Linking the Physical, Digital and Financial Worlds: IoT Meets Cash Management By Gerhard Bystricky, Head of Product Management Payments Germany, UniCredit and Henri de Jong, Head of Business Development, Quantoz N.V. O ne of the most innovative and far-reaching technologies that has emerged in recent years is the Internet of Things (IoT), with its potential to embed communication into industrial and domestic appliances, machines and devices, to send and receive data. But the potential for IoT extends far beyond enabling a machine to order its own replacement supplies and parts. In particular, by combining the communication value of IoT with innovative payment capabilities, leveraging virtual accounts and blockchain technology, the result is a powerful and potentially disruptive cash management value proposition. Furthermore, this is not a vision of the future, but a proposition that can be achieved today. Project background In order to bring the most effective digital solutions to their corporate clients, transaction banks are increasingly turning to collaboration with emerging financial technology companies (´fintechs´). Many banks have set up a range of initiatives such as digital labs, Reprinted from TMI | www.Treasury-Management.com
Transcript
Linking the Physical, Digitaland Financial Worlds: IoTMeets Cash Management
By Gerhard Bystricky, Head ofProduct ManagementPayments Germany, UniCreditand Henri de Jong, Head ofBusiness Development,Quantoz N.V.
O ne of the most innovative and far-reaching technologies that has emergedin recent years is the Internet of Things (IoT), with its potential to embedcommunication into industrial and domestic appliances, machines and
devices, to send and receive data. But the potential for IoT extends far beyondenabling a machine to order its own replacement supplies and parts. In particular,by combining the communication value of IoT with innovative paymentcapabilities, leveraging virtual accounts and blockchain technology, the result is apowerful and potentially disruptive cash management value proposition.Furthermore, this is not a vision of the future, but a proposition that can be achievedtoday.
Project backgroundIn order to bring the most effective digital solutions to their corporate clients, transactionbanks are increasingly turning to collaboration with emerging financial technologycompanies (´fintechs´). Many banks have set up a range of initiatives such as digital labs,
boot-camps and accelerator programmesfor fintechs. Global Transaction Banking atUniCredit always strives to harnessinnovation to create a new customerexperience and deliver cost-effective waysof supporting existing challenges andfacilitating new business models. In GlobalTransaction Banking at UniCredit we seethis type of collaboration – based on clientproblems and powered by bank expertiseand fintech innovation – as an importantway of achieving this objective, with thepotential to offer enhanced solutions toclients. Consequently, we are activelypursuing fruitful collaborations.
Leveraging familiar solutionsMany corporate treasurers are alreadyfamiliar with virtual accounts. These areoften established as part of a collections onbehalf of (COBO) structure within an in-house bank. One entity collects cash onbehalf of group companies, thereforeremoving the need to hold and manageaccounts per entity. This is a valuable wayof centralising collections, and helps toreduce the number of bank accounts.However, with large volumes of collectionscoming into a single account, there can bedifficulties both with reconciliation andposting of incoming flows. Furthermore,customers may not necessarily be willingto pay to an account outside their homecountry. A virtual account solution enablescompanies to provide customers with localaccount details (the ‘virtual’ account), butthese are linked to a central collectionsaccount. These virtual account numberscan be assigned to each entity, through toindividual customers, product lines etc.This makes it easier to reconcile thecollections account, and post incomingflows to the relevant intercompanyaccount and customer credit accountautomatically.
A powerful combinationHowever, the potential for virtual accountsextends significantly beyond in-housebanking, as the new solution designed byQuantoz and UniCredit demonstrates,taking the concept of virtual accounts onestep further by combining it with IoT. Inthe past, an ‘identity’ could be assignedonly to a person or organisation. Byleveraging Quantoz blockchaintechnology, a device, machine or objectcan acquire an identity. The missing piece,
however, is that a device cannot have abank account. By linking the device ormachine to a virtual account, which ineffect becomes a digital wallet, the valuechain is complete, combining cashmanagement and IoT into a singlesolution. In doing so, it creates an entirelynew value proposition and facilitates thebusiness models of the future today.
Innovation in practiceLet’s consider the use case of a car sharingcompany. IoT-enabled cars exist today,with black boxes and trackers nowcommonplace. The car can transmit dataon its location, its mileage, toll charges, fuellevels etc. By linking this data with acharging structure, and providing the carwith a virtual account number, the
Quantoz N.V.
Based in the Netherlands, Quantoz is a multiple-award winning developer of blockchain-based solutions. In 2016, Quantoz was named as one of the 50 emerging Fintech stars byKPMG and selected from more than 500 companies to participate in the TechfoundersAccelerator Programme. Quantoz’ Quasar solution is a distributed, permissionedblockchain-based digital cash system with built-in rules to fulfil relevant regulatory andcompliance requirements. It enables people or machines to receive or send moneywithout the need for intermediary payment processors or credit card companies. Thewallets connect to the Quasar blockchain nodes through an open API, with Quasar nodesrun by regulated service providers or banks.
The potential forvirtual accounts
extendssignificantly
beyond in-housebanking,
IoT Payments with Quantoz and UniCredit
� Leverages blockchain to create a machine identity� Machines have a virtual account, enabling them to link into cash management
systems, pay and receive funds (autonomously where appropriate), with fullreconciliation and statement reporting
� Potential across a wide range of industries, including the sharing economy,manufacturing, energy, healthcare and many others
� Based on technology available today, supporting clients’ innovation strategy.
Head of Product Management Payments Germany, UniCredit
Gerhard Bystricky was the programme manager for theSEPA implementation in Germany and global productmanager for SEPA in Austria, Italy and CEE. Under hismanagement, UniCredit has introduced innovativeproducts such as virtual accounts and bank service billingreporting. He is a member of various payment workinggroups at national and international levels.
company can provide users with full usagestatements and invoices based on theinformation from the car.
The concept of machine identitythrough blockchain marks a step change inIoT, and when integrated with virtualaccounts, they can be connected into apayments and cash managementinfrastructure, including micropayments.This additional step is crucial to the abilityto integrate IoT into viable and efficientbusiness models, and monetise thesebusiness models, but there are multipleuse cases across a wide variety ofindustries. Machines or domesticappliances can order their own spare parts,or monitor time and consumables, whichis valuable in facilitating the sharingeconomy. The energy industry is also ripefor innovation: for example, solar panelson one house could fuel an electriccharging hub for its neighbours, hinting atsome of the vast potential for smart cities.
The business imperativeMany industries are already testing andintroducing IoT, and but a crucial factor inintegrating IoT into viable business models
is the ability to extend from the physicaland communication supply chain to thefinancial supply chain. According to aMcKinsey Global Institute report1, linkingthe physical and digital world could add$11.1tr in economic value by 2025. Thisnewest initiative pioneered by UniCreditand Quantoz links together the physical,digital and financial worlds, which hasmajor implications for clients’ digitalreinvention strategy. While treasury wouldnot historically have played a major role indefining or delivering on digital agenda,this has now changed. By bringing virtualaccounts to their companies’ IoT strategy,treasury can act as facilitator forinnovation, differentiation and competitiveadvantage. �
Henri de Jong
Head of Business Development, Quantoz N.V.
Henri de Jong is responsible for business development atQuantoz following a 25-year career of bringing newtechnologies to market, from the first route planningsystems, digital road maps and electronic publicationsthrough to energy, logistics and healthcare. His focus nowis on developing Quasar, the Quantoz digital cash solution.
UniCredit Corporate &Investment Banking
UniCredit is a pan-European commercialbank providing unique access towestern, central and Eastern Europewith a strategic presence in 14 Europeancore markets and an internationalnetwork spanning another 16 countriesworldwide. Our Corporate & InvestmentBanking division serves 1,500multinational corporates and keyfinancial institutions, and supports theGroup’s corporate banking units indelivering services to 600,000 corporateand public sector clients. Furthermore,we deliver investment solutions for 24million retail and private banking clients.
Integrating IoTinto viable
business models isthe ability to
extend from thephysical and
communicationsupply chain to
the financialsupply chain.
Notes1 McKinsey Global Institute Report, ‘The Internet ofThings: Mapping the value beyond the Hype’
