PASI was established by Royal Decree in 1992 with the primary objective of providing social stability for the insured and his/her dependents, with its primary focus being on supporting Omani private sector employees working anywhere across the GCC. Therefore, in addition to nine bank accounts in Oman denominated in OMR, the fund also holds non-resident accounts with five banks in UAE, Kuwait, Qatar, Bahrain and Saudi Arabia, each denominated in the respective foreign currencies. Employers make monthly payments to PASI in respect of their employees' individual contributions to these bank accounts in various currencies, as PASI offers remitters the option of depositing in their local currency.
This arrangement, whereby multiple remitters were remitting to the same account, was creating appreciable issues for PASI's AR function. This was because remitters did not always provide complete and consistent remittance information, or simply left it out altogether. The option for employers to remit in currencies other than OMR also meant that variations in local clearing systems could cause variations in the amount of remittance information remitters could supply that would help identify their payments.
Under these circumstances, PASI's AR team had difficulty in identifying which corporates had made each contribution because of the limited (or absent) transaction information. This meant that the team spent a considerable amount of time following up with remitters to identify the source of payments. The overall process was therefore time-consuming and costly, as well causing significant delays in reconciling accounts and making postings to PASI's general ledger.
In order to address this situation, in Q1 2019 PASI conducted an analysis of available solutions in the market. As part of this process, the fund held extensive discussions with HSBC. PASI obviously needed a solution that was tailored to its business and internal workflows, rather than a generic off-the-shelf product, and it was impressed by the breadth and depth of knowledge the HSBC teams could bring to delivering that. This applied across various disciplines, including IT specialists, integration specialists and product managers.
During the discussions, several possible options were considered, with PASI finally deciding to adopt HSBC's Virtual Account Payor Identification solution, with its scalability and flexibility being important considerations. The implementation of this in five different currencies enabled PASI to identify incoming payments immediately by assigning a unique virtual account number to each payer. However, a key factor in the success of such a solution is encouraging remitters to switch to sending their payments to their new unique virtual accounts. An important part of this process for PASI was distributing marketing material to its remitters advising them of the change and the benefits it would bring for both PASI and themselves. HSBC assisted with the preparation of this material as well as with accompanying press releases. The HSBC team working with PASI also circulated these materials to other HSBC colleagues in the GCC countries to help raise general awareness of the change. Before the implementation started, HSBC delivered a project plan with integrated timelines agreed to by PASI. This itemised all the various steps and the key HSBC personnel involved, including a dedicated integration resource who was mandated to reply back to PASI within 24 hours on any query raised.
The implementation of the initial phase of the project took a month to complete including testing. This was a highly collaborative process between PASI and HSBC. PASI had a dedicated staff member driving the project from its side, which was a key element in ensuring rapid decision making and progress.
The first phase of the project is now live. HSBC has issued PASI with 2000 virtual account numbers, in multiple currencies (AED, QAR, KWD, SAR, and BHD), which the fund has distributed to the first 2000 employers, who are now using them for their remittances. Once a day, HSBC sends an MT940 bank statement message (which incorporates the relevant virtual account number against each line item) to PASI's Oracle ERP system, which reconciles the remittances with the invoices issued to employers. Because the employers are now paying to the virtual account details, the ERP system can instantly reconcile to the employer level and match remittances against outstanding invoices automatically, before making the relevant general ledger entries. PASI provides a portal for employers which is driven by near real time data from its ERP system, so employers can log in at any time for an accurate view of their accounts. The next phase of the implementation will involve on boarding a further ~18,000 employers and issuing them with unique virtual account details for their remittances. However, the first phase has already clearly illustrated the benefits: All remitters can be immediately identified, regardless of the quality of information (if any) they may attach to their remittances
The value of these benefits has been keenly appreciated by PASI, to the extent that it has presented its successful solution and outcomes to other pension funds in the GCC at their quarterly meeting, as well as preparing a video for internal circulation. "HSBC's Virtual Account Payor Identification has been a valuable addition to our business," says Mr. Mohammed Ali Al Qassabi, Manager Finance & Accounts at PASI. "It has enabled us to service our employer clients and their employees with greater efficiency and automation, to the benefit of all concerned." The close relationship between PASI and HSBC fostered by the planning and implementation of the solution has also extended, with discussions now underway about automating and streamlining PASI's payments business.