Trial run for Netsett

Why did RSA want to do a Netsett pilot?

Netsett came along at the right time to help us solve a series of challenges we had with moving cash around the Group, including settlement of premiums and claims from our global network, processing internal treaties and the recharging of expenses.

When we looked at the processes, there was a lack of consistency, particularly around cash management and foreign exchange (FX) along with problems such as too many manual processes, too  much paper  and too many hand-offs across different teams.

We felt that there were pockets of best practice, but there’s always a challenge in applying that across a large Group.

From a treasury perspective,  the biggest barriers to effective management are visibility and certainty, so the opportunity to use Netsett as a catalyst to standardise these processes was something we were very happy to be involved in.

Outside the Group, we have some similar challenges with our brokers, namely the visibility and certainty of certain flows and their reconciliation  when they do  occur. The earthquake in Chile a few years ago proved particularly challenging, and the opportunity to use Netsett to facilitate such potentially complex transactions was also very attractive to us.

What was involved in preparing for and running the pilot?

Once we had agreed the ‘as is’ process  with Xchanging and Deutsche Bank, we worked to overlay Netsett and focus on reducing the steps/hand-offs  and leveraging the system.

We decided to pilot Netsett using a specific book of business, so we had a  discrete set of transactions through which we could assess the performance of the new processes.

After we finalised the definition of the scope and processes we come to the necessary evil, and I know my treasury colleagues will have some sympathy: bank documentation.

It’s not a requirement of Netsett to move your core banking to Deutsche Bank—indeed one of the attractions was that we could maintain our existing operational accounts elsewhere—but you do need a set of accounts to facilitate the settlement cycle.

Once all accounts were opened, channels tested, and file formats agreed we were able to start a user acceptance testing (UAT) phase which helped us to get familiar with the application and incorporate the new internal procedures. Our dedicated contacts at Xchanging and Deutsche Bank helped us to keep the implementation workload to a minimum.

What did the pilot actually cover?

We undertook an initial penny test in December 2012 to check the pipes and connections. Thereafter we ran a settlement cycle on a quarterly basis for that one book of business between the UK and Ireland.

The first quarter incorporated 250 transactions, five currencies, and a gross transaction value of £10 million. At the end of the cycle, we reduced the number of transactions between the two entities to five and a net movement of £5 million, so a 50 percent netting reduction. We have successfully completed five cycles for those two entities now.

From my perspective an advantage of being involved in the pilot was being able to provide direct feedback to Xchanging and Deutsche Bank and have any process enhancements incorporated into the platform.

To date we’ve raised 14 major change requests, and an assortment of minor ones. Examples include the ability to process transactions in bulk, query management workflow, and the ability to run non-cash items through Netsett.

To what extent did the Netsett pilot deliver the benefits RSA was looking for?

On a process basis we’ve halved both the number of steps involved and the number of people who touch each transaction and we managed to reduce the settlement cycle time from six to two weeks. In addition, we think there’s further upside as the various functions get comfortable with the process.

On a finance operations basis, we’ve cut bank fees, closed  five bank accounts, and reduced the payments workflow by 80 percent.

From a treasury perspective I gain comfort from the knowledge that our  FX requirements are executed on a competitive basis. But most of all I can see the status of every flow in every currency  and we can feed that data into our forecasting and liquidity management processes.

It seems the pilot was a success. What happens next?

We’re currently implementing Netsett for our largest subsidiaries in Canada, Scandinavia, and Europe. The project is ongoing and should be completed during the course of 2015.

We envisage Netsett being used to process all internal treaties and recharges, as well as the efficient reallocation of expenses and intra-company transactions across the Group. We’ll try to use it for any movement of transactional cash across the Group.