Many of the benefits that have been highlighted around electronic bank account management (eBAM) have to do with automation – reducing paper in the process, reducing manual entry, minimising manual processes and enforcing account authorisation. This automation is critical to minimising risk by reducing the number of errors as well as preventing fraud. The key is that automation has to occur on both the corporate and bank side. But for those who have implemented eBAM, increased data transparency and visibility are just as valuable and critical.
Increased transparency into data at each step of the process means:
- Centralised audit reporting of bank account changes.
- Better reporting for compliance with regulators (e.g. reporting all individuals who authorised a transaction).
- Identifying potential risk areas (e.g. foreign nationals holding signing authority).
- Knowing active, in-progress and closed account details in real time (e.g. where accounts are held).
- Having a full view of how accounts are organised and for what purpose.
- Tracking and monitoring account activities, such as knowing whether requests for closing an account had actually been honoured.
- Better management of cash flow.
- Increased ability to predict trends and make better planning decisions.
But what do you need to get this increased transparency into eBAM? End-to-end data integration.
From the corporate perspective, you need to get all the relevant data from your internal systems to the bank. This means pulling out the data from your company’s various systems and sending it to the bank in a way the bank can consume, whether in ISO 20022 or some other format.
Coding the interfaces to pull this data out and turning it into a form that makes sense can take three to four weeks of development and testing time per interface. When the bank format or industry standard changes, you have to spend cycles on development and testing again. SWIFT makes hundreds of changes a year. And eBAM messages, new and evolving quickly, will change numerous times in the coming years. This development effort is compounded further if you are dealing with multiple banks, which require different levels or different types of information.
Competitive Differentiation for Banks
From the bank perspective, your competitive differentiation lies in the level of service you provide your customers. Your customer service is distinguished by the speed and ease of your client onboarding process. Faster client onboarding means faster time to revenue. Just reducing onboarding from weeks to days can increase your revenue by 8%. For your customers, faster onboarding means not only bringing their data in faster but also providing visibility into the onboarding process. In this way, you and they can quickly identify problems in the process and resolve those problems quickly. Providing visibility into the process gives your customer additional information and therefore better control. They don’t have to call you to inquire about the status of their account opening, closing or maintenance. This additional information also provides you with the competitive differentiation to increase customer loyalty.
One of the most valuable services you can provide your corporate is to do use their data proactively. This includes reporting back to the customer and providing an audit trail, such as what accounts have been closed and when (and tracking whether requests for account closing had actually been honoured). It includes providing account details, such as the status of accounts, where they are held and how they are organised. It includes sending an account a report confirming that a new account has been opened. Dashboards, analytics and other reports enable you to manage and monitor by providing insight into discrepancies, errors, failures and exceptions. This reporting makes clear every step of the way what is being done.
To do this type of automation (e.g. accelerate client onboarding) and reporting requires you to integrate your customer data with all the relevant back office systems in the bank. Bringing customer data onboard and integrating it with your company’s internal business applications and systems is difficult and time consuming. Your customer data can come in multiple formats, including:
- Binary documents (e.g. PDF, Excel, Word).
- Print formats (e.g. AFP and PostScript).
- Complex flat files.
- ISO 20022.
Your customer may send you their data multiple times a day or once a day. They may have different instructions for you to process this. You then need to take their data and integrate it with your internal systems, which also have different formats and requirements for processing customer data.
As a result, straight-through processing (STP) becomes an enormous challenge. It is critical for you to quickly integrate your customer data with your internal systems in order to effectively do something with their data. Corporates (who work with multiple banks) would rather not invest in multiple IT projects to support eBAM. Leading banks have focused on the client onboarding process to:
- Accept and receive documents/forms from the corporate in any format, including Word, PDF, or other non-XML formats.
- Seamlessly integrate customer data into the bank’s back office.
- Provide the corporate with self-designed monitoring of the bank account management process (e.g. providing alerts based on the corporate’s specific rules).
End-to-end integration may be daunting and can be realised in phases. If you have multiple back end systems, providing a common way to present information to and interact with all your corporates is a priority. So you can first provide a common view and mask the complexity of your internal systems without replacing all your current systems. On the other hand you need to – and still can – support the specific requirements of each corporate. This strategy of providing a common view coupled with customising the interaction with each corporate has enabled the leading banks to provide additional, competitive services such as eBAM.
STP provides enormous value to the corporate from both an automation and reporting perspective. Not only is the complexity in end-to-end integration, but the value is in providing that end-to-end integration for enhanced visibility.
To achieve greater transparency, providing an audit trail and the ability to produce reports enables corporates and banks to demonstrate compliance with regulators. This is especially important in today’s environment given the level of increased regulation and scrutiny. With reporting in place, treasury can better manage core issues and cash flow. Free from tactical process management and armed with increased visibility through streamlined processes, treasurers will be better able to predict trends and plan strategic initiatives.
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