How COVID-19 has created potential payment efficiencies for fiduciaries

23 July 2020

6 minute read

Despite the unprecedented challenges of the pandemic and the resulting social and economic shocks, overall payment systems have remained resilient and robust. How will COVID-19 impact business’ own cash management and payments and what could this mean for fiduciaries and their clients?

“When COVID-19 first emerged and we entered lockdown, fiduciaries faced a number of challenges when it came to payment operations and managing cash for their clients,” says Matt Charrett, Head of Cash & Liquidity Specialists, Barclays.

“Maintaining visibility of their banking balances and transactions with all their banking partners, for example, proved a real challenge because a lot of fiduciaries are multi-banked. Keeping that high level of visibility of balances, what they need to execute in terms of payments and what funds are coming in, is harder the greater the number of banks.”

“Many had to re-set up online banking systems. With each bank operating differently in terms of the hardware and software it uses, that wasn’t necessarily straightforward, and many had to re-think how to make that work in this new environment.”

A gateway to greater efficiency?

The position of working with multiple banks is often a legacy of clients coming to fiduciaries with existing, historical banking relationships, perhaps across multiple jurisdictions that they’re keen to maintain. Could that change in the post-COVID world?

“We’ve often talked with fiduciaries about streamlining the number of banks they work with to create efficiencies,” says Adele Bohlen, Head of Fiduciary Business, Barclays, “but COVID-19 has highlighted the imperative of that.”

“Some of the fiduciaries we work with are dealing with 40 or 50 banks, but I think the pandemic will act as a driver, giving them a push to review the financial institutions they engage with, identify those they have had particular challenges in dealing with during the crisis and streamline the overall number to three or four banks. As we emerge from the crisis into recovery, that will offer them, and their clients, multiple benefits in terms of safety and efficiency.”

Meeting the challenges of remote working

Another practical issue fiduciaries faced when lockdown began, was around payment authorisation. “Ensuring they could make payments in accordance with the mandates they held with their banks was important,” says Charrett. “That became a key issue when the availability of authorised staff could change very quickly. If they were off ill, for example, there needed to be enough people with the right level of permissions to maintain that service for their clients. As a bank, we had to mobilise quickly to support clients to securely and safely broaden their number of authorised users to ensure they could deliver that service.”

Remote working in itself added to the difficulties fiduciaries faced in maintaining client services. With many clients more focused on their liquidity needs, the demand for time critical transfers of funds between accounts increased, at just the point that process time also increased. “When people are working remotely, processes just take longer,” Charrett points out.  “That means allowing more time to complete processes, particularly those that are time critical – and also managing client expectations around that.”

Technology offers process benefits

But COVID-19 created additional challenges in terms of payment authorisation. With staff working remotely, the method of receiving instructions also had to be reviewed. “Under normal circumstances, we would accept written instructions in wet ink,” explains Bohlen. “However, that changed virtually overnight, and we had to adapt quickly to using e-signatures from authorised signatories. With a significant amount of work on protocols and governance and support in place for clients, it’s actually been another success that’s emerged from the crisis, again creating more efficient processes.”

The growing use of e-signatories has been part of a much broader enhancement of digital engagement, which has led to the adoption and acceleration of a number of digital initiatives, both by banks and businesses. Across the cash management and payment space generally, there has been much wider interest and take-up of digital  – think contactless payments, online banking and even online shopping.

“We are all learning from this crisis,” says Charrett. “One of the key learnings, I think, will be around technology and how it can be used by fiduciaries to streamline their operational processes. Many fiduciaries, for example, are still manually keying data into systems, whether that’s to create a payment or reconcile a bank account statement. Automating these processes could help reduce the costs of serving their clients, which can boost  profitability and enhance their competitiveness, as well as reduce risk.”

What COVID-19 may have done, is to help us to reach the tipping point for adoption of these technologies faster than we would have done in normal circumstances.

Matt Charrett, Head of Cash & Liquidity Specialists, Barclays

Learning from the crisis

The crisis has also offered an opportunity for fiduciaries to review what worked well, where challenges arose and where the opportunities to improve can be made.

“Firms may be looking to reduce reliance and risk associated with human intervention by, for example, improving straight through processing rates for payments and increasing auto-reconciliation of banking transactions.  To do this they may need to review their internal workflow processes and also consider alternative ways of connecting to their banks such as using host to host or SWIFT network connections,” says Charrett. “Additionally, multi-jurisdictional fiduciaries may have offices and payment teams around the world who have experienced having to move to contingency arrangements.”

“As a result, they may want to review their current operating model and consider whether benefits could be driven by centralising certain activities such as payments.. Not only could that drive efficiency more generally, but it may also enable them to enact contingency plans quicker and more efficiently should similar business impacts be seen in the future.”

Managing payment risk in the new normal

While changing processes and adopting new technology offers significant opportunity, it doesn’t come without risk. It is no coincidence that levels of cyber-crime and fraud have increased during the pandemic. “Change and uncertainty creates an environment where that kind of activity can thrive,” says Bohlen. “That’s why we’re supporting fiduciaries to keep cyber-security front of mind.” Insight into the nature and scale of the cyber threat and steps fiduciaries can take to protect themselves and their clients, can be found in our article on cybercrime prevention.

In the midst of the pandemic, regulatory changes are also continuing, and these too are designed to enhance security of payments. “In addition to the changes we are likely to see as part of the Payment Services Directive (PSD2), Confirmation of Payee, although primarily related to UK domestic payments, will help protect fiduciaries and their clients, by checking that the payee name matches the beneficiary bank account name for the bank details used on the payment. Whilst banks are at different stages of roll-out, there is a commitment to launch the initiative this year.”

Finding opportunity in change

Despite the challenges that COVID-19 has created, there have also been a number of opportunities concludes Bohlen. “Sometimes we (and I count fiduciaries and financial institutions in that) continue to do things the way we’ve always done them, but then an event like this happens and we have to re-think our operations and our processes.”

“It offers the chance for us to find efficiencies and streamline day-to-day processes, and to push forward our adoption of new technological or digital solutions, so that we can carry on delivering the service our clients expect, and it gives us the potential to emerge as a stronger, more resilient business.”

It offers the chance for us to find efficiencies and streamline day to day processes, and to push forward our adoption of new technological or digital solutions

Adele Bohlen, Head of Fiduciary Business, Barclays


Dedicated to helping you

To find out how Barclays can help you make your cash management and payments more efficient, contact your Relationship Manager.


Talk to us

If you have any questions or want to discuss your investment options, contact us.

Related articles

Investments can fall as well as rise in value. Your capital or the income generated from your investment may be at risk.

This communication:

  • Has been prepared by Barclays Private Bank and is provided for information purposes only
  • Is not research nor a product of the Barclays Research department. Any views expressed in this communication may differ from those of the Barclays Research department
  • All opinions and estimates are given as of the date of this communication and are subject to change. Barclays Private Bank is not obliged to inform recipients of this communication of any change to such opinions or estimates
  • Is general in nature and does not take into account any specific investment objectives, financial situation or particular needs of any particular person
  • Does not constitute an offer, an invitation or a recommendation to enter into any product or service and does not constitute investment advice, solicitation to buy or sell securities and/or a personal recommendation.  Any entry into any product or service requires Barclays’ subsequent formal agreement which will be subject to internal approvals and execution of binding documents
  • Is confidential and is for the benefit of the recipient. No part of it may be reproduced, distributed or transmitted without the prior written permission of Barclays Private Bank
  • Has not been reviewed or approved by any regulatory authority.

Any past or simulated past performance including back-testing, modelling or scenario analysis, or future projections contained in this communication is no indication as to future performance. No representation is made as to the accuracy of the assumptions made in this communication, or completeness of, any modelling, scenario analysis or back-testing. The value of any investment may also fluctuate as a result of market changes.

Barclays is a full service bank.  In the normal course of offering products and services, Barclays may act in several capacities and simultaneously, giving rise to potential conflicts of interest which may impact the performance of the products.

Where information in this communication has been obtained from third party sources, we believe those sources to be reliable but we do not guarantee the information’s accuracy and you should note that it may be incomplete or condensed.

Neither Barclays nor any of its directors, officers, employees, representatives or agents, accepts any liability whatsoever for any direct, indirect or consequential losses (in contract, tort or otherwise) arising from the use of this communication or its contents or reliance on the information contained herein, except to the extent this would be prohibited by law or regulation. Law or regulation in certain countries may restrict the manner of distribution of this communication and the availability of the products and services, and persons who come into possession of this publication are required to inform themselves of and observe such restrictions.

You have sole responsibility for the management of your tax and legal affairs including making any applicable filings and payments and complying with any applicable laws and regulations. We have not and will not provide you with tax or legal advice and recommend that you obtain independent tax and legal advice tailored to your individual circumstances.