By Cosimo Rullo, Vice President, Payments Cash Management & Open Banking, Intesa Sanpaolo, Joost Bergen, International Business Development & Strategy, Montran, and Tom Alford, Deputy Editor, TMI

Introduction

A bank deploying virtual accounts technology does so not only with a keen eye on what it will provide for its corporate clients but also how the solution can further its relationships with those clients. A recent TMI TreasuryCast featuring Cosimo Rullo, Vice President, Payments Cash Management & Open Banking, Intesa Sanpaolo, and Joost Bergen, International Business Development & Strategy, Montran, put those twin values to the test.

When Intesa Sanpaolo (ISP) set out its 2022 to 2025 business plan, it presented a path dedicated to digitisation, innovation, and multichannel engagement. As part of that process, it went live with a virtual accounts (VAs) offering, delivered in partnership with Montran. ISPs VAs model is designed to optimise payments and liquidity management, allowing corporate clients to centralise their treasury operations efficiently while utilising fewer resources compared to managing these processes without the bank.

Before diving deeper into the structure and benefits of VAs, and exploring how the bank and its clients have leveraged this technology, Rullo outlined ISP’s current place in the market. He explained that ISP is one of the top banking groups in Europe and leader in Italy with international coverage. This, he said, is achieved with the global network comprised of International Subsidiary Banks operating in 12 countries in Central Eastern Europe, Middle Eastern, and North African Areas, and an International Corporate Network active in 25 countries.

Within this structure, ISP has used its commitment to technology to develop what Rullo described as “a strong future in cash management services”. Its approach has seen it fully engage with the notion of VAs “in order to optimise treasury and cash management opportunities for corporates and their counterparties”. These opportunities, he revealed, are centred around, but certainly not limited to, rapid payments and reconciliations.

Taking up the vendor side of this story, Bergen explained that Montran is a payments and liquidity technology company that has moved, in its over 45-year history, beyond the US “out to the rest of the world”. Aided by its multiple global development centres, Montran’s mission is twofold: first, to support commercial banks with the whole spectrum of payment and liquidity orchestration; and second, to help central banks and clearing institutions achieve their domestic and cross-border payment infrastructure goals.

Total Connection

Montran is a payments technology company, and its Global Payments Hub (GPH) serves as its core platform, built on modern Java technology. The Virtual Account Management (VAM) engine is developed on top of its GPH, enabling it to be deployed either as a standalone solution or in conjunction with the GPH. Clients already utilising Montran’s GPH benefit from established integrations, streamlining the implementation of virtual accounts.

For banks such as ISP that maintain their own payment hub infrastructure, Montran’s virtual account solution integrates seamlessly with the bank’s payments systems, ensuring full compatibility and operational efficiency.

Bergen revealed that this VAs structure enables the corporate clients of these banks to route payments to any number of virtual sub-ledgers – virtual accounts – that are tied to a central master account, with the latter being currency-specific if required.

As the master and virtual accounts are inextricably associated, Bergen explained that clients adopting this structure “can take a much quicker and easier path to deploying complex account structures, while retaining the benefit of a single per-currency account”. It does this by providing an overlay on the bank’s core banking system, and connecting and integrating  with its front-end. Montran’s VAM is consequently able to fully integrate into, and ultimately expose (via API or other connectivity solution), the bank’s clients to all payment functionalities and centralised cash management services with that bank.

Although each bank will have its own goals and approach to deployment, subsidiaries of a client company are, through the VAs structure, afforded the opportunity to manage their payments and receivables via their own master account. As Bergen detailed: “It can unlock a massive gain in liquidity efficiency for companies centralising receivables and payables in this way, but it can also drive operational efficiencies”. He cited the single, clear, dashboard visualisation of the client company’s entire cash position as one such example.

Worlds Apart

While there are similarities between a VAs structure and that of an IHB, Bergen emphasised some key differences. The major variance is that while an IHB structure is bound within a treasury environment and its TMS, a VAs arrangement is a constituent of a master account functioning within the much broader world of the banking infrastructure.

At a practical level, an IHB operating model must account for all inter-company transactions with treasury, the structure being used by subsidiaries to pay each other using only internal cash. Conversely, VAs, being virtual accounts of a master account, are fully integrated with the bank’s  payments infrastructure, which enables the VA to make supplier payments and receive from customers.

This means that a VA can, for instance, be actively referenced on a customer invoice for direct payment. This enables all inflows to that node (the VA)  to be accounted for through its related master account.

The Treasury Gift That Keeps Giving

“By offering VAs, we have another great opportunity to put ourselves in front of our corporate customers,” said Rullo. Indeed, ISP can present its treasury clients with the opportunity to directly manage their own bank accounts “as if they were managed by the bank internally”.

But VAs also presents ISP with an opening to introduce to these clients a range of new value-adding tools.

“We recognise that at its core, VA is about managing payables and receivables,” observed Rullo. With the roll-out of the Montran platform, ISP can, for example, offer new services around account opening and closing, and the provision of dashboard customisations exposing only the required account data.

“Through a single master account for each currency, and their connected virtual accounts, all client payment, reconciliation, and reporting data are on tap. What’s more, we can now also offer clients a simulated cash pool, with real-time sweeps between their virtual accounts.”

Optimising Outcomes

The quest to understand client needs, and the needs of the client’s clients – in this case, the corporate treasurer – demanded a collaborative effort. By working in close partnership, both ISP and Montran were able to explore how the platform could be best shaped for an optimal outcome for the bank and its client base. The two-month discovery process saw teams from both sides deliberate every aspect of functionality, design, and delivery as they worked towards an ISP-specific blueprint.

“The relationship started well, and will continue to grow over time,” confirmed Bergen. Digging in to “the bits and the bytes”, and shaping every aspect of connectivity between all the individual parties in the bank, required “strong orchestration, and a lot of clear communication”.

A critical aspect of successful delivery was, Bergen added, “making absolutely sure everyone was aligned with what we set out to achieve from the outset, and that we all understood how that could be made as easy as possible”. With considerable experience integrating its own technology with legacy bank systems, ease of delivery – and thorough testing– was as high on the Montran agenda as any other aspect, he commented.

Launch Fast, Progress Faster

The role of technology has for a long time been an accepted component of banking, the industry often being an earlier adopter of core systems. But early adoption, and the massive investment it requires, has seen many institutions beholden to legacy systems, which, ironically, are now impeding rapid innovation. But all is not lost, noted Bergen.

“Implementing an overlay structure, such as VAs, on top of a core banking infrastructure, is empowering banks to quickly launch new services, products, and bespoke solutions for their clients,” he explained.

The integration of legacy infrastructure with modern front-ends will enable full transparency for the bank. From a corporate treasury perspective too, real-time full transparency of all cash holdings in all currencies is a distinct advantage.

For ISP, continued technological advancements will bring VAs to the fore. “We’re evolving this model of service, adding new features, especially by harnessing real-time updates,” said Rullo. “The roll-out of instant payments in particular is building up a set of VAs use cases for our clients. We’re also now looking at how this can support our existing cash concentration mechanism.”

Everyone’s A Winner

The deployment of VAs within ISP provides the bank’s relationship managers with real-time visibility into corporate client activities. While this insight clearly opens up new service provision opportunities, Rullo noted too that it “reinforces our relationship with clients and supports customer retention”.

For Bergen, a VAs platform serves “two sides of the same coin”. One side, he explained, is the flexibility to bring an entire multicurrency account structure within a single view of the bank. This, as Rullo noted, enables the bank to rapidly bring new products and even bespoke solutions to market. The other side of the coin, he explained, relates to bank funding, and more specifically, how banks diversify funding.

“We’ve seen cash pooling as a significant enabler of that, with funds reinforcing the bank balance sheet. But virtual accounts will also facilitate greater balance sheet inflows, while also generating more payment fee revenue. In addition, VAs can open up different liquidity investment solutions, which can broaden the client relationship.”

With this in mind, it’s no wonder Rullo was drawn to declare VAs “an important part of our product set”.

Unlocking The Possible

When treasury has access to moment-by-moment views of its transactions and cash positions across the organisation, it is in a position of strength. This is precisely what ISP’s VAs structure offers corporate clients as its starting point, stated Rullo.

“With additional value flowing from platform personalisations, such as the use of different currencies, or the inclusion of customer IBANs for easier matching, the number of potential VAs use cases increases.”

Indeed, Rullo continued, where direct integration with other client systems is enabled, ready access to transaction reporting data across virtual accounts is possible for all authorised personnel. A sales manager able to confirm a customer payment receipt in a virtual account may use that information to extend credit or sales opportunities, for example.

More VA use cases are brought to life in the following case study.

An Olympic Winner – The Milano Cortina 2026 Foundation Case Study

Some organisational challenges are truly global in nature. The Milano Cortina 2026 Foundation, for example, was established back in 2019 to carry out the administration, promotion and communication activities of all sporting and cultural events relating to the 2026 Olympic and Paralympic Winter Games in Italy. For the Games to run smoothly, and be in compliance with the provisions of the International Olympic Committee (IoC), a strong organisational effort has been absolutely essential.

As part of its duties, the Foundation must interact with multiple counterparties related to financial matters. That partner list includes International Federations, National Olympic and Paralympic Committees, marketing and sponsorship partners, official hosting providers, press officials, and radio and television rights holders. The sheer number and diversity of these bodies presented the Foundation with a major issue. Ensuring a clear and prompt view, and reconciliation of, the funds receivable from these organisations, with multiple current accounts, and their related high costs, seemed like an Olympic challenge in itself.

However, a solution was found in the ISP Virtual Account Management (VAM) service. This afforded the Milano Cortina 2026 Foundation the opportunity to use a single virtual account (VA) to separately identify every counterparty. This enabled it to directly and immediately connect each payment received with its payer, and even the reason for that payment.

Today, the Foundation manages around 500 VAs. All incoming credit transfers are now available to it through a single current account, enabling it to best manage both reconciliation and cash concentration. Furthermore, by adopting this system from ISP, the Foundation, via the bank’s corporate channel, is able to self-manage the VAs opened by ISP, and access a range of tools that help it check transactions and download reports for each VA.

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