European Banking Solutions
IOM currently has established banking relationships in approximately 150 locations worldwide, with more than 60 different banking partners and more than 180 accounts in Europe alone. This presents a number of challenges for IOM:
- Numerous bank accounts result in inefficient use of cash and liquidity as more funds are needed to maintain accounts balances for monthly needs.
- There is no automated cash management structure to pool excess cash and sweep excess funds to HQ for investing.
- The manual replenishment of mission bank accounts from HQ is inefficient and slow.
- Payment methods (e.g., cheque, manual input to e-banking platform) are slow and poorly controlled with no direct link from the PRISM Financial system or "Straight Through Processing" (STP). This involves considerable additional re-keying and manual generation of payments as well as manual reconciliation of payments to the accounting system.
Furthermore, the inability to leverage banking relationships results in an ineffective banking structure with higher pricing of banking services, i.e. excessive fees and poorer service standards from banks towards missions.Given the many challenges in the Organization, the implementation of a banking solution is essential for IOM.
New structures for Treasury
Treasury is working on the implementation of a new banking structure for the Organization's banking business in Europe that will be much safer and less time consuming than the current system and will be fully integrated with PRISM. The new services will help IOM to enhance visibility, transparency, and reduce frauds and misconduct. Furthermore it will ease reporting and planning. Following the recommendations of a consultancy company, the Treasury Division conducted a Request for Proposal (RfP) with the result of selecting Deutsche Bank and Société Générale to cover most of the banking business in Europe. Deutsche Bank was selected to be the core bank of IOM regarding cash pooling. Missions will be funded and replenished automatically and cash payments will be substituted with STP, where possible.
Treasury and IT are closely working together to build an STP system which connects IOM directly with Deutsche Bank and Société Générale. A similar IT exercise has been successfully conducted for the Asian Economic Area of IOM, namely with Standard Chartered Bank.
"Data integrity can be compromised in a number of ways, Straight2Bank (S2B) integration with PRISM minimizes the treasury process risk by passing vendors' banking details to the bank and doing away with manual intervention, thus reducing human errors and improving efficiency. To avoid "garbage-in, garbage–out", it is imperative that the missions ensure the maximum quality of vendor creation process." - Somwong Chuleewatanapong, Chief Financial Services, IOM Manila
"The S2B interface link with PRISM provides a more convenient process for bank transfers - from manual payment to automatic payment, delivers faster transaction flows, and cuts down the usage of paper. Missions benefit from an integrated workflow that allows achievement of greater operational efficiency and gains more security and control over the transactions and processes. The treasury function can prepare the payment more easily since all the bank account details of vendors have been saved into the vendor master data and it allows mission to do bulk payments for multiple transactions thereby reducing the need to transmit several bank payments, see real-time balances and transactions in the accounts, and make real-time transfers between accounts." - Finance Assistant, IOM Jakarta
From a technical point of view, IT can build on the S2B solution that was created for Standard Chartered. The PRISM team is liasing directly with technical staff from the banks and is currently in the final phase of testing Deutsche Bank's dummy accounts in Geneva. The first milestone, foreseen for early autumn 2015, will be setting up the connection for Headquarters, Germany, Austria, Belgium and the Netherlands to Deutsche Bank.
Every mission has their specific programmes, special features and characteristics which require careful match of services (e.g. cash needs or card programmes). A continuous dialogue between Headquarters, PRISM IT team, the local finance focal points and the relationship managers from the banks is needed to ensure that these special features are incorporated into solutions for all missions.
The way to a fully integrated banking solution
It is planned that following the successful implementation of the Deutsche Bank solution for IOM Headquarters and the selected first four above-mentioned countries in Europe, the solution will be rolled-out to other IOM missions (Italy, Spain, France, Portugal, United Kingdom, Hungary, Poland, and Ukraine). In parallel, the implementation process with Société Générale has started with a first kick-off meeting in July 2015. The solution with Société Générale (which includes Albania, Bulgaria, the Czech Republic, Croatia, the Republic of Moldova, Montenegro, the Former Yugoslav Republic of Macedonia, Romania, Serbia, Slovenia, and Slovakia), will integrate the selected countries into a common European system for IOM's banking activities in these locations. Another, substantially smaller, RfP is planned for Scandinavia and the Baltics, which could not be covered by the selected banks.