The Art of Co-creating and Co-ideating

Highlights from BNP Paribas’ European Treasury Board

The key to success in the delivery of both strategic and operational treasury systems is having access to the open and honest views of stakeholders. BNP Paribas’ regular Treasury Board meetings with clients and subject matter experts takes collaboration to the next level. Here are selected highlights from the most recent gathering.

Realising the power of co-creation and co-ideation is very much the driving force behind BNP Paribas’ regular Treasury Board meetings. From minor tweaks to major developments, the process seeks results that the treasury community knows from the outset are grounded in real-world needs because its involvement is encouraged from the outset.

In the most recent meeting of European treasurers held in Paris, co-creation conversations ranged from APIs and how to acquire real-time information to the digitalisation of B2B payments. In the co-ideation space, where new concepts are tackled head-on, discussions probed the possibilities of the end-to-end liquidity journey, and the fascinating notion of the ‘Easy Treasury’ toolkit.

APIs: time for real-time

It’s well known that APIs are not new, either as a technology or as a treasury topic. Indeed, Steven Lenaerts, Head of Global Channels & Digital Onboarding, BNP Paribas, reminds us that previous Treasury Boards have already explored the concept in terms of revealing the most important use cases and any caveats arising from their adoption.

Steven Lenaerts
Head of Global Channels & Digital Onboarding, BNP Paribas

In seeking to share experiences to date, but also contemplate the next steps with APIs, Lenaerts acknowledges that treasury is not at the forefront of adoption. “We have seen quite a number of use cases, and we have explored areas such as instant cash reporting and visibility on account balances,” he says. “But if we really want APIs to work, we need to hand over mature and standardised solutions to our corporate clients. This is why we call upon Treasury Board participants to look at overcoming the hurdles, shaping use cases, and investigating how to leverage APIs for better daily treasury operations.”

For corporate contributor and API pioneer, Erik Snersrud, GPO Cash Management, Group Treasury & Tax, Hydro, one of the key treasury goals is having transaction information as early as possible. This enables earlier reconciliation of accounts payables and credit management. “Most accounts receivables are reconciled next day, even though all transaction information has been in the system overnight,” he says. “Having that information much earlier, so treasury can start processing same-day, or as soon as possible after the transaction, means that our account balances can be updated with matching speed, almost processing the entire transaction simultaneously.”

Intraday processing suits APIs, which by nature are real-time, says Lenaerts. However, integration of real-time information via APIs requires an “overall readiness” on the part of the corporate technology environment into which they are integrated. There are a number of ways to achieve this, and Snersrud cited adoption of a unified bank and fintech solution as his approach. This provides standardised transaction data and balance status that is uploaded into SAP, with treasury able then to format an intraday view and deliver reports almost on demand.

The specific fintech/bank solution adopted by Snersrud’s team is a product of co-creation. With multiple API technologies on the market, Lenaerts notes that SWIFT’s focused initiative in this space is beginning to shape the market towards much-needed standardisation. “BNP Paribas is supporting this because we believe clients should need to invest only once in their API structure,” he comments.

With testing underway using SWIFT-standardised API connectivity, Snersrud reports good progress. “But there are still some limitations to this solution because the view from the corporate end is not the same as the bank’s. I need all the details – the invoice number, all the details of the transaction – because I receive information about who has paid but not what they actually have paid.” 

This type of user-view is invaluable, says Lenaerts, “because we’re going to feed that into the standardisation process”. The purpose of the Treasury Board is, of course, using interactivity to help bank and client co-create a range of APIs, among other technologies, and these are beginning to be published, with new developments under discussion.

Together it was decided that information reporting should be the first API focus. Snersrud suggests the next might be the delivery of transaction status messages, enabling treasury to take a more proactive stance on data flows. He feels progress is being made but acknowledges the industry is still at an early stage. “What we have experienced to date is a lot of buzz around APIs. I’m not saying that they are not easier to implement than some historical means of connectivity, but onboarding needs to be simplified in order to really reap the benefits of APIs.” That said, he notes adoption can go smoothly, and thinks market providers are gaining good experience and moving forward.

Another treasury participant is using APIs within its in-house banking structure to expose information for, among other processes, forecasting. It’s aim is to begin moving to more operational treasury activities, such as KYC data exchange, but this is a work in progress. “We’ve tried for a year to make the operational side work, using two separate fintech solutions, with no success so far,” it was reported. More open discussion is needed.

B2B payments: going digital

With many companies offering a B2B e-commerce solution, Bruno Mellado, Global Head of Payments & Receivables, BNP Paribas, believes that perhaps one in three are moving into digital marketplaces. He adds that while the client journey for payments is not necessarily keeping pace, “there’s a perfect storm out there where treasury can be in the centre of their organisation, among marketing and procurement, helping them achieve new growth”. 

Bruno Mellado
Global Head of Payments & Receivables, BNP Paribas

Antoine Leclercq, Cash Manager France, Kingfisher, a major Europe-based DIY retailer, explains how customers of two of its leading home improvement merchant brands in France, Castorama and Brico Dépôt, were facing difficulties in making payments for their high-value purchases – such as kitchen or bathroom refits. With purchases often beyond credit card limits, cheques expensive and slow to process, and cash payments impractical, the alternative, wire transfers, were disjointed, slow, and often disincentivising for customers.

In partnership with BNP Paribas, the Kingfisher team in France found a remedy using account-to-account (A2A) payment capabilities. It has now deployed this across all 228 in-country shops, to great effect. Combined with offerings from open banking payments solution vendor Token and third-party middleware vendor Paytweak, the Kingfisher solution is formed around BNP Paribas’ Instanea real-time payments platform. This easily integrates with multiple payments channels to deliver immediate settlement.

When a payment is made, customer and sales data automatically generates a one-click secure link to Instanea, which is sent to the customer. The message incorporates the transaction details alongside additional valuable customer data and an innovative unique transaction identifier code.

Upon receipt of this message, the customer accesses Instanea where they choose their online bank. They are redirected to that bank to validate the details and then authorise the payment. Following real-time checks, the bank proceeds with the irrevocable instant payment from the customer’s bank account to the relevant Kingfisher BNP Paribas account.

Kingfisher receives instant notification of the payment action, along with all the relevant transactional data and the unique identifier. Paytweak simultaneously notifies the shop of the receipt of its customer’s funds, the shop is then able to release the goods. The entire round trip takes just a few seconds.

Both Kingfisher and BNP Paribas worked closely to define and develop this innovative customer payments experience. “It was truly a joint project. At the beginning we had a discussion about Instanea, with BNP Paribas looking for partners to test this new platform,” recalls Leclercq. “We were really happy to be involved; this was a fitting solution for the challenges we had identified, and we quickly agreed to work and learn together, discovering the solution’s capabilities.”

With a small number of participants collaborating with marketing departments on how to increase sales using payments optionality, and some getting calls from procurement on how to integrate payments into their procurement systems, it seems treasury is taking the centre ground on providing solutions.

Indeed, the consumer concept of ‘buy now, pay later’ is gaining some traction as another tool of interest in digital B2B payments. BNP Paribas is rolling this out for online checkouts. In partnership with a fintech, it is using a real-time system to assess customer eligibility for extended payment terms, effectively providing additional or alternative financing options linked to B2B digital payments. In trade, where sending goods to a customer before payment is not uncommon, this solution adapts to the buyer’s credit status, potentially improving sales revenues by reducing DPO to clear credit lines and increasing purchase frequency.  

What the discussion to this point suggests is that the will to engage in co-creation spans a diversity of treasury processes. Following on from this was an exploration of co-ideation, where new products, services, and processes can begin to take shape.

Ideation: sharing the end-to-end liquidity journey

For treasury, full vision over investment and cash positions is not always possible. For Isabelle Monnerot-Dumaine, Leader of Liquidity Management Advisory, BNP Paribas, a TMS may not reveal the whole truth about liquidity, with investment levels perhaps not as clear as cash positions.

Delivering equal clarity over both, on the same platform, is a goal that BNP Paribas and its partners have set out to explore, she explains. By having both in view, discussions have shown that the opportunity to know the total amount available for investment, in real-time, could significantly enhance the investment process.

Indeed, with the transparency and accessibility afforded by a single global platform, it would be possible for analysis tools to show the impact of an investment quickly – a term deposit for example – on the overall cash position, the overall investment pool, and any future cash positions. If a simulation matches pre-defined parameters and triggers within the platform (including instrument, amount, currency, and tenor), then the actual investment can be made by a single click – or even automatically.

The ideal drawn from this co-ideation procedure, says Monnerot-Dumaine, is a digital end-to-end process that maintains a cash balance at a desired daily level, with excess going automatically to approved short-term options, such as MMFs, and any shortfall triggering automated divestment of those short-term investments to bring the balance back to the required daily level.

At the heart of the process is API connectivity, delivering real-time balance data direct from the bank. “I think this is a great step forward,” says Michel Verholen, Assistant Treasurer, Zoetis, commenting on the superior use of excess cash. “Of course, some treasurers don’t want to open other investments, but we make our investment decisions during the day – and are open to different kinds of investments depending on the real-time situation.”

Treasuries have investment policies that typically steer excess cash to deposit or MMFs, and all articulate which is the highest ranking, notes Monnerot-Dumaine. Verholen says in his firm’s UK business, excess cash has for many years been automatically swept into a high-yielding investment account “so we don’t have to worry about that aspect: there’s no accounting, nothing to do in the TMS; it’s just another balance in the bank account”.

While BNP Paribas workshop discussions revealed little in the way of appetite for moving beyond MMFs, Monnerot-Dumaine says the idea of a global platform to facilitate the end-to-end liquidity journey is to give treasurers options of where their excess cash can go, with the facility to tailor maximum daily limits. Verholen agrees, saying that facilitating flexibility for treasurers – perhaps a two-step process – so they can invest, post MMF daily cut-off, in overnight deposits for instance, is welcome.

One participant raised the matter of investment performance and the possibility of divesting automatically from less profitable fund yields and moving into another. “We do it manually today in my company, arbitrating one fund versus another,” they said. “When we have to, there is a decision that is made both on the amount invested in the fund, plus the yield of the fund. Of course, we’re going to divest from the less profitable ones first.”

While automated divestment is yet to be discussed, Monnerot-Dumaine is eager to have input around more complex investments, currency needs, or any other treasury expectations, “because it really helps us fulfil client needs”. 

Easy Treasury toolkit

Vincent Marchand, Head of the Fintech Lab, Cash Management, BNP Paribas, firmly supports the bank’s belief in co-ideation and co-creation. Working already with a group of treasurers, he has plans to launch a new BNP Paribas-connected ‘Easy Treasury’ solution by November this year, with validation input now being sought from several treasury stakeholders.

Vincent Marchand
Head of the Fintech Lab, Cash Management, BNP Paribas

Easy Treasury is aimed at newly spun-off entities, joint ventures or where a treasury function previously did not exist. To help these businesses hit the ground running, Marchand feels Easy Treasury has a unique value proposition. “It’s a plug-and-play concept to help new legal entities to run or manage their daily treasury operations under a very aggressive timescale, reducing project times from 15 to 18 months to one or two months. It is the full package, even providing a certified treasurer to manage the treasury department of the new legal entity.”

The depth of provision here required BNP Paribas to co-ideate the model with its preferred technology partners. Marchand says this is helping it meet the brief of “a very simple, well-packaged solution that will answer all your basic needs so you are ready from day one”. While the partners are providing different pre-configured and optional modules – cash management, payments, FX, and treasury – and another is handling integration, he confirms that the client contract, and thus liability, lies with BNP Paribas, “which ensures simplicity and a greater degree of comfort for the client”.

Having been involved in the co-ideation of the Easy Treasury “transition tool”, François Masquelier, Chair, EACT, is now one of its ambassadors. “When an entity is spun off, it does not necessarily come with all the required functions – IT, treasury, traders, and so on – from its former parent. Setting up these teams and their systems from scratch can take a long time. This solution solves that issue without treasury having to know precisely what its future organisational structure will look like.”

The Easy Treasury co-ideation project is ongoing, with input from experts such as Masquelier steering its development, says Marchand. Although its eventual roll-out has no geographical limits in theory, BNP Paribas will initially be targeting treasuries in areas where it already has a strong cash management franchise, particularly France and Germany.

The spirit of co-ideation that has seen Easy Treasury arrive at its current juncture is being extended to any treasury that would like to be involved in its development. A testing programme is being rolled out now to help meet BNP Paribas’ planned end-of-year go-live.

Of course, by “flying the flag early”, Marchand says it will alert the market to a solution “that is available, has an aggressive time to market, and which provides all the basic needs of a new treasury operation”. It is also one that has been built by treasurers, for treasurers, and is thus a highly practical expression of the power of co-ideation and co-creation.