Published: January 01, 2000
With the world moving faster each day, treasury management has become increasingly ruled by automation. Meetings and phone calls, while still important, have given way to e-mails, texts and instant messages that race around the globe. A corporation based in Sao Paulo is just as likely to have a relationship with a bank in New York and a vendor in Hong Kong as with companies down the street. Yet one crucial area of transaction banking has remained rooted in the past: bank account management.
With few exceptions, opening and managing accounts remains a manual process in which treasurers and their staffs are burdened with significant paper shuffling among multiple locations. Such reliance on paper is counterintuitive in a world where we otherwise can get approvals from someone on the other side of the planet in a matter of seconds.
“In today’s climate, it doesn’t make sense for such a key function of treasury management to trail other innovations, and it’s no surprise that treasurers and financial executives are demanding more standardised processes from their banks,” said Cindy Murray, eCommerce and Portal executive in Global Corporate Banking at Bank of America Merrill Lynch. “Between the faster pace of business, the larger number of banking relationships and the shrinking margin for error, companies can’t tolerate cumbersome, paper-intensive and time consuming processes.”
Today’s large multinational corporations may work with more than a dozen financial institutions on multiple continents. Each of those banks typically has its own systems for managing cash transactions. So how do you trim the number of steps it usually takes to open and modify accounts – even something as simple as an address change?
The answer lies in electronic bank account management (eBAM), which banks are exploring as a way to appease clients’ desire for more efficiency and ease of operations. By employing more standardised processes and enhanced interaction through a web-enabled eBAM system, treasurers and other users would gain more visibility and control. “Such tasks as opening accounts, changing signer authorisations and limits, and digitally signing documents would be captured in more automated and streamlined processes,” Murray said. “Financial institutions would be able to give clients more transparency, and users would benefit from shorter cycle times, reduced risk and anytime access to accommodate their schedules.”
With those advantages evident, Bank of America Merrill Lynch has been aggressively exploring the best way to bring eBAM to its clients. Earlier this year, the bank began working with IdenTrust, Inc., a global leader in trusted identity solutions, to bring an eBAM solution to corporate clients.
By joining the IdenTrustTM Trust Network, Bank of America Merrill Lynch will issue interoperable digital identities that can be used around the world. Compare that with aspects of the current systems of paper-based account management: long cycle times, unreconciled records, paper, printing and postage costs, and unproductive customer interactions.
“Large multinational corporations often work with several financial institutions across multiple regions, and the different systems used by those institutions mean corporates must manage many different processes separate from the others,” said Tom Durkin, eCommerce Product executive at Bank of America Merrill Lynch. “This paper-based, manual system can be costly for a company, and efficiency and security remain constant concerns for both clients and banks.
“Now imagine a system in which corporates can deal with each of their financial institutions on the same level, enjoying more standardised banking processes,” Durkin continued. “With more visibility and security, the risk for error or fraud should be much less, while efficiency should increase.
”Through eBAM, onboarding and ongoing account management should be easier. Installing straight-through processing can significantly cut the long implementation cycles. In addition to more speed, banks will be better able to provide corporate customers with consistent messages, as well as a standard way of communicating those messages, when opening and maintaining accounts.
Along with achieving greater service quality externally, companies would anticipate discovering more operating efficiency internally. “From there, banks and corporates can explore how to expand their interactions to other treasury services and other lines of business, such as capital markets or leasing,” Durkin said. “That can lead to more stable and robust long-term relationships – providing even more consistency and trust.” [[[PAGE]]]
What specific technology does eBAM use? As offered by Bank of America Merrill Lynch, eBAM’s features include encryption, digital signing and real-time request tracking. Manual data entry would be replaced by the re-use of existing information in electronic documents. In addition, companies would have centralised audit trails, aided by an improved confirmation process for messages received and changes to accounts. Through this increased visibility, treasurers and executives will have a much better ability to predict trends, allowing them to embark on more strategic business planning. Meanwhile, the faster processing and accelerated response times can reduce costs – for instance, overnight shipping charges could plummet – revealing more liquidity for corporates.
Through eBAM our goal is to give treasurers- whether they're in Boston, Bogotta or Berlin- the same experience in opening and managing accounts.
Bank of America Merrill Lynch is now actively handling eBAM transactions as part of a pilot programme within Europe and the US. Eventually, eBAM is expected to be a part of banking in many major markets, including Latin America and Asia. “Many of our clients, especially multinationals, have told us that they’re excited about the possibilities with eBAM,” Durkin said. “With banking becoming more global every day, corporates must be able to have reliable processes that provide ease of use across borders.”
As the Latin American market continues to emerge, companies based in those countries are doing more business each year in different markets. At the same time, Latin America is an attractive market for many corporates, who would embrace more consistent account management that also delivers faster results.
“Through eBAM, our goal is to give treasurers – whether they’re in Boston, Bogota, or Berlin – the same experience in opening and managing accounts,” Durkin said.
The focus on eBAM by Bank of America Merrill Lynch is part of the company’s larger initiative to provide corporate and commercial clients with the next generation in online banking services. By investing in innovative technology, the bank is enabling clients to shift their attention from basic processes to more strategic functions.
In 2009, Bank of America Merrill Lynch launched CashPro® Online, a web-based banking channel with intuitive technology that allows clients to move beyond transactions, helping them increase productivity and profitability. The web-based banking channel provides a single point of access to global treasury, debt, cash management, investments, trade finance, foreign exchange services and other financial capabilities.
Following last year’s launch, CashPro Online will be enhanced in the months ahead with a new payments hub. This will allow Bank of America Merrill Lynch to integrate common payments processes, react quickly to evolving standards and regulatory changes, and leverage payments capabilities to boost efficiency. The portal will also gain new information-reporting capabilities, with companies getting access to their financial products virtually anytime and from anywhere, with real-time feedback and instant client support through email, chat, and mobile alerts.
“The separate silos that treasurers often have to navigate when processing payments will finally be combined into one dynamic hub, able to support multiple file formats and achieve higher straight-through processing for clients” Murray said. “Users also will see an enriched reporting experience in which they can go beyond viewing numbers on a spreadsheet and turn information into intelligence.”
The bank’s eBAM effort complements this effort by developing strong relationships when clients open accounts online. Building a successful eBAM system is a tremendous commitment, but the initial interactions in account management are crucial to developing trust between banks and their clients.“
By cutting the onboarding time from weeks to days or even hours, we expect to cultivate even stronger relationships with our clients,” Murray said. “Without question, succeeding in eBAM requires a significant amount of work, but we believe our clients deserve that kind of investment and effort.”
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