Photo of James Hayward and Nikhil Sohoni, Mahindra & Mahindra.

This solution was developed in-house at Mahindra & Mahindra to enable them to better manage their banking relationships which span 22 domestic and foreign banks with 250+ bank accounts. Since there were no ‘off-the-shelf’ solutions available, M&M decided to build their own.

The challenge

The Corporate Finance function of Mahindra & Mahindra (M&M) is instrumental in building, managing and maintaining banking relationships with multiple banking partners to support the diverse business requirements of the company. M&M currently has relationships with more than 22 domestic and foreign banks, with more than 250 bank accounts.

Nikhil Sohoni, Senior Vice President – Finance explains: “There are 300 employees across the organisation and various locations which have been designated as authorised signatories for ease of operations. There are new signatory additions, transfers and retirals. In addition, as people move up the organisational hierarchy their authorisation limits are revised accordingly. Managing and continuously updating this data with the corresponding KYC information posed a real challenge. We identified and realised that this was a huge latent risk that the organisation was facing.”

Unless there are real-time updates, the risk of fraudulent payment instructions posed a huge risk. The issues M&M was facing can be summarised as follows:

1. There was no central overview of the number of banks accounts.
2. Delay in deletion of ex-employees from the being authorised signatories, posed a huge risk of unauthorised transactions being executed on behalf of the company.
3. Manual requests for any changes to the accounts and excel-based records leading to control risks, duplication of records and KYC paper documents in large file cabinets.
4. Lack of history and audit trail.

The solution

M&M undertook some market scoping and quickly recognised they were not alone in this situation; it appeared this was a risk that was not being addressed across much of India.

Since there were no off-the-shelf ‘ready-made’ and proven solutions available, M&M leveraged their internal resources, leading to collaboration with cross functional teams to build a digital solution to address these risks. A Straw Man Proposal approach was then adopted wherein they built two to three user interface designs, evaluated their benefits, knocked them down and built a solid final solution. A holistic feedback was taken from the business team to make the system and UI more user friendly and relevant.

The corporate finance at Mahindra believes in challenging itself to excel. It strives to keep the standards of delivery high. When the work gets recognised, by being conferred with this leading industry award, which Adam Smith Awards Asia stands for, it is a confirmation that we are adding value where it matters.

Nikhil Sohoni, Senior Vice President – Finance, Mahindra & Mahindra

A digitised, fully automated and unique system was conceived and developed. This system now ensures complete visibility and process efficiency with real-time information and updates. The four eye principle addresses the risks of fraud and misconduct. In addition, robust reporting and an audit trail have also been incorporated. All the bank account modification workflows are fully automated. The company has complete account information and overview with a central repository for the KYC documentation.

Best practice and innovation

The Mahindra & Mahindra Intra Bank Account Management (M-IBAM) system is a unique solution which is not prevalent among Indian corporates. This system can be easily scaled and deployed within the group and across other corporates.

As Sohoni concludes, “Since this is a risk management solution, if one has to quantify the risk that is being mitigated, it can range from as low as a few lac rupees to several hundred crores. All it would require is one or two unscrupulous minds to defraud the organisation. While all large risks such as currency risk and interest rate risk are well managed, this system addresses a latent but equally grave risk in an organisation.”

Key benefits

• Risks of fraud and misconduct removed/mitigated.
• Complete overview, control and management of all bank relationships and bank accounts.
• Digitised straight through process reducing paperwork – a move towards sustainability.
• Compliance through automated approval workflows for all BAM requests.
• Bank relations improved.
• Online repository of KYC documents available.
• Robust reporting with minimal clicks and introduction of audit trail.
• Real time operational support to business with integrated visibility of all BAM elements.

Key learning points

It is good to follow best practice, but what will distinguish us as professionals is if we lead the next practices. This will call for an open and inquisitive mind. It is not whether we work with our left brain or the right brain, but whether we are working with our whole brain. Some things may look less glamorous (bank account management/forex risk or commodity risk) and some may look just impossible (given the size and complexity) it is here that a whole brain approach will help!