Hyundai Motor’s treasury operations such as payments, collections and liquidity management were decentralised at an entity level. Visibility of funds was not fully secured on a regional level, and liquidity fragmentation was a challenge. This resulted in some imbalance of funding. Payment flows were vulnerable to fraudulent attempts without host-to host (H2H) connectivity. These issues negatively affected the efficiency of treasury operations and working capital optimisation. Hyundai Motor Europe as European Regional Headquarter in Germany with about 20 employees in the field of financial planning, accounting and treasury operations, was engaged in finding a secure solution to the challenging situation. Four employees are dedicated to managing the treasury operations. Due to the company’s structure, the solution needed to be an automated solution for effective management.
Hyundai Motor implemented a holistic cash management solution covering 14 entities across the globe. This enables regional treasury entity, Hyundai Motor Europe, to centralise treasury operations with full visibility and mobility. Key components of the solution are:
Through MBTBA, balances in a country can be swept to the bank, and then balances collected in each country can be placed in a single pool in London for liquidity optimisation. There are eight currency header accounts in the pool (multi-currency notional pool) enabling the company to debit and credit in various currencies while minimising FX costs and liquidity fragmentation. Payment processing is streamlined via H2H connectivity with enhanced security through CPOD.
“Our objectives are managing cost, credit and security. Citi as the selected partner understood these objectives and fully meets all of them. Especially, the security challenge. It is a unique objective, and Citi is the only bank that could provide an innovative and digitised solution to all our needs,” explains Heeyong Kwon, General Manager Business Analysis Department, Hyundai Motor Europe.
As a key business objective, the company’s management wanted to raise security and prevent fraud in the treasury operations. It was a key business objective. They wanted to avoid issues that have impacted other companies and peers around the world.
From an innovation perspective, Hyundai Motor had the vision to protect its cyber-security by selecting the CPOD solution which is based on machine learning and AI. CPOD combined with H2H connectivity delivered solutions for the company’s cyber-security concerns and decision makers from both HQ and regional office were aligned and ensured they were fully aware of the capabilities of the solution. Through close collaboration with partners at a very difficult time with the pandemic, the company overcame challenges during implementation.
“This is a holistic cash management solution but as key to our requirements it comes with integral cyber-security capabilities. The initiative and hard work of our team together with our partner already pays off,” says Kwon.
“Hyundai Motor has business in over 40 countries around the world and a passion for making its treasury operations efficient and secure. We are delighted to work with Hyundai Motor, offering advice and solutions that support their treasury centre and cyber security goals. One solution in particular, our Citi Payment Outlier Detection has proven very effective. It defines patterns of payments through Artificial Intelligence and Machine Learning and prevents fraudulent attempts by screening payments that are outliers of defined patterns.”
Hyun-Kyu Lee, Global Solution Sales, Treasury and Trade Solutions, Citi