There is no lack of interest in electronic bank account management (eBAM) – indeed it is attracting much attention in the corporate-to-bank world because of its potential to generate considerable benefits. Multinational organisations typically manage hundreds, sometimes thousands, of accounts worldwide. Accounts can appear and disappear on a daily basis as a result of changing business needs and mergers and acquisitions. In addition, the management of the operational mandates on these accounts can be a challenge as people join, leave and change positions within an organisation. eBAM helps to ensure that account servicing banks have the same view on account parameters as account owners, and paves the way for considerable efficiency gains in the bank account management area.
Yet, as will be discussed during the Forum for Corporates at Sibos in Toronto on 20 and 21 September, achieving widespread adoption of eBAM is not a ‘done deal’, and will require a sustained industry effort.
A session on Tuesday 20 September at 16:00 will explore how the industry can collaborate to expedite eBAM adoption, so that banks and corporates alike can start to reap the benefits of standardising and automating this historically manual, costly, error-prone and time-consuming activity.
How Far has EBAM Progressed to Date?
SWIFT’s eBAM offering, which combines ISO 20022 XML-compliant standards with its messaging platform to streamline the process of bank account management, has been live for some time. It focuses on four key areas:
- Account opening.
- Account closing.
- Account maintenance.
The offering creates the potential for significant cost and time savings by helping to automate what has until now been a paper-based process between banks and their corporate customers.
The go-live in mid-2010 followed a successful pilot, involving three corporate customers, three banks and three software vendors. At the time, Carola Van Limborgh, cash management architect at Shell, said: “eBAM’s standardised messaging will help us to improve our account management processes with our banks. It will save costs and effort, by eliminating large parts of the paper flow between ourselves and the banks. This is a tremendous benefit for companies with global treasury operations.”
What Can be Done to Further Boost eBAM Adoption?
There are three key areas in which work needs to be done if eBAM is to fulfil its potential. The first is the technology dimension. Significant progress has already been made on this front. An increasing number of treasury solution providers now offer an eBAM ‘module’ to their corporate customers. But many of these solutions target very large multinational corporations, where the need is clearly acute. Smaller organisations would also benefit from automation in this area. Although they manage a smaller number of accounts, and therefore typically perform less frequent account openings, updates and closures, they could still significantly benefit from receiving electronic and structured reports on these accounts, detailing for example who the signatories are and the average balance on the account during the past month.
In addition, in order to streamline eBAM end-to-end, banks need to implement and automate workflows in their own environments. This is currently happening: banks are introducing eBAM technology in their back offices, and using the eBAM ISO 20022 standards to communicate with their corporate customers. But experience shows that standards can be subject to interpretation and different implementations, leading to a heavy burden for those users that need to deploy them across multiple counterparties.
In summary, there has been solid progress on the technology front, but we need to do more.
Work is also required on the organisational dimension. Not only is bank account management very manual today, it is also decentralised – both in banks and corporates – making it hard to obtain a consolidated view and to streamline the process. In short, banks and corporates alike need to organise themselves to effectively centralise and automate bank account management.
Third, there is the legal dimension to consider. There are difficulties in determining when to provide what information – which jurisdictions require what types of documents for account opening. There is also a need to know which jurisdictions accept digital signatures and which do not. There is a requirement to make an inventory of this information and to harmonise it across jurisdictions – and arguably the regulators need to intervene to make this easier.
Certainly today there is a significant concern about the different regulations and bank policies in play across and even within different countries. There is a clear challenge for corporates in keeping track of which information needs to be provided to which bank in which country – and this is a clear hurdle in the way of adoption.
What Can We Do to Help Resolve These Challenges?
Some of the issues impeding the rapid adoption of eBAM are more easily tackled than others. Promising progress could already be happening in some areas, thanks to a pilot SWIFT has undertaken to ease the consistent adoption of eBAM standards globally. The pilot is running during August and September 2011, and involves four banks and seven corporates.
The pilot offers an eBAM central utility, which addresses the growing problem of divergent interpretation and implementation of the eBAM standards by different software vendors and banks – as well as helping users to deal with differences in bank account management processes between markets. Such a central utility essentially enables corporates and banks to take advantage of eBAM standards with numerous counterparties, and significantly eases any unavoidable customisation.
The initiative is being championed by SWIFT’s innovation team, which is tasked with identifying and where appropriate ‘incubating’ ideas for new solutions to address industry challenges. As well as working with SWIFT’s banks – and their customers – the eBAM central utility also involves technology vendor partners.
The eBAM central utility interconnects corporates with their banks either over the SWIFT network or over the internet. It could also be used among correspondent banks. Banks feed their specific documentary requirements into a central database which is then queried by corporates, which use the information to efficiently compose their instructions from their eBAM application. This eBAM application interacts in turn with the bank’s application through the exchange of ISO 20022 messages. The central utility guarantees the receiving bank that an eBAM instruction complies with the ISO 20022 standard and with the bank’s specific implementation requirements for the standard. This is done by querying against an inbuilt ‘bank requirements database’.
In short, the eBAM central utility enforces a consistent interpretation of the standards while also easing implementation. In addition, corporates gain single access to all eBAM-capable banks and to a single source of truth for specific bank documentary requirements (that is, which documents are required to open an account with Bank X in country Y).
Finally, the eBAM central utility also offers a web-based application which will allow – typically smaller – multi-banked corporations to perform their eBAM activities in an electronic way.
Overall, such a central utility solution should drive significant additional uptake of eBAM, by reducing implementation costs for banks, corporates and vendors (they would only have to integrate once to the utility), and by expediting set-up time (there would be one ‘single source of the truth’).
The progress of the pilot, which is showing promising results so far, will be reported on at Sibos.
Beyond the Central Utility – What Else Needs to Happen?
Clearly, if successful, the eBAM central utility solution would go a long way to easing many of the technological, integration and operational challenges currently standing in the way of more rapid adoption of eBAM.
But an engine sitting between corporates and banks will not make any significant impact on the organisational challenge. Both banks and corporates will still need to invest in bringing together disparate sources of data and streamlining internal processes to take full advantage of the technology and the central utility.
The central utility also cannot overcome the legal issues holding up widespread eBAM adoption. Banks and corporates need to decide if and how they want to review and address the legal problems – and indeed if and how they want to communicate with the regulators to appeal for harmonisation of bank account opening practices across jurisdictions.
SWIFT stands ready to support the banks, the vendor community and their corporate customers in whatever way makes sense, so we encourage you to talk to each other and to us about what we can do to help.
The Sibos Forum for Corporates in Toronto represents the ideal opportunity for corporates to talk to their banks – and for banks to talk to SWIFT – about how to speed implementation not just of eBAM, but also of other crucial solutions with the potential to significantly improve efficiency in corporate-to-bank communications.
Sessions worthy of note include:
eBAM: How can we speed up adoption to deliver on its promise? Electronic bank account management (eBAM) is attracting much attention in the corporate-to-bank world, given its potential to generate considerable benefits. Yet, adoption is proving challenging. How can the industry collaborate to expedite adoption?
e-Invoicing: A fast-evolving landscape E-invoicing is starting to boom. Corporates are implementing it across the world. Most advanced providers are now linking up to speed up adoption. How much faster will corporate adoption take place? How should banks react?
Accord for Corporates panel discussion: Using SWIFT’s confirmation matching service to achieve cost-effective risk management in your corporate treasury department In the post-financial crisis environment, volatility has returned to the markets and this is pushing currency risk back to the top of your agenda. Hear from a number of your peers, treasurers from other major corporates worldwide, about how they are using Accord to cost-effectively manage risk in their treasury processing.
3SKey – SWIFT Secure Signature Key One year on from the launch of 3SKey, the digital identity solution that secures the exchange of information in banking applications, how are corporates benefiting from being able to manage multiple banking relationships using a single, multi-network personal digital identity?
Check out the full programme for the Forum for Corporates.
When Mark Cuban declared that "Data is the new gold" he highlighted why information is possibly the most valuable asset a business has. APIs are the unsung heroes that make it possible to extract that value.
How treasury stands to benefit from blockchain: Ripple’s goal to revolutionise cross-border transactions
Imagine a world where cross-border transactions can occur in real-time, at a few cents per transaction, to and from any bank, in any ... read more
Europe’s opening banking regulation is finally here. After months of preparation across the continent, the Revised Payment Services Directive comes into effect on January 13.
The cost of compliance efforts for banks has increased exponentially in recent years. This is especially true for those banks that are active in the global trade finance domain, where the overwhelming expectation is for compliance requirements to become even more complex, strict and challenging over time.