A recent report by CompleXCountries concluded that few treasurers do not centralise cash in some way and that in doing this, they establish de facto an in-house bank and create a need for administration and accounting systems to handle this activity.

“Our in-house bank business case consisted of a number of different elements,” observes Jan Hausin, ABB’s Cash Management Workstream Lead EMEA. “We set out to reduce the number of cash management banking partners and the overall number of bank accounts. There are hard cost savings and efficiency gains due to lower effort needed to maintain bank relationships and the bank account landscape.”

The company determined that liquidity could be better controlled centrally and further centralised. Instead of regional pools spread between banks, it now operates via a globally standardised in-house bank with truly global cash management banks, which means more funds are centrally available.

“There were also internal process efficiency improvements,” explains Hausin. “Harmonisation of global payment process, significant reduction of bank transfers between ABB Group companies, near elimination of cross-currency payments, a more automated reconciliation process and monthly cashless netting cycle.”

Closely linked to a company-wide SAP S/4HANA rollout, ABB chose a currency-by-currency approach to implementation. The currencies with the highest transaction volumes were transitioned from physical bank account operations to the in-house bank – starting with payments – and immediately after extending to receivables and collections all on-behalf-of.

The in-house bank legal entity transacts on behalf of group companies wherever possible. “The project management (bank RFPs/Qs, country stakeholder communication and implementation of virtual account landscape) was largely carried out in-house, while tax and legal opinions were sourced from specialised consultants and system (SAP) configuration and implementation carried out with an external implementation partner,” says Hausin, who adds that the company has derived significant benefits operating cash management via the in-house bank.

“We have a more streamlined cash management landscape, have further internalised transactions between ABB units and transitioned our monthly netting process to cashless where this is possible.”

The company has greater visibility over liquidity as it uses central/global channels with fewer banks to obtain statements and make payments and the in-house bank has also greatly simplified its internal funding structure.

“There are many markets where the in-house bank concept cannot yet be realised due to tax or legal stipulations,” says Hausin. “However, we are monitoring any development here closely with the aim of further rolling out the model as soon as it becomes feasible.”

Financial backbone

Roche’s initial business case for establishing an in-house bank was to transform a fragmented and decentralised treasury landscape into a centralised, internal banking model supporting the entire group.

Over time, the vision evolved beyond traditional treasury, explains Stefan Windisch, Global Head In-House Bank. “Today, it acts as Roche’s financial backbone for payments, liquidity management, governance and risk control, providing standardised treasury services to affiliates worldwide,” he says.

The implementation process was deliberately designed as a long-term transformation rather than a ‘big bang’ project. The company consciously progressed region by region, systematically defragmenting the previous landscape while taking local regulatory requirements and business needs into account. Each implementation wave added new capabilities while building on a standardised global architecture.

“A key success factor has been co-creation; working closely with Roche affiliates, finance, IT, banking partners, SWIFT and technology providers to jointly develop solutions that address real business needs,” says Windisch. “This collaborative approach has enabled us to continuously innovate while maintaining operational stability and delivering tangible value to the organisation.”

The in-house bank has delivered significant benefits in terms of increased efficiency, visibility and control. More than 114 affiliates operate without their own external bank accounts with the in-house bank acting as their banking partner, while real-time payment tracking, intraday bank statements and centralised reporting significantly improve transparency and forecasting capabilities.

“The in-house bank serves as Roche’s central interface to the banking landscape, providing standardised governance, bank connectivity and payment controls,” says Windisch. “Central ownership of bank master data, settlement controls, compliance management and fraud prevention creates a consistent control framework across the group. Standardised platforms and processes ensure secure payment execution while supporting scalable growth and continuous innovation.”

Beyond these operational benefits, the company’s focus is on innovation that creates tangible business value. The in‑house bank continues to evolve through the introduction of new treasury services, enhanced payment analytics and API‑based connectivity and optimised end‑to-end processes.

Stakeholder buy-in

Ray Suvrodeep, Head of Treasury Solutions Group, Global Payments Solutions, HSBC suggests stakeholder buy-in for establishing an in-house bank typically comes down to quantifying five outcomes:

• Lower financing costs and better returns on capital.

• Increased organisational resilience through more effective use of internal liquidity.

• Mitigation of market risks such as inflation, FX and interest rate changes while reducing external hedging and costs.

• Building a scalable, streamlined operating model for treasury and payments that delivers sustainable cost savings.

• Improved operational risk management by centralising controls and reducing fragmentation across the banking landscape.

“The key technology considerations are data, integration and the user experience,” he says. “First, you need high quality, trusted and readily available data to create a clear view of the treasury landscape and to support the shift from transaction processing to strategic decision-making.”

Strong integration and automation across external banks and internal systems is required to enable straight through exchange of statements, payments and FX workflows, as well as interfaces into the general ledger, forecasting and internal payment instruction processes.

“Finally, most operating models require a portal-like in-house bank experience for subsidiaries, with self-service access to statements and balances, controlled approval workflows with audit trails and the ability to request or execute FX via the in-house bank,” adds Suvrodeep.

Dennis Kiratli, Treasury Transformation Lead at KPMG’s Global Treasury Center of Excellence, explains that better cash visibility and forecasting allow groups to deploy liquidity more effectively, either by paying down debt or investing excess cash, while an appropriately structured in-house bank can also improve after-tax financing efficiency by aligning liquidity, funding and treasury activities within a robust tax, transfer pricing and regulatory framework.

When asked whether it is possible to replicate some or all of the functionality of an in-house bank without establishing a dedicated treasury entity to provide financial services, Kiratli notes that in-house banks are typically supported by a TMS or comparable platform that records intercompany transactions, loan amortisation schedules and potentially external debt, derivatives and other financial instruments.

“If group policy states that banking, cash and treasury activities go through the treasurer, the essential foundations are a platform, a clear policy, appropriate governance and a team capturing the relevant activities in that platform,” he says. “The moment it becomes more complicated is when you go cross-entity or cross-border, because then you need to consider transfer pricing, tax and other jurisdiction-specific cash management requirements.”

A purely technical option is to replicate treasury transactions and loans in a technology platform without necessarily settling them. This can create transparency for further decision-making without centralising the underlying cash management.

“However, the objective here is very different from centralising cash,” adds Kiratli. “The moment you start moving cash across borders and legal entities is where the complexity starts.”

As for where the scope for further innovation lies, he emphasises the importance of clean data and says that, in many cases, when a CFO looks for assistance in enabling AI, the organisation first needs to implement a data strategy to maximise the value of the technology.

“They may be able to apply specific use cases but their ability to scale them will be limited by the quality and accessibility of their data,” says Kiratli.

Key drivers

François Masquelier, CEO, Simply Treasury, refers to four key drivers for establishing an in-house bank:

• Cash concentration and funding efficiency.

• FX and intercompany netting.

• Control and fraud prevention.

• Scalability for M&A.

“Regulatory catalysts often accelerate the decision,” he says. “However, I always position it as a milestone, the natural step before a group is ready to run a full payment factory. You cannot centralise payments-on-behalf-of without first having centralised the accounts and liquidity structure that sit behind it.”

Masquelier suggests that in-house bank projects succeed or stall on technology. “It is usually a module or ledger structure inside the TMS, but its value depends entirely on the quality and consistency of the data feeding it from ERP. Similarly, multi-bank, bank agnostic connectivity is what allows it to consolidate visibility and execute on behalf of entities without being locked into a single banking partner.”

In addition, centralising execution concentrates risk as much as it concentrates control, so dual approval, strict segregation of duties between initiation and authorisation and automated sanctions and fraud screening built into the workflow are non-negotiables.

“A modern in-house bank should support virtual accounts, real-time or near-real-time cash positioning dashboards and increasingly AI-assisted cash flow forecasting,” adds Masquelier. “My advice is always the same: sequence the technology decisions after the target operating model, not before.”

Looking ahead, he suggests innovation will be driven by a combination of AI-powered cash flow forecasting, agentic AI, real-time and instant payments infrastructure and virtual accounts and API banking.

“We are moving toward treasury copilots capable of proposing (and in defined cases, executing) routine cash management actions,” concludes Masquelier. “With the emergence of tokenisation we will enter the era of 24/7 treasury management.”