2013 – The Year of eBAM?

The postponement of the launch of the SWIFT electronic bank account management (eBAM) Central Utility has not dampened the enthusiasm for eBAM – at least in some quarters – but it does mean that the lack of a common banking platform will force corporate treasurers to look elsewhere at individual banks, other organisations or technology vendors that are developing their own solutions, says gtnews contributing editor Kelvin Walton. 

The SWIFT Central Utility was designed, inter alia, to smooth over the difficulties of operating eBAM in a global multibanking environment, by providing a standardised solution for the different message formats, transmission protocols and security requirements of different banks and their corporate customers. It was supposed to addresses one of the central operational challenges of making eBAM work – namely, ensuring multiple banks are involved. 

Without the Central Utility, corporates using eBAM will now require their technology solution to shoulder the additional burden of managing the intricate and sometimes infuriating technicalities to facilitate the effective two-way communication of eBAM messages for opening, amending and closing bank accounts. 

Nonetheless, several technology vendors have been broadcasting the imminent exchange of live eBAM message between corporate customers and their banks, suggesting that the technologists have not been placing all their eggs in the Central Utility basket. Operational eBAM activity should be common during Q1 2013 – or else at least some of the eggs will reappear on embarrassed faces. 

SWIFT has attributed the delay of the Central Utility program to the reluctance of sufficient banks to commit. Anecdotally, some bankers feel that eBAM will take away an important communications channel with their clients. This might be so, but I do not see how that represents any kind of negative implication for the corporate treasurer. It is what treasurers want

If we briefly consider the benefits of eBAM to a corporate (with sufficiently large and complex banking arrangements), these may be summarised as: 

  • Substantial reduction in unproductive, error-prone clerical effort to manage a network of bank accounts. 
  • Significant acceleration of bank account management processes. 
  • Enhanced control and security, with greater assurance that account and signatory information is complete and up to date. 
  • Enhanced quality of cash visibility, with all its concomitant benefits. 
  • Establishment of a much easier means of changing cash management banks. 

It may of course be the last point that particularly discourages some bankers. After all, one of the goals of a bank’s relationship activity is to increase customer stickiness, and a new mechanism that enables accounts to be opened and closed more rapidly might not be seen by a cautious banker to be very helpful. 

eBAM is Inevitable

I expect that the current eBAM momentum will in practice be maintained, and that the banks who lag in the availability and quality of their eBAM offering will risk losing some of their blue chip corporate customers to their more advanced competitors. The key factor will naturally be the quality of experience of the early eBAM adopters among the corporates. If they can operate eBAM successfully in a multibanking environment and start realising several tangible benefits, the market will quickly see some Darwinian changes – or some rapid adaptations. 

Such projections are of course speculative – but they will (or will not) materialise in the near future as the time for theory to be turned into practice has come. The SWIFT Central Utility might possibly never be revived – but if eBAM moves ahead on current lines, we can perhaps envisage a two-tier future for the higher end of the corporate banking universe, with interesting and very challenging competitive implications. There are alternative solutions out there. 

eBAM’s time may well be upon us. If industry adoption falters this time, the project would be dealt a serious blow. But initial success, followed by an upswing of corporate demand, would see a radically and irreversibly changed cash management universe, setting new standards of corporate-to-bank relationship best practice for bank account management.

 

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