Welcome to the 2016 Treasury Management Training Symposium

Transcription

1 2016 NAST Treasury Management Training Symposium New Orleans, LA Welcome to the 2016 Treasury Management Training Symposium 1:15 2:30: Wrestling with Investment and Cash Management Integrated Platforms Moderator: Treasurer James McIntire (WA) Panelists: Angela Bonaminio, Banking Operations Manager, ID Treasury Eileen Roberts, Executive Director, JP Morgan Jeff Sharp, Application Systems Manager, WA Treasury

2 Integrated Platforms Panel Back Office Integration What is it, how can it help, and what could go wrong

3 What is back office integration? Consolidated reporting and payables, standardized connection through SWIFT Host to Host Transmission for payments and reporting Bank Web Portal with export to bank office Simple Level of Technology Complex Information Reporting Basic cash positioning Daily reporting through bank web portal Export data in CSV out of bank portal Direct transmission of daily reports Rely on bank portal for some reporting Use of mobile and other multi channels Largest may use ERP treasury or TMS TMS or dedicated treasury ERP module Direct transmission or SWIFT communication channels Little if any use of bank web portal Pooling and netting schemes Payables In-house or web portal check print Check usage still high Use bank web portal for wire & ACH Partial reconciliation In-house or direct transmission check print Check usage slowing; active campaign to ACH International & FX payments Use of mixed payments files Shared service centers or payment factories FX and multicurrency accounts Use of mixed payment files Payments created and initiated through ERP, likely use ERP as the approval and transmission vehicle

4 Integration Concerns Secure connectivity and protection of data Compatibility with third-party treasury management systems and ERP systems Additional support costs and risks due to multiple payment file formats Difficulty consolidating bank account information across multiple platforms Lack of consistency and efficiency in communicating with banks IT resources are minimal and stretched -- how can a large project be accomplished?

5 Benefits of Integration Lower costs Fewer connections and files to monitor; use of built-in adapter reduce initial development costs and on-going support Compatibility By employing industry standards solutions are replicable across banking partners Low tech footprint Solutions such as cloud technology speed deployment and minimize hardware requirements Simplify business process requirements - Straight through processing and improved internal controls

6 Chase, J.P. Morgan, and JPMorgan Chase are marketing names for certain businesses of JPMorgan Chase & Co. and its subsidiaries worldwide (collectively, JPMC ). This document was prepared solely and exclusively for the benefit and internal use of the party to whom it is directly addressed and delivered (the Company ) in order to make a preliminary presentation to the Company regarding certain products or services that might be provided by J.P. Morgan. This document and any related presentation materials are for discussion purposes only and are incomplete without reference to, and should be viewed solely in conjunction with, a related oral briefing provided by J.P. Morgan. This presentation does not constitute a commitment by any JPMC entity to extend or arrange credit or to provide any other services. The Materials and oral briefing (collectively the Information ) contain information which is confidential and proprietary to J.P. Morgan and may only be used by the Company for the purpose of evaluating the products and services described in the Information and may not be copied, published, disclosed or used, in whole or in part, for any other purpose other than as expressly authorized by J.P. Morgan. In preparing the Information, J.P. Morgan has relied upon and assumed, without independent verification, the accuracy and completeness of information available from public sources or provided to it by or on behalf of the Company. J.P. Morgan does not guarantee the accuracy, completeness or reliability of that information. J.P. Morgan s opinions and estimates contained herein reflect prevailing conditions and our views as of this date, which are accordingly subject to change, and should be regarded as indicative, preliminary and for illustrative purposes only. Our analyses are not and do not purport to be appraisals of the assets, stock, or business of the Company or any other entity. The Information is not intended and shall not be deemed to constitute or contain advice on legal, tax, investment, accounting, regulatory, technology or other matters on which the Company may rely, and the Company should consult with its own financial, legal, tax, accounting, compliance, treasury, technology, information system or similar advisors prior to entering into any agreement for J.P. Morgan products or services. The Company is responsible for its own independent assessment as to the cost, benefit, suitability and appropriateness of any products or services it obtains from J.P. Morgan. J.P. Morgan makes no representations as to the actual value which may be received in connection with any J.P. Morgan product or service or the legal, tax, or accounting implications of consummating any transaction contemplated by the Information. The Information contained herein is intended as general market and/or economic commentary, does not constitute and should not be treated as J.P. Morgan research. The Information may differ from that contained in J.P. Morgan research reports. The Information is not intended as nor shall it be deemed to constitute advice or a recommendation regarding the issuance of municipal securities or the use of any municipal financial products. J.P. Morgan is not providing any such advice or acting as the Company s agent, fiduciary or advisor, including, without limitation, as a Municipal Advisor under Section 15B of the Securities and Exchange Act of 1934, as amended. The Information does not purport to set forth all applicable terms or issues and are not intended as an offer or solicitation for the purchase or sale of any financial product or service or a commitment by J.P. Morgan as to the availability of any such product or service at any time. J.P. Morgan products and services are subject to applicable laws, regulations, service terms and policies of J.P. Morgan. Not all products and services are available in all geographic areas or to all customers. Eligibility for particular products and services is subject to satisfaction of applicable legal, tax, risk, credit and other due diligence, J.P. Morgan s know your customer, anti-money laundering, anti-terrorism and other policies and procedures. Products and services may be provided by commercial bank affiliates, securities affiliates or other JPMC affiliates or entities. In particular, securities brokerage services other than those which can be provided by commercial bank affiliates under applicable law will be provided by registered broker/dealer affiliates such as J.P. Morgan Securities LLC, J.P. Morgan Institutional Investments Inc. or by such other affiliates as may be appropriate to provide such services under applicable law. Such securities are not deposits or other obligations of any such commercial bank, are not guaranteed by any such commercial bank and are not insured by the Federal Deposit Insurance Corporation. All trademarks, trade names and service marks appearing in the Information are the property of their respective registered owners JPMorgan Chase & Co. All rights reserved 0

7 Integrated Platforms Panel Idaho State Treasurer s Office TATRS Treasurer s Accounting Transaction Reporting System

8 History The STO had previously purchased third -party portfolio management products from several different vendors. Pros Simplicity of purchasing: while the cost was significant, it was not prohibitive Ease of use: could be put into production in a short time frame Cons Customization: there was a high cost for special requests Customer Service: response time was often longer than desired Updates: Software often lagged industry standards Data Access: Not given full access to our own data The STO has always used a proprietary banking system: IBM AS400

9 Business Decision for Proprietary Portfolio Management The Idaho STO priorities for building an in-house system Customization Third-party products contained modules or options that were not applicable. We paid for more than was needed. Third-party products contained modules that were one-size-fits-all. We needed to be able to easily change a module to fit our needs. Customer Service Changes or corrections often took weeks when we needed it now. Processing issues could put everything at a stand still, as you have no control over how a vendor prioritizes your needs.

10 Growing Pains Infrastructure: To develop an in-house system you need resources in place such as: Hiring qualified programmers and retaining them Network servers and other equipment/software Contractors to assist in the implementation It took about 2 years to develop the pooled accounting system and an additional 1.5 years to build the portfolio management system. This was accomplished primarily by one full time programmer

11 Today The portfolio management module is in production and we are currently building a module for banking We partner with a pricing service, financial institutions, and a custodial bank and send and receive files with few issues We use FTP to bring in & send files to/from proprietary system with few to no issues We interface with our State Controller s accounting system with few to no issues

12 Benefits of Proprietary System Idaho STO employees have direct access to programmers to work on building modules and customizing processes, greatly reducing the turnaround time We have reduced workload as a result of being able to customize and automate tasks Outreach to state agencies provides feedback on design of the interface they will access

13 Summary Idaho is smaller in scale which may have facilitated in the success of building/using a proprietary system The goal for the next 6 months is to get the banking module tested for production in FY18 The next 3 years will be dedicated to enhancements to further automate tasks and communication between us and other agencies user interfaces and enhancements to make the system smarter, faster and up to date with the latest technology

14 Office of the State Treasurer Washington State Treasury Management System (TM$)

15 Office of the State Treasurer (OST) Background OST functions as the bank for Washington State Government acting as a central service agency Borrowing and investing on the state s behalf, Processing its cash transactions, Producing the accounting transactions associated with all cash transactions

16 Cash Inflows & Outflows Collections (Cash Inflows) Agency: Cash Checks Debit/Credit Cards Lockbox: Checks Electronic: ACH Wire Transfers Image Cash Letters \ Remote Deposits Short-Term Investments Concentrated Cash Position Short/Long - Term Borrowing Disbursements (Cash Outflows) ACH Wire Transfers Warrants

17 In the Beginning Various Mainframe Systems MF Excel Worksheets Access Databases Paper MF Paper Paper Access Investment Decision Paper Paper Paper Excel MF

18 TM$ Vision Lease Purchase Debt Administration / Financing Allocation (Distribution, Interest Earnings Cash Management (Deposits, Withdrawals, Historical Cash Flows) Treasury Accounting (Accounting Interfaces, Fund Transfers) LGIP Inquiry LGIP Administration C O M P L I A N C E PDPC Warrant Management Portfolio Management

19 TM$ Opportunities A set of integrated treasury applications and technologies built around a central data repository. Enhanced short term and long-term cash flow forecasting Enhanced effectiveness of short-term investing TM$ provides a single point of entry that has a consistent, userfriendly interface for all OST customers Built in business rules that provide better controls used during input, validation, and authorization processes

20 TM$ Opportunities cont. Improved reconciliation processes ensuring data integrity and reliability Better internal communication, facilitating teamwork and strategic planning for asset/liability management Labor efficiencies for operational tasks through increased automation of manual functions, less opportunity for errors Labor efficiencies within the Information Services Division (ISD) allowing them to provide more responsive service to the agency s internal and external customers Statewide internet access to treasury applications for both data capture and data dissemination

21 TM$ Core Functions Cash Management Treasury Accounting Portfolio Management / Investments Local Government Investment Pool (LGIP) Debt Administration Bonds COPs / Lease Purchase (State & Local) School Bond Guarantee Allocations Revenue Distribution Interest Earnings Warrant Management Public Deposit Protection Committee (PDPC)

22 Authorization / Security Robust system security ensuring accountability and auditability Role Based Dual Control Separation of Duties

23 How We Got There Get executive support and direction Know what your requirements are up front This was very beneficial during the procurement process Determines the size of your project Research what others are doing

24 Where We Needed Assistance Identifying the Risks: We took responsibility for the Business Risk We needed help to bring our development staff up to speed on the new development tools Used a two step Proof of Concept Don t re-invent the wheel We used some third party components where it made sense

25 Lessons Learned Work closely with the business staff if they re involved they will share ownership Bite off chewable pieces Tackle one module at a time Follow Industry standard interface formats; NACHA, BAI2, and/or SWIFT

26 Next Steps Update the Development Team s Skillset Upgrading the Platform and Code Base Take the Opportunity to close any Functional Gaps

27 2016 NAST Treasury Management Training Symposium New Orleans, LA CPE CODE INSTRUCTIONS In accordance with the standards of the National Registry of CPE Sponsors, CPE credits have been granted based on a 50-minute hour. NAST s sponsor ID number is On your CPE tracking sheets, please place this code in the box beside the current session B4