The importance and growth of a Virtual Account Management solution

Bradley Jarrett, Director, Financial Services Transformation at bancon is responsible for the group’s global financial services offering, strategy, sales, people and customer engagements, with programs spanning the United Kingdom, Continental Europe, Southern Africa and North America. His experience at Lloyds Banking Group led him to work together with SAP / SAP Fioneer on the Virtual Account Management solution. Given bancon’s early involvement and market leading expertise, bancon was a natural partner with SAP Fioneer in building out the Virtual Account Management solution which now features as part of SAP Fioneer’s offering.

Today bancon is SAP Fioneer’s preferred implementation partner for Virtual Accounts. We sat down with Bradley to find out more about his background and his vision for the future of Virtual Accounts.

Tell us a bit about your background?

I’ve always been in banking. I spent nine years working my way up at Lloyds Banking Group from Cashier, to Bank Manager, to Senior Product Owner within their Group Transformation function. Whilst there, my job role spanned mortgages, wealth management and corporate banking overseeing commercial banking lending and cash management products. When I became the lead product owner for Cash Management, working for the Global Transaction Banking division, our goal was to be the number one Cash Management and Payments provider by offering a real-time, API first, fully self-serve capable service. We partnered with SAP (now SAP Fioneer) for the underlying platform, but there was a gap within the Core Banking proposition – Virtual Accounts. It was here I began an 18-month process of discovery, design and development of a brand-new Virtual Account Management solution.

Nine-months after leaving Lloyds, I was heading up Digital Retail Business Banking at HSBC when I was approached by bancon to help continue the journey of building out this new SAP Fioneer Virtual Account Management solution, along with wider initiatives.

What is it about Virtual Account Management that drew you back?

Virtual accounts are one small part of my role, however it’s very personal to me having worked on the foundational product. The opportunity to design a solution from the ground-up rarely presents itself, so collectively we really took ownership of that responsibility and it became our lives for 18-months. A lot of love and late nights were poured into ensuring every detail represented what a best-in-class solution should have.

For me, what makes SAP Fioneer Virtual Account Management so compelling is it’s one of the few products that, thanks to advances in technology, has really come into its own. 

It’s not new. It’s been around since the 80’s but due to the lack of technological sophistication, it caused just as many inconveniences as it did benefits. However, with the convergence of Open Banking, real time data, and enhanced analytics it has overcome those early issues and is now positioned as one of the leading cash management offerings, generating real efficiency gains for those who have adopted it.

So why haven’t more businesses adopted Virtual Account Management? What are some of the barriers?

Perception. A lot of Corporate Treasurers were introduced to Virtual Accounts in the 80s and 90s when functionality didn’t marry up with expectation. It’s this poor perception that seems to cloud judgement and slow down further adoption.

The other barrier is access. Banks have historically never offered Virtual Account Management and if they did, it was rarely invested in. Virtual accounts were more a protector of revenue than a generator of it, so investment was often prioritised to areas that generated additional income. Over the years, it became recognised as a half-baked treasury solution with corporate businesses seeing little benefit. Therefore, access has only really been available to corporate businesses who had the capital to invest in technology providers directly and extend their own ERP capability. 

What are some of the consequence’s banks will face if they don’t introduce a Virtual Account Solution?

All businesses, especially those within transactional banking, look to their bank as more of a provider of tech than a traditional bricks and mortar bank. The expectation for seamless user experience has never been so high. The likes of Monzo, Starling and Revolut have shown us what convenience feels like as a consumer and have extended that offering into business banking, setting a new standard that traditional banks cannot afford to overlook. 

If the incumbents don’t invest in their infrastructure and support innovative propositions that make the lives of their customers easier, their customers have two options. Seek out the technology provider directly or switch to a bank that can support their needs which would ultimately result in customer churn, lose of market share and reduced reveneus. 

How do you see Virtual Account Management evolving over the next five years?

I expect the increasing pressure from businesses wanting to increase efficiency and decrease operational costs, along with increase real-time cash visibility, will in turn drive awareness and adoption across the banks. We’ve seen intent from lots of banks – but very few have actually implemented. By 2026, I think all major corporate treasury teams will be regularly using and applying Virtual Account solutions to their day-to-day treasury functions. It’s not if, but when.

In turn, this adoption will spin off a lot more use cases that will then be coupled with emerging technology to drive further innovation. Open banking is one of the single biggest disruptors and it’s not quite hit the corporate banking sector. There are lots of conversations happening around how it will revolutionize corporate banking but it’s not quite translating into real world gains at the moment. 

I also see virtual account solutions being more commonly used by small and medium businesses, who like corporate treasury teams want to increase their own efficiencies only on a smaller scale. This process is already underway and one of the key reasons why challenger banks including Starling and Monzo are making such gains in a segment that is crying out for some love and attention.

Click here for more about bancon and SAP Fioneer Virtual Account Management.