Articles
April 1, 2021
Talking Shop: Payment Platforms; Supply Chain Finance; Bank Capital
# Banking
# Risk Management
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Member question 1 (payment platforms): “We are having discovery calls with FIS, TIS and Fides to understand their value propositions.
- “Our main pain points are having all sorts of e-banking portals, and arise when we onboard new entities (recently acquired) and penetrate new countries.
- “Anybody having any experiences with the vendors listed? And suggestions how to best select (did you RFP this business?).”
Peer answer 1: “We have used TIS for some years now and are quite happy. They have a large number of banks in the system and it’s pretty easy to connect to these.”
Case study: NeuGroup Insights published an article on how TIS helped The Adecco Group. And watch this space for details about a NeuGroup virtual interactive session in May featuring TIS.
- “However, we did make an amendment to the buyer joinder agreement to narrow the terms under which the direct debit may occur.
- “It specifies that the debit is limited to amount in the payment instruction, or any obligation to pay an amount equal to any payment obligation, and so on.
- “The SSC-A/P function then uses a clearing account process in SAP to ensure 1:1 matching to expectations.”
Member question 2 (supply chain finance): “[Our bank] is telling us that companies permit them to direct debit their accounts for supply chain finance (SCF) in EMEA due to ECB rules, and that that it is common practice.
- “Is anyone else allowing direct debt in EMEA for SCF?”
Peer answer 1: “Yes, we are rolling out SCF in Europe and are allowing direct debit under [that same bank’s] process.
- “However, we did make an amendment to the buyer joinder agreement to narrow the terms under which the direct debit may occur.
- “It specifies that the debit is limited to amount in the payment instruction, or any obligation to pay an amount equal to any payment obligation, and so on.
- “The SSC-A/P function then uses a clearing account process in SAP to ensure 1:1 matching to expectations.”
Member question 3 (bank capital): “I’m interested in getting some peer feedback regarding the internal monitoring of capital ratios beyond just the standard regulatory minimums.
- “What types of reporting/tracking are people using? Are they utilizing multiple points of escalation based on various internal targets? Are the internal levels based on actuals, forecasts, both?
- “If forecasts, what time frames are being used? How proscriptive is everyone when it comes to taking action based on dropping below an internal threshold?”
Peer answer 1: “We do monthly forecasts and ALCO where we report out actuals and provide an outlook for a few quarters (depending on the time during the year).
- “Our focus tends to be common equity tier 1 and tangible common equity ratios, although we also show ALCO leverage, tier 1 and total risk-based. Our TCE ratio limit is self-imposed at [a certain percentage].
- “For all other ratios we set the limits at the defined ‘well capitalized levels’ plus 1.0% to serve as an early warning limit.
- “We also share our typical operating range of the ratio, which is higher. If we were to break a ratio, there is a process in place to discuss with the enterprise risk committee of the board and settle on a course of action to bring it back under compliance. This hasn’t happened since I’ve been here.”
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