Virtual Account Management (VAM)

Virtual Account Management: A New Service Model for Banks

Transaction banking generates lucrative and stable annuity revenues that are highly profitably at scale. However, for financial institutions to compete in the payment and cash management business massive investment in technology and human resources is required. In recent years new market entrants, such as Payment Institutions (PI), Payment Service Providers (PSP) and Third-Party Processors (TPP), have emerged which adds downward pressure on pricing. For incumbent banks to combat the impacts of commoditization, to avoid disintermediation and to remain competitive they face a hugely difficult task: Increase and improve market offerings while simultaneously reducing the requisite operating and servicing costs.

Banks seeking to secure their market position and profitably deliver global payments and cash management services are faced with two central obstacles: Maintaining legacy core banking infrastructures and a resource-intensive service model. Both burden banks with unsustainable cost structures. Maintaining legacy systems requires large operational budgets and inhibits product innovation by reducing available grow-the-bank resources. And the traditional service and delivery model for global cash management inhibits a bank's ability to efficiently provide services to customers at all levels at scale. These challenges apply equally to global, regional and domestic financial institutions.

Virtual Account Management (VAM) technology simultaneously resolves both challenges. It provides the infrastructure to deliver global cash and liquidity management solutions, while leveraging the self-service model of the Internet that slashes the cost of servicing clients.

Architecturally, VAM is a single integrated platform that incorporates accounting, payments, cash management and browser-based channel functionalities. Built on modern Java architecture, it front-ends to the market existing core banking infrastructure. Functionally, VAM supports a total suite of global multi-currency solutions without destabilizing existing operations or requiring any infrastructure renewal. VAM also enables the introduction of new products, such as virtual cash pooling (that can replace notional pooling) and the virtual in-house bank (IHB). The range of solutions supported by Montran VAM includes:

  • Payment Factory, Payables Management and Payments-on-behalf-of (POBO)
  • Collection Factory, Receivables Management and Collections-on-behalf-of (COBO)
  • Segregated Funds and Client Money Management
  • Global Intraday Liquidity Management

Strategically, VAM transforms the service model that supports commercial clients, because many activities previously performed by the bank are now empowered to the client via the VAM web channel. A simple example concerns account management. The bank has traditionally managed the set-up and administration of numerous bank ledger accounts for global cash pooling. Using the virtual account architectures of VAM, which are self-administered by the corporate, a bank can satisfy pooling requirements by rationalizing bank ledger accounts in favor of expanding virtual accounts, thus reducing account administration burdens. There is no loss of revenue to the bank, however, because account charges for virtual accounts still apply and movements still transit the bank ledger account. There are many examples of additional efficiencies VAM introduces over the existing service model, all of which ultimately come down to self-service.

VAM technology is already transforming how the banking industry delivers and supports treasury services. Fully implemented, it represents next generation technology for realizing global financial supply chain automation. Montran's Virtual Account Management White Paper explores these topics in detail and is available upon request.

Montran Thought Leadership

Montran's Virtual Account Management white paper describes how VAM fundamentally transforms transaction banking and revamps the operational and service model by which banks support the global cash management requirements of corporate enterprises. What constitutes a VAM system and the parallels between VAM and the corporate in-house bank (IHB) are examined in detail. Most importantly for financial institutions, the compelling market differentiation achieved by a bank offering VAM is explored in detail.

Click here to download the paper

For additional information about Montran's solution and to arrange a demonstration please email

A Corporate Treasury Operating Environment:
  • Web portal
  • Accounts, hierarchies & statements
  • Reconciliation Engine
  • Billing & charging engine
  • Payment initiation and processing
  • Risk management
  • Foreign exchange
  • Real-time liquidity management
  • Intercompany Lending