What is Realiti® Treasury Management Software – and what does it do?

Being asked what I do for a living strikes me with fear. Even as I write this, I can see the exchange in my mind's eye.

Them: So then…what do you do for work?

Me: I work in IT….

Them: So, what do you do in IT?

Me: I head up a product team of analysts, researchers and designers that help identify new features and improvements to enhance our product for our customers.

And then comes the really awkward question…….

Them: And what does your product do?

It should be the easiest question in the world to answer. I spend enough hours of the week doing it. But as a subject it’s really difficult to describe without making the listener glaze over. But let me give it a go. Our product, Realiti, helps Cash Management and Treasury teams in banks and other corporate organisations optimise their overnight funding and intraday liquidity usage across the accounts they hold globally.

I thought I'd use this blog to share a little about the product and see if any you can offer a more succinct or pithy description for me.

All of us most likely have a current account, and perhaps additionally have a separate bills or savings account. You may use your online banking app to check the activity going across those accounts and the closing balance, and as a result, decide to transfer cash from your savings account to ensure you can cover a mortgage payment or to consolidate surplus cash into your savings account to earn a little more interest. If you don’t have enough cash to cover that mortgage payment, you might instead temporarily borrow that cash from your bank, i.e. use an overdraft facility. Effectively what you are doing is optimising your overnight cash position to ensure you can meet all your payment obligations, borrow cash at an agreed rate if you cannot, and earn some credit interest if you have any surplus cash.

The organisations that use Realiti do much the same but on a much larger and more complicated scale. They will have hundreds of bank accounts, with thousands of transactions per day, belonging to various legal entities, in various currencies, and in various locations around the world. Their objective is the same - they want to understand the activity across each and every account so they can cover outgoings. Where they are short, they want to borrow at the most affordable rate and where they have surplus, maximise the highest return available to them. To do this they forecast their closing balances and transfer cash between accounts to optimise their cash position. It might sound simple and straightforward but the sheer scale in terms of number of accounts and volume of transactions, with the added uncertainty of whether all those expected transactions will actually occur, means it’s a little bit more difficult than managing your own current account and savings account.

However, just to add to that complexity, there is another dimension that these organisations now need to worry about, namely intraday liquidity usage. It’s always existed, but pre 2008 no one really worried too much about it, that is until Lehman's collapsed. Intraday liquidity is effectively cash or other funds that are available or can be borrowed during the business day to enable an organisation to make payments out, in other words, if you want to make a payment you either have to already have the cash to cover that payment or you need to borrow that cash intraday. Many banks and large organisations rely on intraday credit facilities meaning they can pay out huge amounts of cash from their accounts before covering those positions as part of the overnight funding process, effectively an intraday overdraft facility as opposed to the more commonly understood overnight overdraft facility.

Lehman’s were already feeling the impact of the subprime mortgage crisis, and as market confidence in Lehman’s continued to erode, so too did the intraday credit facilities that Lehman’s relied upon and the rest is history.

As a result, organisations not only have to forecast and optimise their closing cash positions and manage their overnight funding, they also have to monitor, manage and optimise their intraday liquidity usage. That usage has to be reported to the regulators who in turn determine the amount of liquidity an organisation must hold based on that usage and other factors to prevent another Lehman’s.

So back to the question, (if you haven’t yet glazed over), what does the product do, well it does just that.

We will be producing further blogs in the coming months covering how Realiti supports the optimisation of Cash Management and Treasury Services - follow us on LinkedIn and look out for our next blog installment.