In order to fully utilise the advantages of eBAM, most companies first are challenged to opti-mise their own internal processes. Only then, the requirement for continuous straight- through processing is fulfilled. This works by installing a structured, internal bank account management (BAM) with appropriate software solutions.
Governance Principles Require a Structured Approach
BAM systems are a common basis for the efficient management of bank accounts and for sharing account-related information and documents. The communication via bank account access rights, for example, is simplified significantly. Even from a governance point of view, headquarters and treasury always need a transparent overview of all bank accounts used in the company. Compliance principles require that this is known at any time, which person has received a certain authorisation for signing, and that access rights are promptly withdrawn and awarded.
To use eBAM effectively, a company must have installed corresponding software systems in order to produce xml messages, which are manageable for the bank. In a first step, the idea is to scrutinise the internal processes of account management.
Proper bank account management is the prerequisite for successful financial and risk man-agement in any organisation. It is based on three pillars:
- A company-wide unambiguous assignment of responsibilities
- A complete auditable database and
- Standardised, automated workflows.
For many companies however, bank account management is far from optimal. Often, one can find transparency and inefficiency. Local legal units open, maintain and close bank ac-counts independently. This is done without the knowledge of the head office and without any control over whether the banks have strategic relevance or meet certain minimum require-ments regarding rating or technical skills (MT940 reporting). Due to this, critical business information is distributed and a central overview of all accounts is missing or irregularly main-tained in various Excel spreadsheets. To get the required information, a time-consuming col-laboration and communication is necessary. Successful bank account management means enterprise-wide, cross-functional teamwork – the larger the company, the more difficult.
In one scenario, the four-eyes principle cannot be checked centrally. Approval processes are usually paper-based. The copy of the passport of the authorised signatory, his signature and the confirmation of the company are filed with the respective banks. The central maintenance and updating of this information within the company is time-consuming. Changes in signature authorisations are not updated, or they are incomplete. For this reason, former employees may be deleted on the signature card, but still authorised to sign in eBanking tools – a clear violation of common compliance requirements.
First Optimise Internal Account Management, then eBAM
Companies should therefore reconsider and, where necessary, again set up their internal processes, which precede the opening and closing of accounts and the change of authorities. With a central BAM platform, an organisation has created the basis for a uniform data management and a clear division of responsibilities in order to maintain relevant information regarding global banking accounts. As an advantage, information about new access rights must not be permanently caught up at various divisions or persons in the company. Also ap-proval processes for changing permissions no longer work via sending unlinked Excel spreadsheets. Application papers are not sent over awkwardly via internal mail. But the over-view of signatories is always complete and up-to-date.
Thus, in terms of transparency, centralisation, cost reduction and governance, tremendous improvements can be achieved – even without touching the eBAM topic at all. Specifically, this means that a company is restructuring its bank accounts processes, initially in its internal organisation, ideally through the use of workflow systems. Because before opening an ac-count message goes to the bank by eBAM, a series of processing steps is necessary inter-nally. These must be set up in a clear way; their compliance must be controlled.
Data Capture, Workflow Definition, Inventory
Companies can accomplish optimised processes with software systems, which first bring together the accounts currently held in distributed Excel sheets via initial upload to enable a central maintenance. Therefore, information must be collected, which goes beyond the mere account number, e.g. the bank’s rating, the general legal number, or references for which ERP systems are needed. A survey of such additional information is important for establish-ing reasonable bank account management.
In a second step, approval, modification and closing processes are to be implemented in workflow software. Afterwards, an inventory follows. As part of this, several positions in the company should check if the data collected is correct. This mainly involves the local treas-urer. Companies with high turnover accounts should perform such an inventory process to a monthly basis, those with more static accounts about every six months.
Cloud Solutions Can be Used Quickly and Safely
Just a few years ago, special solutions for these purposes were missing, nowadays one can find powerful, efficient and workflow-based bank account management solutions. They sup-port the collaboration by delegating workflows to the responsible employees in a structured and automated way. In particular, cloud solutions based on SaaS are fast and safe to use in this context without IT projects.
To a best practice process there belongs in particular an automated, regular inventory of bank accounts, relevant legal documentation and signature permissions. This serves as a basis for internal audits and auditors. The local finance managers confirm the completeness of the accounts registered in the central database by the company´s subsidiaries.
BAM is a Must, eBAM is Freestyle
With the implementation of such measures, a company already has made a big step forward on the road to more efficiency in banking account management. After the mandatory pro-gram is completed and the processes are optimised internally, the selection of the banks with eBAM capability may be followed. So at this stage, the second step follows: the xml based communication with the bank and automatic electronic transmission by eBAM of the new signatory, the new account opening or closure within all affiliated details to the bank.
Therefore, eBAM only makes sense, if the internal BAM has been shifted to an elaborate, state-of-the-art level, using appropriate technology. Used stand-alone, the efficiency gain of eBAM is limited and will incur unnecessarily high costs. To conclude, the core message for all companies that want to provide more transparency, efficiency and compliance with gov-ernance requirements in their bank account management, is: don´t make the second step before the first one.
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