How Groupe BPCE transformed liquidity management for greater agility

Setting the scene

Millions of customers in France rely on financial products and services from Groupe BPCE, France’s second largest banking group, which includes its largest brands, Banque Populaire and Caisse d’Epargne. With the SAP Fioneer Liquidity Management for Banking application, the group manages its short-term cash and has more-complete visibility of inflow, outflow, and execution.

The challenge: Reducing operational risk caused by outdated systems

Groupe BPCE is the second-largest banking group in France, with its two leading brands, Banque Populaire and Caisse d’Epargne. Its 108,000 employees serve 36 million customers, 8.9 million of whom are cooperative shareholders. The Group’s companies adapt their banking business as closely as possible to the needs of individuals and regions. With 18 Banque Populaire banks and 17 Caisses d’Epargne, Natixis, Crédit Foncier, Banque Palatine, and BPCE International et Outre-mer banks, Groupe BPCE builds long- term relationships to help customers achieve their goals. As such, it finances over 20% of the French economy. The group’s treasury team must meet the needs of local banks, anticipate the cash requirements according to inflow and outflow, and optimize liquidity management strategy. The systems used to manage these goals were developed internally and proved technically and functionally obsolete. They lacked the flexibility to expand to new applications and interface with specific downstream applications including Calypso, Swift, Crips, and Crystal. Plus, there was too much overlap with accounting, limiting usability, flexibility, and quality of audit trails. It also lacked the ability to respond to regulatory changes, including TARGET2, the updated interbank payment system for the real-time processing of European cross-border transfers. These obsolete systems, the need for multiple interfaces to evolve, and the limited flexibility were an operational risk.

The solution: Finding a software solution built for cash flow

A rigorous process was launched to find a solution that fulfilled a host of requirements. The application would need to decouple the liquidity management of the accounting systems and the payment platforms. It should allow Groupe BPCE to extend the controls and strengthen the management of loading streams. Above all, the application would need to be specifically dedicated to cash management, have the ability to be implemented rapidly, and be simple for employees to learn. The SAP Fioneer Liquidity Management for Banking application covered all of Groupe BPCE’s needs and more. It is designed to manage liquidity and streamline financial forecasting. It also allows for intraday and real-time monitoring of cash flows and current positions of the bank. Plus, the application has a strong footprint in many leading European banks. SAP Fioneer Liquidity Management for Banking can be integrated into an infrastructure without disrupting the existing information system. All of Groupe BPCE’s cash management was integrated over a period of 12 months. The rollout was phased in gradually, managing foreign currencies in the first six months, then the euro over the next six months. The final phase, deployed in just under six months, optimized the management of the output stream. The integration was managed by internal Groupe BPCE teams.

The result: Increasing agility and efficiency

Groupe BPCE saw the benefits of its investment soon after the deployment of SAP Fioneer Liquidity Management for Banking. Major changes to the system were managed quickly and nimbly. Market inflows and outflows (excluding those taking place at Natixis) and the flows that ensure the refinancing of the Banque Populaire networks (excluding BRED) were transitioned in six months, completed by only two full-time employees. This was a 100% increase in the volume managed with the same resources. Groupe BPCE is now prepared for organizational evolution, that will allow things like the structure of the networks of correspondents at Natixis, to happen seamlessly. Service is now available 24 hours a day, and the surplus balances have been reduced by 50%. SAP Fioneer Liquidity Management for Banking has proved to be an effective solution for Groupe BPCE, allowing for a consolidated view and integrated reporting of needs. The ability to analyze historical data enables the treasury teams to anticipate cash surpluses more effectively for investments and to execute orders for funding when appropriate. Thanks to increased visibility and more-sophisticated control algorithms, forecasting errors and shifted orders are far less likely to occur. Now Groupe BPCE users are able to produce all regulatory reporting quickly.

Anticipating challenges on the horizon

The liquidity management department is ready to support the strategy of Groupe BPCE and meet more future requirements, such as stress tests and new reporting, in a macroeconomic environment where rates might be less favorable.

“Future visibility and analysis has helped us to master the exposure of Groupe BPCE on transactions with counterparties and to control the risk,” says Renaud Le Page, head of the cash flows department for Groupe BPCE. “During the 2008 to 2010 liquidity crisis, SAP Fioneer Liquidity Management for Banking allowed BPCE to have an instant, real-time view of its short- term liquidity, expected flows, and pending settlements with counterparties designated as sensitive by our risk managers. In addition to greater visibility, which is highly appreciated by risk managers, and the ability to manage this exposure, SAP Fioneer Liquidity Management for Banking also allowed Groupe BPCE to anticipate needs and global liquidity surpluses in order to optimize costs.”