Published: November 01, 2012
Although eBAM (electronic bank account management) has been discussed for some time, there are currently only a few corporates exchanging eBAM messages either through banks’ proprietary solutions or through SWIFT. The term eBAM is often incorrectly used to refer to tools provided by treasury technology vendors for managing bank account and signatory information within the organisation. These tools should more correctly be described as ‘BAM’ or bank account management, while eBAM refers to the electronic exchange of messages with counterparty banks for opening or closing accounts, or changing signatories using banks’ proprietary systems or SWIFT. Despite corporate enthusiasm for eBAM, adoption has been delayed in many cases, firstly as their banks or vendors may not yet support it, but secondly as companies have not first implemented an internal bank account management tool. USI has been one of the first companies to adopt both an efficient process for managing bank account information internally, and to extend this solution to incorporate eBAM, as this article describes.
At USI, we have a centralised approach to account management. Accounts are opened by group treasury, and functional control is then passed to the local business unit. Typically, we have 80-100 accounts, although this number increases when we acquire new businesses until entities have been integrated fully into the group. In most cases, accounts are held with one bank, except for accounts of acquired entities, and we also hold accounts with regional banks when required.
Historically, the process of opening and closing accounts, and updating signatories, has been manual, using spreadsheets to hold bank account information, and faxing or emailing instructions to the banks. This involved significant manual processing and was prone to error and omission. As a business, we are committed to efficiency and transparency, so we recognised the need to enhance the way that we managed our bank accounts.
We approached SunGard, our treasury management system (TMS) provider, to discuss the limitations in our current process. With their help, we implemented the Bank Account Management module, which is part of our TMS. This enabled us to manage bank account information in a structured way and automate bank account reporting.[[[PAGE]]]
Since implementing this module, we attended a conference and learnt about about the new electronic bank account management (eBAM) service through SWIFT. We quickly recognised that this would be a logical next step for our business and worked with SunGard to extend our existing bank account management solution. Although the solution is new, we see the advantage of being ahead of the curve and adopting leading-edge technology. Our key partner bank was also supportive of our intention to implement eBAM through SWIFT. Although the bank had a proprietary eBAM solution which was provided at no cost, this covered only accounts held with that bank; furthermore, we appreciated the advantages of a bank-independent solution.
Before embarking on the eBAM project, USI was not a SWIFT member, so joining SWIFT and establishing connectivity was the first step. We also defined our functional requirements and validated our existing bank account data, which inevitably took a little longer than anticipated. We also found that testing SWIFT messaging with our bank was quite time-consuming, as the bank had less experience in corporate SWIFT connectivity than we had expected. The testing process is now close to completion, however, and SunGard is providing the necessary experience in SWIFT connectivity and eBAM messaging.
Once we have completed the project, which we expect to achieve by the end of 2012, we will benefit not only from a robust bank account management tool with which to manage and report on bank account information, but our account opening, maintenance and account closing processes will be conducted automatically through SWIFT messaging. This will significantly reduce the amount of time to conduct day-to-day processes such as changing signatories, which can easily take a whole day at present, but will take less than an hour in the future.
Before embarking on an eBAM project, it is essential to have an efficient bank account management tool for storing, tracking and reporting on account information. Once this is in place, the solution can be extended to include electronic bank communication. Having made the decision to implement eBAM, the relevant bank(s) and vendor(s) then need to be engaged. We found that although SunGard had the necessary solutions and expertise that we needed to support the project, some banks did not have the same degree of experience about corporate SWIFT connectivity and/or eBAM. It is important to understand each bank’s capabilities and experience early on, and be realistic about what can be achieved. As more banks and corporates alike recognise the value that eBAM offers, the overall level of industry expertise is likely to increase and the number of corporates adopting eBAM should therefore accelerate.
How Thought Leadership Can Reduce the Cost of Sales by Patrik Havander, Havander & Partners A focused attention on the costs incurred by the global sales and marketing processes is becoming increasingly important for corporate banks and their transaction banking departments. While the client/bank relationship remains vital, research has shown that in fact relationship selling […]
