There are many reasons for a corporate to consider bank account rationalisation. For example, it can reduce technology costs by lowering the number of accounts over which treasury requires visibility and eliminating sub-optimal liquidity structures.
Rationalisation can lower the administrative cost of account management by reducing the amount of work required for reconciliation and review. Reporting can also be streamlined as accounts with low balances are eliminated, while liquidity can be consolidated to achieve a higher return.
Consolidating bank accounts increases negotiating power to lower costs based on transactional volume and size of deposits, which is significant since bank costs tend to increase as corporates move to on-demand and real-time reporting with APIs.
Accounts typically reflect the transaction services a bank can offer within a particular country or region. By encouraging competition amongst its banking partners, corporates can ensure banks’ service offerings remain best suited to their operational needs. The ‘less is more’ approach improves cash flow accuracy as it provides easier access to account data, which allows corporate treasurers to make more informed intraday and end-of-day decisions in optimising short-term cash investments. A streamlined account structure strengthens control and security, reducing the risk of fraud and improving transaction governance as well as simplifying cross-jurisdictional compliance obligations. It also reduces administrative complexity and frees up valuable time for treasury teams to focus on value-add activities.
Food company Kerry decided to rationalise its bank accounts due to challenges in its cash management and treasury processes driven by expansion and acquisition as well as changes in regulations and business needs. The company recognised that an unrationalised bank account structure was diverting resources from more valuable treasury activities and resulted in higher bank charges, whilst also limiting its bargaining power with banks explains Arijit Deshmukh, APMEA Treasury Manager. “Rationalising our bank accounts has been a multi-year effort, during which we have consistently embraced the lessons learned to ensure that any new business or acquisition has a rationalised banking structure,” he says.
Challenges included slow acceptance of the rationalisation process by business stakeholders and regulatory requirements. “For instance, in China we needed specific capital accounts for the injection of capital rather than using operational accounts,” says Deshmukh. “Furthermore, once the rationalisation process was executed, transferring transactions to the new bank proved to be complex and time-consuming, especially for the customer receipts.”
Streamlining its bank account structure has enabled Kerry to improve its cash balance management, ensuring that excess cash is effectively utilised or invested and that there is sufficient liquidity for operational needs. It also supports the implementation of liquidity solutions such as cash pooling and virtual bank accounts.
“Consolidating accounts with fewer banks has increased our bargaining power when negotiating fees and terms with banking partners,” adds Deshmukh. “A more focused banking relationship means we can build stronger partnerships with key banking partners, leading to improved service and support. A rationalised account structure has also provided strategic flexibility, allowing Kerry to adapt more quickly to changes in the business environment and pursue new opportunities.”
Al-Futtaim Group (AFG) has held the regional franchise rights for Marks & Spencer (M&S) since 1997, operating 46 stores across Bahrain, Hong Kong, Kuwait, Malaysia, Oman, Qatar, Singapore and the UAE.
The growth of its business in Hong Kong highlighted the need for a solution that could reduce the number of physical accounts, enable faster and accurate reconciliation and streamline finance processing for better insights.
Finalising the scope of the rationalisation project involved working with cash in transit vendors to structure the overall flow of deposition of cash to a virtual account at store level, set up unique identifiers for each store and ensure information is matched when account statements are reconciled.
Streamlining its bank account structure has allowed M&S Al-Futtaim to operate a single physical account for multiple purposes, optimise working capital by improving cash conversion cycles with same day turnaround, massively improve remittance identification and save time through a streamlined end-to-end reconciliation process across distribution channels and payment methods. “The deployment of a next generation virtual account management solution from HSBC has greatly enhanced M&S Al-Futtaim’s cash management accuracy and efficiency while offering deeper insights into our customers’ payment behaviours and preferences,” explains Nick Batey, General Manager M&S Asia.
Vibhash Joshi is Regional Treasury Head APAC at energy equipment manufacturing and services company GE Vernova. He says key factors in the decision to rationalise bank accounts include improving cash efficiency and optimising liquidity as well as reducing resource and administrative costs like cash management, ERP integration and audit. “Core elements of a bank account rationalisation programme include understanding and documenting the purpose of each bank account and quantifying the efforts required in the migration, as well as understanding the risks involved in the migration phase,” says Joshi.
In-house skills and resources required to manage a streamlined bank account structure include deep knowledge of liquidity management and banking, project management skills and continuous contact with finance and bank administrative teams.
Successful bank account rationalisation programmes start with a comprehensive assessment of existing bank accounts, legal entities and cost structures says Kelly Wen, Head of Client Advisory, Treasury Services at BNY. “This allows corporates to identify patterns in account opening and closing and why each bank account was opened in the first place,” she explains. “Corporates should also perform a risk assessment on the banking landscape, as fundamentals and diversification are important when choosing the right bank providers.”
Having the end in mind can determine whether future state requires legal entity rationalisation to align to local bank providers or setting up an in-house bank structure to centralise cash management and leverage virtual accounts to more effectively manage liquidity.
An inventory of existing accounts should include the account holder, currency and jurisdiction. The next step is to analyse the flow of these accounts to determine if they are active or dormant. “Following this, the payment instruments used per account should be listed,” says Simon Kaptijn, Director Transaction Services Cash Advisory & Structuring at ING wholesale banking. “This information will form the basis for deciding whether each account is necessary. Generally, one account per entity per currency should suffice, although internal processes may necessitate additional accounts (for example, salary flows or business segregation).”
Optimisation of relationships and risk management can be contradictory drivers given that they stem from different sources. The first from operations – focused on processing banking transactions in the most suitable, efficient and cost-effective way – and the second from senior management, mindful of the company’s best interests. That is the view of Eric Aillet, Product Manager Enterprise Solutions at Finastra, who recommends a competitive and transparent approach to setting out the corporate’s needs and selecting the right banking partners through a formal RFP process with a representative from each relevant department alongside legal and procurement.
“Implementing and monitoring the negotiated conditions are also key to managing the relationship,” he says. “The implementation phase includes adapting all systems (ERP, TMS, CRM) and processes. These are cross-functional projects requiring strong leadership to ensure a coherent approach. Once implemented, it is important not to forget to set up control reports to verify and manage the banking relationship on an ongoing basis.”
There are many scenarios where accounts were opened by non-treasury personnel in the field and with the evolution of more modern banking services these accounts can be closed without impact to the business, suggests Bob Stark, Head of Market Strategy at Kyriba. “It is important for a bank account review to analyse both hard and soft costs, including productivity for internal teams who manage and reconcile accounts as well as regional teams who facilitate payables and receivables locally,” he says.
Vincent Casanova, Managing Director APAC at GTreasury advises establishing clear goals around cost, efficiency and control and assigning specific KPIs, timelines and owners to each objective and carefully monitoring performance metrics and anticipating potential challenges, such as minimising transition impact on external partners or suppliers through early communication.
While a single physical bank account per country, legal entity and currency to support transactional treasury and at times non-proprietary flows is the ideal model, one size does not fit all cautions Rupa Mankad, Managing Director Asia South & Singapore Liquidity Management services at Citi.
“In terms of in-house skills, most corporates tap into cross-functional teams across treasury front and back office, accounting, legal, tax, technology and risk teams,” she says. “However, they also rely heavily on their main cash management banking partner to define the most efficient model.”
Lillian Sim, Global Head of Multinational Corporation Payments Sales at J.P. Morgan Payments agrees that a coordinated effort across multiple in-house teams is required and that collaborating with banking partners is key to exploring solutions that facilitate transactions without additional accounts, particularly for rationalising local banking relationships/accounts used for special purposes, such as local statutory payments.
It is important to have the right resources in place to manage change, including a team with experience in treasury, accounting, technology and compliance and risk management, adds Lisa Vasic, Managing Director Transaction Banking at ANZ.
Having treasury professionals who understand the intricacies of intracompany payment flows, account structures and how they affect the business is critical to align stakeholders across finance, business and operations. “There should be a focus on managing external relationships with ERP/TMS providers and other IT providers,” says Wen. “It is also important to allocate in-house IT resources who can support treasury with changes in systems, data lakes and reporting applications.”
Kaptijn refers to the need for a knowledgeable and dedicated project team to manage a time-consuming process and the necessity for support from local teams familiar with decentralised account structures and local payment instruments. “Additionally, a mandate from senior management is important as local finance teams may be reluctant to transfer responsibility for local accounts, liquidity and bank relationships to a group or regional treasury,” he adds.
The case for bank account rationalisation will strengthen in 2025, enabled by the wider adoption of treasury management systems across APAC and especially in South-East Asia where the rate of penetration is low but accelerating fast, suggests Casanova.
“Many companies are returning to basics by maintaining a streamlined account structure, which serves as a foundation for robust financial operations,” says Sim. “With renewed momentum in M&A activities anticipated, companies have a strategic opportunity to review and streamline their account structures in preparation for mergers or divestitures.”
Bank account rationalisation is top of mind for many corporates, very much akin to ‘spring cleaning’ to ensure that finance and treasury operations are running at the optimal level, agrees Yvonne Yiu, Co-Head of Global Payments Solutions Asia Pacific at HSBC. “New payment solutions, the standardisation of formats and policy changes all increase the appeal of bank account rationalisation,” she says.
Mankad describes bank account rationalisation as the foundational base of the digitisation journey as well as a cost efficiency contributor. “No corporate working towards real-time visibility and efficiency in their liquidity and on-behalf structures should start its journey without rationalising its bank accounts,” he concludes.
