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.”