutes
- Rising power of the customer, and their usage of Payment Factories
- Emergence of open standards such as ISO20022 and of multibank techniques like SWIFTNet FileAct
- Increased competition amongst suppliers
Case studies: group sessions where delegates apply a Porter’s 5-Forces Analysis Model to the payments business and appreciate how the Value Chain is being reshaped
Day 3
Single Euro Payments Area and Liquidity Management
Status check on SEPA: the initiative to harmonise the disparate European payments environments
- SEPA history, governance and roadmap
- Change from vertically to horizontally integrated market
- SEPA Data Model and interlinkage with ISO20022
- SEPA Schemes for Credit Transfer and Direct Debit
- SEPA Clearing Infrastructure
- Barriers to adoption of SEPA and how they are being addressed
- Setting of a mandatory end date for migration - SMED
Case studies: delegates gain insight into the European Commission’s desire to alter the payments market in the EU from a vertically integrated one to a horizontally integrated one, with reference to the existing structure of the International Cards market, the SEPA market models for Cards and Payments
Corporate Liquidity Management techniques now that overcome barriers in the current environment
Overview of main techniques:
- Collecting balance information, manual disposition.
- Use of funding and investment instruments, tiered interest accounts
- Zero-balancing and Target balancing
- Interest enhancement and Notional pooling
- How banks attempt to create geographical reach beyond their own branches
- MT101 Bilaterals/“Strategic Partners”
- Banking clubs – like IBOS
- Pooling Engines and ‘Re’ Accounts
Case study: delegates analyse how one small bank can gain a major portfolio of multinational customers via usage of correspondents, cross-border sweeps, multilateral netting and notional pooling – Bank Mendes Gans, Amsterdam
Competitors’offerings
- Network banks (Deutsche, BofA, Citi, ING..)
- Banks using services that depend on Banking Clubs (Connector or IBOS)
- Banks using Pooling Engines
- SWIFT Corporate Access/SWIFT Service Bureau
Case studies: team exercise to enable delegates to contrast the attraction of each offering to both corporate customers and to the bank itself (based on investment cost and time-to-market)
Banking, legal and tax barriers to optimal Liquidity Management
- Banking barriers such as the structure of currency and money markets, and information timelags
- Regulatory barriers such as Asset and Liquidity Reserves, and Deposit Insurance
- Legal barriers such as Capital Stripping, Deemed Dividend, and Thin Capitalisation
- Tax barriers such as Withholding tax, Tax treaties and Stamp Duty
Case studies: delegates gain concrete appreciation of the impact of these barriers by calculating the cost of Asset and Liquidity Reserves, Deposit Insurance, Withholding tax, and Stamp Duty, and of the penalties for non-compliance with regulations around Capital Stripping, Deemed Dividend, and Thin Capitalisation
Course summary and close