Global leader in augmented identity cracks the code for a digital treasury transformation in Asia Pacific
Background & Scope
Headquartered in France, Idemia is a security and identification solutions company. They are one of the world’s leading providers of facial and biometric identification systems and payment security technology. They formed in 2017 following a merger between Oberthur Technologies and Safran Identity & Security (Morpho).
Following the merger, Asia Pacific treasury functions were still managed by various decentralised teams that previously belonged to the two entities. These teams used different systems to manage funds held with 30 different banks across the region, including HSBC.
The absence of overall system integration resulted in poor control of cash balances and complicated funding management. Treasurers had to manually consolidate and mobilise cash from each market, and also manually track interest from intercompany loans.
Additionally, as Idemia had taken on debt to finance the Morpho acquisition, they recognised the need to better utilise surplus cash within their organisation to reduce external borrowing and costs. This compelled Idemia to fully integrate their treasury, and standardise and automate as many processes as possible.
Said Philippe Berneur, Financing and Treasury Director, Idemia: “The extensive presence of Idemia in Asia Pacific and the diversity of currencies handled there made streamlining our treasury management crucial. This was so that we could achieve efficiency gains through a reliable and robust set-up”. The objectives of this transformation were to improve visibility on cash positions, and achieve more efficient funding for its Asia Pacific operations.
Idemia needed an easily-scalable solution that provided a consistent link to their banks. On discussions with HSBC, Idemia implemented the Kyriba Treasury Management System (TMS) as their global treasury management platform. This granted Idemia the standard interface needed to help their treasury teams manage cash in all accounts more efficiently.
Idemia then centralised Asia Pacific liquidity management by establishing a cash pool with two-way zero balancing sweeps between header accounts held at their regional headquarter in Singapore and entities in four key Asian markets. This automatically consolidates Idemia’s surplus cash, and enables more timely funding decisions.
As a further enhancement, a single-entity multi-currency notional pooling (MCNP) structure was overlaid over the cash pool to notionally convert aggregated funds to a choice currency. Idemia then draws from this notional balance to support business needs and deleverage their regional headquarters’ balance sheet as needed. There is no physical fund movement, which eliminates the typical costs and effort of FX conversions and lending. This allows Idemia to better harness internal funds to support business needs, and reduce reliance on external borrowing.
Idemia also worked with HSBC to implement the Liquidity Management Portal (LMP) online service, which offers a consolidated view of the company’s global cash positions, and self-help tools to manage liquidity.
As Scott Samson, Director, Liquidity and Investment Products, Global Liquidity and Cash Management, HSBC explained: “The LMP is accessed via the HSBCnet and allows Idemia to directly view and monitor their liquidity structure through a centralised digital platform. The portal’s intuitive interface grants Idemia the quick breakdown of balances they needed to assist with their funding decisions.”
“The LMP also proved to be essential as an interim solution that provided visibility and control of Idemia’s liquidity while their global TMS implementation was in progress. This was critical in Idemia’s post-merger environment as it facilitated unimpeded continuity of treasury operations”, added Carmel Chuah, Vice President, Regional Sales, Global Liquidity and Cash Management, HSBC.
Idemia ultimately centralised its fragmented treasury structure, and now enjoy:
- Full visibility and control of all fungible currencies on a standard interface, and flexible access to funds through the global TMS.
- Improved cash flows while reducing expenses related to interest and FX transacting.
- Automated tracking and reporting via the LMP, which grants timely information to enable confident funding decisions.
Giving his nod of approval, Philippe Berneur, Financing and Treasury Director, Idemia continued: “The design built in coordination with HSBC really meets our needs, and the project implementation turned out successful within a tight timeframe despite the numerous hurdles we were facing. We are happy that our treasury is now fully operational, and that we can optimise use of local resources, as well as the upstream of cash surpluses”.
Building on the success of the Asia Pacific treasury transformation, Idemia and HSBC have now taken the liquidity solutions global. In Europe, similar cash concentration structures now sweep funds in GBP and EUR from four key European markets to a cash pool held at Idemia’s global headquarters in France, allowing Idemia’s European treasurers to benefit from the same operational efficiencies enjoyed by their Asia Pacific counterparts.
Idemia is also implementing a “drain-the-pool” sweep from the Asia Pacific cash pool to the European cash pool so that it can draw on surplus funds in the Asia Pacific cash pool to service debt repayments at their global headquarters, and achieve greater overall global funding efficiency.
“As Idemia has grown to become global leaders in biometrics, so too has their business demands. Our scalable funding structures and innovative digital tools have propelled Idemia forward from their merger by enabling more robust liquidity management in Asia, and now Europe. Truly, this underscores our commitment to helping our customers navigate periods of great change, and emerge stronger on the other side,” said Ai Chen Lim, Co-Head of Sales, GB Corporate, Asia Pacific, Global Liquidity and Cash Management, HSBC.
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