SAP Fioneer Virtual Account Management

Introducing Virtual Account Management

In recent years, transactional banking has gone through an innovation revolution. Ushered in by agile, tech-first fintechs,

this era has unleashed endless new products and better user experiences. But, as mentioned in our virtual accounts management whitepaper, this has left many corporates and their treasurers looking at their current banks and wondering whether they are getting what they need. They demand deeper, real-time insights into their liquidity position that allow them to react instantly to changes. 

In response, many incumbent banks are investing heavily into enhancing their cash management and payment platforms.

One area in particular is gaining an ever-increasing amount of attention: virtual accounts. Although the concept has been around for over three decades, it’s only now that treasurers are beginning to see just how vital they are to up-level cash management and payment offerings. And as a result, demanding them from their current bank.

What are Virtual Accounts?

Virtual accounts are a set of administrative ‘sub-accounts’ underlying one physical bank account maintained in the

bank’s ledger, usually known as the master or real account. This real ledger account is mirrored 1:1 in the VAM solution,

and is known as a clone, header or sub-ledger account. Both the clone and real account stay in sync through a range of accounting techniques. This ensures transaction and balance control are maintained between them both. 

For the banks that decide to invest in a VAM solution, there are numerous benefits including reducing the need for costly traditional cash management products, improving client-centricity, decreasing operational costs and expanding the bank’s product portfolio.

Thanks to advances in technology, Virtual Account Management (VAM) is also starting to enable new business models

in the B2B2C sector including, centralized digital wallets, digital marketplaces and virtual savings pots.