Case study: How cross-border banking strengthens a local property developer’s treasury approach

A Hong Kong-based property developer (“the company”) has set up over 100 project-based subsidiaries in mainland China to support its development and investment projects over the years. Bank of China (Hong Kong) ("BOCHK") has provided a cross-border banking solution to give the company better visibility and control of funds in its mainland operations.

Single point of access

With over 100 subsidiaries in mainland China and accounts dispersed in different banks and cities, the company used to allocate a lot of time and resources on internal manual reporting and paperwork, resulting in time lag and inefficiency in management. That is now history, as BOCHK’s cross-border online banking platform has been created to provide a single point of sign-in for the company’s treasury team in Hong Kong to access the bank accounts in both Hong Kong and mainland China, helping it to achieve visibility, operability and control.

1. Visibility: The company is able to obtain bank account balance and transaction details, and generate statements and reports for bank accounts worldwide, including Bank of China group accounts in real time and other bank accounts on the next day.
2. Operability: The company is able to initiate and approve payments from all Bank of China group accounts on the same online banking platform, including accounts in Hong Kong and mainland China. Local payments, payroll and overseas telegraphic transfers are all well covered by the platform.
3. Control: By adding local team members in mainland China as online banking users, the team can initiate and even approve payment transactions to fulfill daily operational requirements. Approval matrix and payment limit can be set up for each account so that there is a good balance between local autonomy and centralised control. For example, payment transactions exceeding a pre-agreed amount would require headquarters team to grant approval on the online banking platform.

Challenges in implementation

Given the large number of accounts and wide geographical coverage, the implementation requires concerted efforts from bank branches and subsidiaries across mainland China. To prepare for documentation and changes in the account management structure, the company communicated with all its subsidiaries extensively on the expectations, implications and steps to implement the changes. At the same time, BOCHK has collaborated with the relevant bank branches in mainland China for authorisation documentation and set-up. To overcome the challenges in engaging various parties, the implementation plan was split into a few stages before the platform went live.

Centralising treasury functions

The unified platform accelerated the company’s treasury centralisation roadmap in various ways. Instead of signing in different online banking platforms with multiple tokens and combining statements in different formats, the company can direct resources to value-adding treasury activities and strategic planning. The company can also perform forward-looking analysis and cash-flow predictions instead of making decisions based on historical transactions.

The enhanced efficiency in account information management has not only saved operation costs for the company, but also created an opportunity to build a more effective risk management mechanism. Real-time monitoring of fund flows provides a data point that was non-existent in the previous fragmented system. In addition, a holistic view of updated cash position for the region also allows the company to explore more options for fund allocation and usage to enhance fund efficiency, such as setting up cash pools to reallocate funds among subsidiaries. In countless ways, the access to information has provided the company a chance to revamp its treasury team and processes, turning the treasury function from a cost centre to a profit centre.

Conclusion

As simple and common as it may seem, a cross-border online banking platform can be a big step forward for corporate treasury centralisation and efficiency. Real-time data at the fingertips can open up a whole new world of treasury management with unlimited possibilities and potential. This case study is a perfect example of how a cross-border online banking platform has changed a company’s long-standing view and practice on treasury functions.