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Harnessing the Power of Technology Highly Commended: Blackstone Group

Published: Aug 2020

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Photo of Frank J Barbara, CTP, Managing Director and Asst. Treasurer, Global Treasury Operations.

Frank J Barbara

CTP, Managing Director and Asst. Treasurer, Global Treasury Operations

The Blackstone Group Inc. is a multinational private equity alternative investment management and financial services firm based in Midtown Manhattan, New York City. As the largest alternative investment firm in the world, Blackstone specialises in private equity, real estate, credit, and hedge fund investment strategies.

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Developing an in-house technology solution to revolutionise payments

The challenge

Blackstone’s treasury team is responsible for making approximately 317,000 wire transactions per year, encompassing more than 5,000 bank accounts. Over the past decade, Blackstone treasury’s strategic philosophy has been aimed at problem solving through innovation.

In 2010, the treasury team put in place an automation solution to transform manual processes – primarily related to investor distribution payments – into digital ones. These changes allowed Blackstone’s treasury function to grow payment volumes by more than ten times with only a nominal increase in staffing, automating 80% of payment volumes that were previously processed manually. While this automation provided tremendous scalability to Blackstone’s operation, about 20% of the firm’s payments (more than 60,000 in 2018) were still being processed manually.

The solution

In 2019, Blackstone deployed a proprietary in-house solution in order to facilitate the processing of the critical wire transactions that were still being handled manually. BX Workflows, a unique work host system, eliminates paper-based processes, including wet signatures on manually prepared wire memos, and replaces them with automated, digital processes. This customised solution is highly integrated with the rest of Blackstone’s technology ecosystem, enabling the treasury group to leverage data from upstream systems and drive automation to downstream systems.

Best practice and innovation

Blackstone’s treasury team partnered with the firm’s internal technology team to develop the customised solution. The BX Workflows platform was initially built to support Blackstone’s acquisition of Strategic Partners, Blackstone’s secondaries business. The treasury team leveraged the existing platform and developed new workflow processes to support a variety of treasury transactions, including manual payment requests, FX transactions, line of credit transactions, settlement instruction updates including call backs, bank account maintenance and new counterparty set-ups.

The BX Workflows tool is integrated with the firm’s treasury workstation to display enabled counterparties. This allows business users to request payments from the firm’s legal entities to any of its established counterparty relationships.

Additionally, the platform places all treasury requests into one auditable queue which can be accessed by the global treasury team. This allows Blackstone’s treasury to provide 24-hour support, five days per week to its operating businesses, while using regional treasury centres in New York, London and Singapore to process these requests. By removing this activity from email and placing it inside a case-based system, Blackstone has enabled all stakeholders to track the status of treasury requests.

BX Workflows also serves as a communication tool: it captures notes between treasury and business operations, lets stakeholders know when a transaction has been rejected and why, and allows the submitter to make adjustments to gain approval. All of this data is archived and available for review at a later date.

Key benefits

Blackstone’s solution has transformed the way transactions are processed. Less than 3% of the total payment volume is now sent via email, with a near-term path to 0%. This automated solution has not only helped deliver treasury efficiency and better controls, but it has positively impacted the entire organisation around transactions and further enhanced the organisation’s ability to work remotely.

The success of the original payment solution has led to an expansion of BX Workflows to include bank account maintenance, FX transactions, settlement instruction updates including call backs, new counterparty setup and line of credit transactions. Treasury now has the visibility it needs to ensure all types of transactions receive proper business level approvals and mitigate risks associated with missed transaction requests.

An additional benefit comes through KPIs. Treasury is able to view the various stages of business line approval and how long it takes to process each of the transaction stages, including fulfilling KYC requirements with banking partners. By accessing metrics around these vital processes, treasury is better able to educate the business on the realities of completing these transactions as quickly as possible.

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Portrait of Derek Yan

Derek Yan

Director, Treasury Sales, Global Transaction Services, Bank of America

Blackstone was challenged with manual processes around managing transactions, opening accounts, and closing acquisitions which was not ideally suited to support the robust growth objectives of the organisation. Driven by a culture of continuous improvement and innovation, the Blackstone treasury team leveraged Bank of America with the goal of streamlining and automating their treasury function.

  • What Blackstone was able to achieve:

  • White gloved service and accelerated account onboarding.

  • Visibility of cash management accounts and reporting integration via SWIFT messaging.

  • Dedicated coverage team across the full spectrum of banking services.

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