Both bank account management (BAM) and electronic bank account management (eBAM) initiatives hold the key to nirvana for banks and corporates alike in 2013. However, it’s clear there are many different roads leading to this perfect state. Right now there is a ‘chicken and egg’ scenario in play. Banks are looking for more corporates to demand the service before they invest in the solutions. At the same time, corporates are investigating the business case benefits and trying to justify the spend for the treasury management vendor and process changes. This alone can be a challenge if they do not have significant full-time equivalent (FTE) savings, or risk pressures. As to how close the industry actually is to nirvana, the answer probably depends on who you ask.
For those larger corporates, which have a greater number of bank relationships and are constantly performing account management, eBam could have a significant impact on operations. For them, the state of readiness is still progressing slowly. The second iteration of the standard is before the International Organisation for Standardisation (ISO) and it can assist with foreign bank account reporting, which will help corporates with reporting for compliance needs. However, to my knowledge, relatively few treasury management vendors offer eBam solutions and only a few banks are promoting eBam support. Additionally, there are country-specific regulatory issues where electronic account management is not accepted.
For the bulk of other corporates, which have fewer bank relationships and account maintenance requests and less need for full eBAM, the good news is that banks are beginning to build BAM capabilities into their online portals for a few requests, and are looking to add more. This business case seems pretty obvious for banks because by building straight-through processing (STP) for some maintenance requests, the bank can save support costs, increase client satisfaction and reduce some risks. More importantly, if you look at which corporates have a large number of bank relationships and significant numbers of maintenance requests, and would be candidates for eBAM, they may be 20% or less of a bank’s portfolio (with a few large bank exceptions).
So, by developing self-serve solutions for the 80% of their base, many banks can create more full-time equivalent (FTE) savings and market that solution as an additional capability of their online portal. Third part vendors can supply advanced technology to automate and transform the work that some of these maintenance requests need for resolution.
The Integration Challenge
How automated that request becomes is open to debate. For instance, can the integration be created to allow it to be fully automated? This issue potentially opens a whole can of worms. Even if a bank has a service-oriented architecture (SoA), it still may be a challenge to get priority and resources to create these integrations. From there, some systems may be third-party applications where integration is even more complex or challenging due to the age of the system, proprietary nature, contractual challenges, or future vendor replacements which could stop any new development. Maybe they are not third-party applications, but a custom in-house application that is slated to be re-built or highly unstable. All of this complexity has to be navigated by the treasury.
In some cases internal politicking and organisational changes may prevent the integration. For this reason, some banks create a handful of these capabilities as STP processes and plan for more, but in many instances, that online maintenance request creates a maintenance case to be managed by a servicing or operations person, sometimes offshore to save on the processing expense. In all cases the bank and the vendor to streamline any process that has manual intervention and explore additional integrations.
So what developments will occur next? It’s a tough call, but corporates investigating and working with their treasury management system (TMS) vendor on eBAM solutions will see their top requests considered and some will likely be fulfilled over the next 18 months and beyond, as those vendors receive more feedback on the needs and challenges of implementing eBAM. The eBAM standard itself has improved and most likely will see small incremental change requests as well.
Governments will see more pressure from corporate treasuries, industry players such as SWIFT and top banks to ease regulations preventing more automation and acceptance of modern technological capabilities. Unfortunately for eBAM advocates, until banks receive enough customer demand from corporates, they most likely will continue to focus on portal based self-service requests and process automation in their operational areas. Those business process management (BPM) vendors who support banks will continue play a key role in streamlining, automating through integration, and generally improving the experience of bank account management, both on and offline.
What should Organisations do Meanwhile?
Larger corporates with an eBAM need should be working with both their TMS vendor and bank peers, if available, as follows:
- To understand their eBAM capabilities.
- How they can leverage them to improve their process.
- What investment would be required internally to implement them financially and technically?
- Which processes would need to be re-engineered?
Corporates may find much of the work is needed on their own internal processes and how they use their technology. If they have not already done so, corporates and their treasury departments should begin the investigation, create a roadmap, understand any investment required as well as any resulting benefits. If they cannot find enough full-time equivalents (FTE) or cost savings to fund the business case, another option is to make the case through risk mitigation. What risks have been identified or been exposed by peers? What would the company’s reputational or financial exposure be if those risks were exploited publicly? Try to articulate the burning platform that adds pressure to fund the transition. If they are operating in areas that prevent digitisation, consider what could be done to streamline that process as much as possible.
Ultimately, going through this process may not always lead to the organisation implementing eBAM, but most certainly will leave it in a far better place, and as the environment matures and changes it will be more prepared to take advantage of any new developments. Banks should also be working with their partners at SWIFT to push the weak areas of the business case as they may have additional ideas or capture thoughts for future enhancements that will benefit everyone in the industry. As with any solution that requires a network, the more that stand to benefit from it the more an idea can take off.
For those banks reviewing progress in the space and trying to make decisions, they should continue to listen to corporates and identify those most interested in advancing eBAM to support the internal investment. The banks should pinpoint those BAM and eBAM processes that are the most costly, take longest for clients and involve the most risk during manual processing. They should then look for ways to create integration points, better service or maintenance case management, and simplify those processes to enable faster, cheaper, easier BAM or eBAM processing.
It also is important for banks to conduct regression analysis on their portfolios, gauge how many clients are of the size and scale to need eBAM and decide what would be required to automate the top requests for that channel. They should also ensure they understand the highest users of their online suite/portal who may not be large enough to require eBAM and what requests they are still processing for them in the phone centre or through the relationship manager. Which ones, if automated, would create the greatest FTE savings, highest improvement in client experience, revenue enhancement, or add to differentiated experience? Finally, the banks should reach out to their portal development partner, business process management (BPM) vendor, and transaction application vendors and support teams to understand what they are doing to help automate the organisation’s processes.
So are we getting close to eBAM nirvana? No, but we are taking the first steps so that we may ultimately run in the BAM space. Alternatively, treasurers might approach vendors directly for help.
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