Virtual Account Management (VAM)

Purpose
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In today’s digital world, corporate clients are demanding different products and services, which provides control over their working capital and liquidity positions from transaction banks. When number of account holder increases, so do the transactions. If each transaction uses expensive services from payment gateways like SWIFT or the clearing systems. Then transactional processing costs will be increased. VAM is an in-house banking, automated self-service solution made available either in the cloud or on premise. VAM cloud solution provides more flexibility. If your needs increase it is easy to scale up your Cloud capacity and it has more robust disaster recovery. Virtual Account Management is changing traditional cash and liquidity management by enabling corporate customers to self-conduct transactional operations in a real-time environment.

Background
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Cash flow are to be considered lifeblood of any business. The cash Inflow, Outflow and their visibility decreases over millions of transactions. To have better control, visibility and liquidity positions, VAM provides smarter transaction banking. VAM provides representation of complex hierarchy structures in the form of tree and real time balances as well interest component, VAM solution is  used by any organization which uses multiple bank account and having decentralized account structure and in which cash flow exists (Like insurance companies ,Retail, Manufacturing, Construction, and Mining).

What are Virtual Accounts?
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Virtual accounts are a non-physical current accounts used for routing payments to one underlying real or physical account. VAM allows you create a complex hierarchy accounts structure, creates numerous virtual accounts, which mapped to one single real account. It provides sweeping, pooling, interest rate, statement reconciliation, multi-currency cash and liquidity management. Instant creation of statements, reports and data extracts for virtual as well as real accounts .It will also provide a better reconciliation of its payables and receivables. It will reduce internal administration, eliminate inefficiencies, streamline operations and provide better cash forecasting.


Aspects
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VAM provides better cash visibility and optimization by allowing clients to manage their working capital in a real-time environment. VAM allows clients to set up models (POBO/COBO/ROBO) and virtual account has the capability to initiate or receive payments on behalf of one physical account. VAM provides better transparency of inter company funds and its tracking.

Regulatory changes will not affect your business since VAM is your in house Bank, which allows you to create numerous virtual accounts and do transaction as much as you can and even on holidays. In addition, cash movement between virtual accounts does not require traditional/ expensive payment channels of Swift or the clearing systems.

VAM solution is easily integrated with the bank’s core and can be customized to support changing business requirement. VAM has its own component payment engine (processing of payment files), Bulker (bulking/debulking of payment message), DLM core (Deposit liquidity management).VAM allows you to use its component independently.

Prospects.
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With emerging Technology, Integration of IBM Cognos BI with VAM will help to view or create business reports, analyze data, and monitor events and metrics so that they can make effective business decisions. Artificial intelligence (AI) will enable VAM to take some key decision like transfer of funds to the needed units/organization as a loan to keep your business afloat without taking too time in the decision, which increases the profit of organization and save the company in harder times.

Recognizing these benefits, a number of banks including Deutsche Bank, Bank of America, ING and HSBC have already invested in the virtual accounts offerings for their clients, which help drive a superior client experience.