Adriaan Bakker

ING (The Netherlands)

Treasury & Liquidity Management Lead

How to design liquidity management so the bank does not lose money due to fragmented decisions across platforms and is ready for a world without a meaningful end of day?

Adriaan Bakker, working at the intersection of liquidity management and bank infrastructure and author of the academic paper “Future-Proof Liquidity Management, adopting next-generation tooling for Cash & Liquidity Management in an Instant Payment environment”, outlines a practical approach in which centralisation is not a slogan, but a set of concrete decisions around accounts, data, accountability, and pre-tested scenarios.

Why the legacy operating model needs to be revisited

For a long time, treasury operated in a world with a clear working day and a clear end of day. Payments closed on a schedule, systems ran overnight batches, and most decisions fit neatly into the familiar logic of “a Start of Day (SoD) and an End of Day (EoD)”

That frame is now eroding. Settlement speeds are accelerating, and in some infrastructures operations are moving toward a 24/7 mode.

The central challenge of recent years is not the emergence of new technologies, but the pace at which settlement is accelerating beyond the ability of existing processes, controls, and legacy systems to keep up. Approaches designed for batch processing and a hard end-of-day boundary become increasingly fragile as settlement shifts toward a continuous operating model.

As the industry moves toward a 24/7 settlement model, it is essential to recognize that Treasury and cash management are not innovation labs. Their core priorities are resilience, risk control, and the ability to clearly explain to supervisors and indirectly to  their clients how and why systems operate as they do.
– As a result, any proposed change quickly encounters fundamental questions:
– Where is liquidity held and how can it be unlocked?
– Who has visibility?
– Which data set is considered the single source of truth?
– What happens in case of failure?
– Who is authorised to stop payments (clear operation model) and how is that executed technically?

Why centralisation matters 

Across the industry, there is a clear shift toward centralising cash and liquidity within banks and large corporates. The rationale is simple: when liquidity is fragmented across business units, each unit optimizes for its own objectives, often leading to group-level outcomes that conflict with the organization’s overall strategy.

The benefit is obvious in a simple example. If offices manage liquidity independently, one unit may place excess cash overnight with an external bank while another borrows at the same time. Centralisation reduces this leakage by anchoring decisions in a consolidated liquidity view.

In a centralised model, liquidity is pooled in a single place, while business units and branches clear through head office. In effect, treasury acts as an internal correspondent bank. Cash positions and placements are visible centrally, making them easier to manage. With settlements occurring 24/7, centrally managing liquidity becomes even more critical to ensure swift action can be taken during periods of failure to meet obligations.

Centralisation is not the only valid model

Although centralisation is an effective model primarily for the currencies – EUR, USD, GBP, as well as CHF and JPY. For others, the optimal choice may differ.

This is particularly true for currencies that demand deep local knowledge and exhibit high volatility and large exposures. The reasons are straightforward: high volatility and limited in-house expertise in that market. In such cases, it is safer to keep decision-making close to teams that understand local dynamics, while at the same time limiting exposure to highly volatile currencies.

In short: centralise where scale, visibility, and control clearly add value; keep management local where the cost of error due to limited expertise would be too high.

One set of systems — one version of the truth

There is a temptation to treat centralisation as an organisational exercise: relocate people, create a centre of excellence, and consider the job done. In reality, everything starts with IT and data.

Cash flow and liquidity management should run on a unified toolset across the company, covering forecasting, predictive models, and intraday control. The objective is simple: operations and risk should calculate metrics on the same data set  (a single source of truth) and within the same logic.

From a business perspective, this delivers three things:

• fewer reconciliation issues in calculations and reporting
  
• better liquidity decisions thanks to a unified picture;
  
• more meaningful risk and business discussions grounded in real processes rather than abstract ratios.
  

What 24/7 really changes

Instant payments initially emerged as a largely retail-focused proposition. However, once clients become accustomed to immediate settlement in personal transactions, similar expectations inevitably spill over into corporate flows — especially where settlement speed directly affects business processes.

Trade finance is a good example. At the moment of ownership transfer for a high-value asset, whether funds have arrived determines liability, insurance coverage, and whether the transaction is effectively complete. Instant settlement removes a significant amount of friction and ambiguity.

But once settlement runs 24/7, end of day ceases to be a natural boundary. This puts pressure on core elements of the operating model:

• Value dates. If a client receives, say, EUR 200 million on a Saturday, which value date applies if the bank cannot yet deploy those funds fully in the money market? For example at Target2 TIPS a payment can be received on Friday evening however the effective interest rate will be calculated as of the next Monday. What kind of value date will you apply for customers?
  
• System cycles. Many IT landscapes rely on overnight processing and day-end closure. A 24/7 world forces a rethink of cycle timing, system synchronisation, and reporting cut-offs. On the other hand the weekend used to be also a time to deploy changes in the infrastructure. This window will only get smaller.
  
• Stress scenarios. Weekends used to provide breathing room. In a continuous environment, issues can arise at any time and decision windows shrink accordingly.
  

At infrastructure level, instant payment systems also differ materially in limits and conditions. For example:
– T2 Instant Payments operate 24/7 with no upper limit;
– FedNow raised its network limit to USD 10 million in November 2025;
– FAST caps transactions at USD 200,000;
– Faster Payments allows up to GBP 1,000,000.

All of these examples require a different approach from treasury on how to manage intraday liquidity. In the near future the boundaries of the above are likely to only expand and require banks and corporates to be ready for the 24/7 payments and settlements.  

Fire drills: who presses the button and what happens next

In the 24/7 payment environment preparation for operational or market failure remains highly important and an underestimated topic. In stress situations, organisations usually fail not because models are wrong, but because roles and action sequences are unclear.

Questions that need to be rehearsed in advance include:

• who decides to stop payment processing and on what basis and which payments;
• how this is executed technically, and where the “red button” sits;
• what happens if a participant bank in a given country stops processing payments;
• whether liquidity is provided, and under what conditions;
• how coordination with the central bank works.
  

Resilience is built not only organisationally, but through tested failover scenarios. Alternative sites exist, switching mechanisms are in place and they are exercised.

Principles that help build a workable model

There is no universal blueprint for global treasury. Outcomes depend on scale, geography, business mix, and regulatory constraints. Still, a set of guiding principles provides a solid foundation:

• Centralise operational activities while retaining multiple locations, using a follow-the-sun model.
• Centralise IT systems  not only for liquidity management, but across front office, back office, and risk reporting. This simplifies integration and onboarding.
• Centralise bank accounts through a centralised policy: minimise correspondent accounts, focus on a primary account per currency/market, route payments via a single central bank connection or correspondent, and enforce discipline around account opening.
• Invest in the future AI for better forecasting and responding faster to stress scenarios while acknowledging that legacy mainframes and new IT systems remain very real constraints on priorities and budgets.
  

What to check internally

• Where does centralisation clearly add value  and where is it safer to keep management local due to market specifics and expertise?
• Is there a single data and systems layer for liquidity, forecasting, and intraday control  or do teams still calculate “their own versions”?
• How is fragmentation between operations, risk, and front office addressed: joint practices, rotations, a shared risk logic?
• Are processes and IT truly ready for near-24/7 operation — value dates, system cycles, continuous monitoring?
• Have stress scenarios been rehearsed: decision rights, payment stops, responses to external participant failure?
  

If instant settlement is treated as just another technology trend, debate will revolve around platforms and terminology. In reality, a 24/7 environment first exposes organisational gaps: who is responsible, who has visibility, and who ultimately decides. Treasury policies are key and not only as a paper exercise. A clear sign of maturity is when those answers exist before an incident or stress scenario, not after.