The Government of Sharjah's relationship with HSBC in the United Arab Emirates (UAE) goes back more than 40 years. As the third largest of the Emirates, Sharjah contributes over 7% to the overall GDP of the country.
Sharjah Finance Department (SFD) is the Government entity responsible for the majority of the finances across the Government. SFD wanted to strengthen the financial controls of the Government through the migration of payment and cash management activities from various departments into a centralised treasury team.
HSBC in partnership with Kyriba has helped SFD to automate their processes with its digital transaction banking products and a cloud-based treasury management system.
SFD's primary requirements were to obtain visibility over their cash positions across 250+ accounts with 16 banks; enhance their financial controls; optimise liquidity management and control their financial risk. The ultimate aim: to become more efficient and reduce their net cost of borrowing.
It became clear that SFD needed to leverage technology to significantly automate their operations and minimise reliance on the various manual processes that were in place to make payments and reconcile transactions in their General Ledger. In line with best practice suggested by the World Bank, SFD decided to implement a Single Treasury Account (STA) to manage their cash in the most optimal manner.
The project started with an exercise to gather requirements, map the various manual processes being undertaken and collate an inventory of all of the bank accounts held by the various departments and other entities. HSBC stepped in to work with SFD on a request for proposal to choose a vendor that would provide a solution that could meet their current and future requirements alongside HSBC's digital banking products. After reviewing a number of Treasury Management System providers, SFD chose to work with Kyriba, a leading Fintech company that supplies cloud-based treasury management tools.
Given the complexity of the requirements and the aim to achieve full automation, HSBC provided business process analysis as well as technical consulting to build a comprehensive bespoke solution in partnership with Kyriba. Extensive collaboration with the project team from SFD, HSBC and Kyriba resulted in an innovative solution combining many products and services utilising leading edge technology.
SFD has so far implemented HSBC's digital banking platforms - HSBCnet for viewing their balances across banks; HSBC Connect, a host to host platform, which provides secure connectivity between the bank, Kyriba and SFD. This has allowed SFD to receive consolidated electronic statements (MT940) from all of their banks and straight through transaction processing capability fully integrated with the Kyriba platform.
Justain Bateman, Regional Head of Client Integration at HSBC Middle East Ltd commented that “the lack of bilateral agreements between banks in the UAE necessitated an innovative solution to enable SFD to concentrate all of their funds from various banks into the STA at HSBC. In agreement with the Central Bank of the UAE we devised a solution using the recently implemented UAE Direct Debit system. This now allows SFD to generate a same-day direct debit instruction to pull funds from accounts held at their other banks to HSBC.”
In collaboration with Kyriba the direct debit and wire transfer file formats (XML ISO2022) were quickly developed and integrated into their payments module. Kyriba also developed a unique process to automatically generate payment and collection instructions based on previous end of day balances from the MT940s and cash-flow forecasts minimising reliance on overdraft facilities and manual intervention.
SFD's Cash Management Section Head, Sean De Silva commented that “around 70% of transactions are now processed electronically and we have gained full visibility over our cash and financial transactions. Our processing times are significantly reduced and we have made significant operational cost savings which have more than offset the implementation costs”.
Future enhancements include full integration with SFD's ERP to complete the automation of the reconciliation process, enhancements to the liquidity structure, automated cash-flow forecasting as well as the rollout of the solution to other entities within the public sector of the Emirate.
In harnessing the power of emerging technology SFD's processes are now simpler, better and faster.