Both TMS’s have been replaced with a single platform, provided by OpenLink, which covers all key treasury requirements. The new system has dramatically reduced manual processing, including direct interfaces to dealing platforms such as 360T.

How an integrated TMS can help treasury better manage risk

The challenge

The system infrastructure at Etihad is comprised of a range of disparate solutions that reflected the rapid growth of the company over the past ten years. Prior to 2016, Etihad had two different treasury management system (TMS) platforms; one for commodity risk and one for the rest of the treasury operations and financial risk management. The platforms were a combination of software as a service (SaaS) and internal hosting.

There are four main banking partners, each with a separate platform for making payments. Only one prior system had a direct connection to the banks, so the majority of payments were made through manual file uploads or manual entry. Counterparties sent printed deal documents to Etihad, whose SVP’s would then review and manually countersign/confirm.

There was also little automation with the ERP; the process involved manual downloads and uploads of Excel spreadsheets. There was a direct market data feed from Bloomberg, but the SaaS system included its own market data and therefore the valuations were in a black box with no ability to perform complex scenario analysis. There were no interfaces to deal execution platforms, which meant dealers spent significant time re-keying deal information from one system to another.

An FX hedging day often meant that the dealers stayed late to ensure that everything had been captured in the TMS, thus delaying downstream operational activities. The majority of management level reporting relied heavily on manual downloads and Excel spreadsheets.

The team agreed that the existing system infrastructure needed to be replaced.

The solution

Both TMS’s have been replaced with a single platform, provided by OpenLink, which covers all key treasury requirements. The new system has dramatically reduced manual processing, and includes direct interfaces to dealing platforms, such as 360T and the ERP.

An overnight market data download allows for scenario analysis to be built into key reports so that the impact of shifts in rates and prices can be assessed for hedging strategies. The system provides a pricing tool, including volatility analysis, which allows for comparison and validation of quotes provided by counterparties and market data providers.

Back office processes have been simplified by the implementation of SWIFT for all FX and money market confirmations, as well as MT101 generation for all treasury payments. The SWIFT project was also rolled out to the new ERP implemented in 2016, which reduced costs through FileAct bulk payment transfers. The amount of paper has been greatly reduced, not only by confirming and paying via SWIFT, but also through the use of electronic signatures with the banks who will accept them.

Excel use has changed, with macro-filled template spreadsheets including pre-configured pivots and charts, which are directly populated by system data in a controlled and restricted fashion.

Best practice and innovation

The TMS is now an integral part of group treasury operations, with cash flow forecasts being sourced across the business to be uploaded into the TMS as a central repository. The reporting generated from the data within the system will continue to be enhanced throughout 2017.

The TMS is also being rolled out to Etihad’s Equity Airline Partners, with users from three different airlines now accessing a centralised database, with more airlines planned for the 18 months ahead.

Over recent years, OpenLink has focused on building out the treasury management functionalities of its Findur platform, and consequently amongst TMS providers, Findur includes best in class enterprise risk and credit reporting.