Cash & Liquidity Management

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Linking the Physical, Digital and Financial Worlds: IoT Meets Cash Management One of the most innovative and far-reaching technologies of recent years is the Internet of Things (IoT). UniCredit discuss what can be achieved by combining the IoT with innovative payment capabilities, leveraging virtual accounts and blockchain technology.

Linking the Physical, Digital and Financial Worlds: IoT Meets Cash Management

Linking the Physical, Digital and Financial Worlds: IoT Meets Cash Management 
By Gerhard Bystricky, Head of Product Management Payments Germany, UniCredit and Henri de Jong, Head of Business Development, Quantoz N.V.

 

One of the most innovative and far-reaching technologies that has emerged in recent years is the Internet of Things (IoT), with its potential to embed communication into industrial and domestic appliances, machines and devices, to send and receive data. But the potential for IoT extends far beyond enabling a machine to order its own replacement supplies and parts. In particular, by combining the communication value of IoT with innovative payment capabilities, leveraging virtual accounts and blockchain technology, the result is a powerful and potentially disruptive cash management value proposition. Furthermore, this is not a vision of the future, but a proposition that can be achieved today.

 

Project background

In order to bring the most effective digital solutions to their corporate clients, transaction banks are increasingly turning to collaboration with emerging financial technology companies (´fintechs´). Many banks have set up a range of initiatives such as digital labs, boot-camps and accelerator programmes for fintechs. Global Transaction Banking at UniCredit always strives to harness innovation to create a new customer experience and deliver cost-effective ways of supporting existing challenges and facilitating new business models. In Global Transaction Banking at UniCredit we see this type of collaboration – based on client problems and powered by bank expertise and fintech innovation – as an important way of achieving this objective, with the potential to offer enhanced solutions to clients. Consequently, we are actively pursuing fruitful collaborations.

Leveraging familiar solutions

Many corporate treasurers are already familiar with virtual accounts. These are often established as part of a collections on behalf of (COBO) structure within an in-house bank. One entity collects cash on behalf of group companies, therefore removing the need to hold and manage accounts per entity. This is a valuable way of centralising collections, and helps to reduce the number of bank accounts. However, with large volumes of collections coming into a single account, there can be difficulties both with reconciliation and posting of incoming flows. Furthermore, customers may not necessarily be willing to pay to an account outside their home country. A virtual account solution enables companies to provide customers with local account details (the ‘virtual’ account), but these are linked to a central collections account. These virtual account numbers can be assigned to each entity, through to individual customers, product lines etc. This makes it easier to reconcile the collections account, and post incoming flows to the relevant intercompany account and customer credit account automatically. 

IoT Payments with Quantoz and UniCredit

 

  • Leverages blockchain to create a machine identity
  • Machines have a virtual account, enabling them to link into cash management systems, pay and receive funds (autonomously where appropriate), with full reconciliation and statement reporting
  • Potential across a wide range of industries, including the sharing economy, manufacturing, energy, healthcare and many others
  • Based on technology available today, supporting clients’ innovation strategy.

 

 

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