Overview
Our client is a leading global financial institution headquartered in Europe. As a key player in the global financial system, it manages an extensive international presence with a diverse clientele, ranging from corporate and government institutions to individuals.
Its legacy trade finance application serves both corporate and financial institution (FI) customers. For customers that don’t have an account with the bank, charges and commission for the bank guarantee (BG) product were collected by debiting the suspense account of the bank and later billed to the customers. The legacy trade finance application required a manual compilation of the transaction details, including transaction amount, customer ID, outstanding amount and commission period. A consolidated email was sent to each corporate customer or by SWIFT messages to its FI customers. This process was prone to errors and sometimes resulted in a revenue loss for the bank.
HCLTech seamlessly integrated accounts receivable/accounts payable(AR/AP) applications into our client’s legacy trade finance application and other platforms to transform its charges and commission management for the BG product.
The Challenge
Manual tracking and invoicing for charges and commission from a customer entity
- Non-standard process across regions (Asia, Europe, Middle East and Americas) for handling charges and commission from a customer entity
- Charges and commission management for BG product is a periodic activity for the operations team in Trade Finance that involves a lot of manual processes:
- Manual invoices were generated from the trade finance legacy application at the transaction level for charges and commission
- Invoices were being sent to customers by the Trade Advisory team, claiming charges
- An Excel-based tracker was maintained for reminders and follow-up
- Manual reconciliation was performed based on ledger credit and debit entries from other applications
- On receipt of funds from the client, the charges were settled in the trade finance legacy application
- Lack of a consolidated view of outstanding charges and commission for a branch and customer entity
The Objective
Achieve a consolidated view of commission and charges for a customer entity and simplify the invoicing process
Our client wanted to implement a system that could manage the accounts receivable and accounts payable for the BG product without manual intervention. This would also help the bank’s operations team get a consolidated view of outstanding charges and commission for a particular customer entity, automate the invoicing process and settle charges.
The Solution
A consolidated view of outstanding and settled charges and commission
- All charges and commission charged for the BG product in the Trade Finance application are sent to the AR/AP application through API integration
- For a customer entity that doesn’t have an account with the bank, the payment flows from the legacy trade finance application to the AR/AP application and reflects as an outstanding amount, enabling the operations user to view a consolidated list of outstanding charges and commission for a customer entity
- For customers that have an account with the bank, charges and commission are debited from the customer’s account and reflected as settled transactions in the AR/AP application, helping the operations team track settled transactions
On-demand report extraction
- Implemented a reporting feature that enables the extraction of PDF, XLS and CSV reports for the outstanding and settled charges for a particular customer entity under a branch
Automated invoicing to the client with follow-up reminders
- The charges and commission for processing a BG product can be collected from the customer on a monthly, quarterly, half-yearly or yearly basis. To simplify this process, HCLTech implemented functionality that enables the operations team to set up the frequency for sending automated invoices to a corporate customer and follow-up reminders at a set interval
Branch-wise report
- Built a functionality for sending an automated monthly branch-wise report on the second business working day of each month, sharing details of all outstanding charges for all customers of the branch in a CSV format, helping each branch get a view of their outstanding charges and commission from the past month.
Integration of the AR/AP application with other banks applications for reconciliation of ledger credits and debit entries
Our integration solution eases the reconciliation of outstanding transactions via one-to-many match and finally mark charges as settled in the AR/AP application as well as the legacy trade finance application. This also requires an approval workflow.
SWIFT MT 799 and MT 101 from the application
- Built a functionality for sending an automated MT 799 message from the AR/AP application to FI customers requesting them to remit outstanding charges and commission. MT 799 message is further followed up by automatic reminders.
- HCLTech implemented SEPA/Direct Debit mandate for Europe and Non-Europe region to be auto generated from the AR/AP application to the corporate customer’s counter-party bank, preceding an email notification before the actual direct debit message.
The AR/AP application was built ground up, and it had its share of challenges, including pulling required data from different stakeholders sitting across different regions and dependency on different teams to integrate AR/AP application with different banks’ systems.
The major deliverables for the project included the client’s data migration from the trade finance application to the AR/AP application, the configuration of the bank’s suspense account and internal customers’ accounts, upgrades, SWIFT messages (MT799, MT 101) implementation, multiple functional regression testing and test bed enrichment for flawless implementation.
The Impact
Streamlining the handling of charges and commission for bank guarantee product
Standardized process globally:
AR/AP application was rolled out across various regions for bank guarantee product, which standardized commission and charge management at a global level for the bank. We assisted the bank in rolling out the application for corporate and FI customers across all regions, covering over 333 branches and 400,000+ customers.
Minimal manual intervention:
HCLTech helped implement the AR/AP application from scratch (homegrown system), which eliminated the manual process of over 8,320 hours per year and translated into savings of several employees.
Better control and tracking mechanisms leading to reduction of efforts for the team:
HCLTech provided a real-time dashboard which helped the operations team in tracking outstanding and settled charges for customers (AR/AP). Additionally, auto-generation of invoices and reminders in an encrypted format reduced the efforts of the advisory team.
