By Ted Howard
Electronic bank account management (eBAM) is gaining steam. Here are a few rules to live by.
If electronic bank account management, or eBAM, hasn’t “arrived” already, it’s certainly in the throes of doing so. With several companies entering into the eBAM space and treasurers putting it at the top of the treasury management system wish list, the functionality is gaining steam.
It’s been nearly five years since a consortium of banks, corporations, and technology companies worked together with SWIFT to bring bank account management into paperless automation.
In the past three years, several companies, including Wall Street Systems, IT2 and others have either produced their own solution or acquired the functionality to meet the demand for that automation, which these companies are betting will boom in the next several years.
lessons learned
Electronic bank account management has been a popular topic in treasury circles. And at a recent NeuGroup peer group meeting, identity security company IdenTrust gave a presentation on how companies and banks can benefit from eBAM. In the presentation, IdenTrust outlined the current state of the eBAM, its benefits as well as ways to get access to an eBAM solution.
In most current treasury structures, bank account management—that is, the opening, closing, and maintaining of accounts—is a very labor intensive, paper-based process that leads to high costs and inefficiencies.
Electronic bank account management is meant to rectify this, by eliminating paper-based supporting documents, controlling bank account changes with a centralized approval process, and tracking the progress of the implementation of bank account signatory changes across the organization, along with its banks.
But despite the obvious virtues of eBAM, it is still very much a technology project and companies and banks need to provide support at all levels. With that in mind, IdenTrust outlined ways in which both corporate and banks can get
that done:
- Corporates and banks: Name a strong project manager.
- Banks: Create an integrated team to manage and guide the process, bringing together players from the product, operations, technology, legal, compliance, and regulatory parts of the bank.
- Corporates and banks: Review existing processes, documents, geographic footprint, and signatory responsibilities.
- Corporates: Reach out early to your banks to gauge awareness, capabilities, and willingness to work with you.
- Corporates: Implementing eBAM will force a re-work of all of the existing processes since it is an entirely different method of performing the bank account management activity.
Therefore, develop a cohesive set of processes “to be” in place once eBAM is implemented that cover all legal entities, bank accounts, and signatories for each bank and geography, as well as preferred hierarchy for delivery mechanisms. - Banks: Also develop a cohesive set of processes “to be” in place that cover all aspects of the eBAM process, including defining your preference hierarchy for Delivery Mechanisms and determining whether you will limit the use to your specific bank accounts only or allow other banks’ accounts to be included.
- Corporates: Leverage external resources to develop a business case around the benefits of eBAM.
- Corporates: Incorporate a plan for integration with other operational systems, such as the GL and HR systems, where a seamless interface will be of value.
- Corporates: Incorporate a plan for integration with your back-office systems even if you do not plan to implement it in the short term.
- Corporates and banks: Leverage the “to be” process to help guide the selection of an eBAM solution.
- Corporates: Once selected, expect a six- to 10-month initial deployment period for the eBAM solution, including a two- to three-month period for initial load and scrub of the data.
- Banks: Select a small group of corporate pilot customers to work through the initial deployment with you before you extend it, including—if possible— corporates that have already begun their own eBAM deployment.
One of the ironies of the success of electronic banking is that it has not been accompanied by improvements in bank documentation processes. But with the maturation of eBAM and growth in offerings, this should soon change.