Optimising liquidity management across banks: Finologee introduces cash concentration feature in LYNKS
Effective liquidity management is a critical component of financial operations for both financial industry players, institutions and corporations. Cash concentration helps optimise cash flow, ensuring funds are available when needed while maximising efficiency. A well-structured cash concentration strategy enables businesses to move surplus cash into a single account to earn overnight interest, comply with governance or regulatory obligations requiring minimum balances, automate their flows or payments between a variety of banks mitigating their counterparty risk and exposure and enhance overall cash visibility and control.
With the introduction of its new cash concentration feature within the LYNKS banks and accounts management platform, Finologee offers an automated approach to streamlining these processes. LYNKS clients can set up their strategies independently from their banks across all their accounts, ensuring greater flexibility and control over their liquidity management operations.
Automating liquidity management with custom rules
A key use case for LYNKS clients, particularly in investment fund management, is optimised excess cash management. While handling investments, unutilised excess cash often accumulates from various capital commitments, unexpected investment returns or timing mismatches. Traditionally, this surplus liquidity is manually identified and allocated – an inefficient process that can lead to increased workload, higher costs and missed reinvestment opportunities. By implementing an optimised cash concentration strategy, fund managers and service providers can enhance efficiency and ensure better utilisation of available funds.
The cash concentration feature allows LYNKS clients to create highly customisable automation rules. Users can define how excess cash should be managed by selecting source and destination accounts, setting minimum and maximum thresholds or target account balances as well as establishing time references and frequency to trigger liquidity sweepings. Approval processes remain robust with solid four-eyes principles in place, while the LYNKS mobile app enables quick and secure authorisations. The entire process operates seamlessly across multiple accounts and banks, without requiring ongoing configuration or validation from the account-holding banks, once the accounts have been connected to LYNKS.
“We developed this feature based on extensive market feedback. Asset servicers such as central admins and fund servicing banks, in particular, expressed a need for a solution that minimises manual work, reduces costs and enhances financial efficiency. With LYNKS, we have delivered precisely that.” – Jonathan Prince, Co-Founder & CSO
Clear visibility and traceability
The platform provides transparency and control across cash pools held in international accounts and multiple currencies. The comprehensive mapping of money flows helps institutions gain a consolidated view of their cash positioning, offering both targeted and actual balances alongside the latest swept transaction details.
According to Sonia de Cia, Product Manager at Finologee, the mapping feature of automated cash flows is also highly beneficial for compliance and internal reporting. The advanced visualisation of cash flows allows users to analyse cash movements at various granularity levels using intuitive filters and view options:
“This adds a new layer of clarity and control over liquidity management.” – Sonia de Cia
Additional use cases: financial institutions and corporations
For life insurance firms, investment funds and their servicing companies, the feature supports better investment opportunities by reducing idle cash and improving funds availability. By efficiently managing excess liquidity, entities can optimise allocations to money market funds and interest-bearing accounts, maximising returns while maintaining liquidity.
Corporations with subsidiaries can pool cash into headquarters accounts to optimise liquidity, centralise operations (such as payroll and supply purchases) or facilitate intracompany loans. Additionally, maintaining minimum account balances becomes seamless, as funds can be automatically transferred from a central liquidity pool to avoid costly external borrowing.
Depositary and investment fund servicing banks integrate the LYNKS platform and its cash concentration feature as a key component of their value proposition, enhancing operational efficiency and liquidity management for their clients. They can leverage LYNKS for oversight functions, such as payments validation, or take it further by white-labelling the platform for their fund management and servicing clients. This allows those clients to access a professional, optimised interface for banking interactions through a highly secure channel, with flexible user and rights management options—either self-managed by the client or controlled by the bank. By adopting LYNKS, banks can enhance their service offering, including streamlined cash concentration capabilities for their clients.
“We plan to continuously enhance the LYNKS cash management suite, committed to ongoing improvement, adding new functionalities that offer even greater efficiency and control for our clients.” – Sonia de Cia
