Digging into the eBAM functionality claims of TMS vendors.
When it comes to researching the capabilities of any new system, it’s always prudent to give the literature a good read. In this vein, the following statement in a recent press release from IT2 caught our eye: “The Feature Pack offers a rich set of new integral elements for the IT2 treasury management system – including the first internally integrated bank account administration solution, with full eBAM facilities – offered within a treasury management system.”
This sounds great given that eBAM is among the more highly-desired functionality items treasurers would like to see in new treasury systems (see related story here). However, the remainder of the press release emphasized visibility rather than the range of account management capabilities implied by “full eBAM facilities,” and this gave us pause.
According to Paul Higdon, Chief Technology Officer at IT2: “Integrated bank account administration provides the last major piece of the puzzle in the provision of a secure and dependable route to enterprise-wide visibility of cash. It also significantly enhances financial risk management, by providing corporate treasuries with efficient, controlled and up to date visibility of global bank exposures [our emphasis]. IT2 offers this powerful solution since its single central database is updated in real time with all relevant bank account information, facilitating central visibility of an organisation’s key resource – cash [our emphasis].”
Visibility is the easy part
The central database with all relevant bank account information may be a useful step in the direction of eBAM, but it is not eBAM. Full eBAM facilities would imply the ability to manage electronically account openings, account closings, account maintenance (including mandate management) and account features reporting (e.g., for audit purposes). Visibility is indeed a good thing, but it confuses account reporting with eBAM.
Prior to this announcement, IT2’s capabilities surrounding account reporting were described as follows (and still are on its website): “IT2 integrates with EFT and account statements with bank workstations from Citibank (on-line and CTSI), Barclays and Lloyds TSB as well as many other banks and services such as FIDES. Visit FIDES website for information on the FIDES Account Reporting System (ARS) which provides connectivity to 600 banks.”
A visit to the FIDES website does indeed provide a helpful explanation of multibank account reporting functionality, which is likely closer to what IT2 is offering on a fully-integrated basis. If this is not the case, then IT2 should be touting the far more challenging elements core to eBAM, the other types of data found in its central data-base of all relevant bank account information, or even visibility over account documentation (e.g., authorized signers and limits) and not just visibility of cash – that’s the easy part, and it’s not even that easy.
This reading of a vendor release should thus serve as a lesson to treasurers to dig deeper into vendor functionality claims, especially where hot-topic buzzwords like eBAM are concerned, and a lesson to vendors (and not just IT2) to take better care when using them to tout functionality advances.
UPDATE
Having now received from IT2 the latest briefing document on its new release, we see that it does offer more bank account administration capabilities than just cash visibility, including capabilities for core eBAM functions such as signatory management and account documentation to the extent that these are possible with counterparty banks.
However, IT2 admits in the document that the capabilities, particularly regarding electronic bank account management, is as much in response to the vision of eBAM, which has been furthered by the introduction of new SWIFT message-types to have banks facilitate account administration electronically via SWIFTnet. “This vision is not yet a reality as we are still in the early adoption period of eBAM messaging – and not all banks are participating in eBAM yet,” according to IT2. “However there are still significant benefits to implementing a controlled account administration framework today – with or without electronic messaging to the early adopter banks.” This may be why the IT2 press release emphasized cash visibility capabilities since it is further past the vision stage.
Core to IT2’s solution is indeed its single central database, which will hold bank account administration information, including details of banks, bank accounts, authorized signatories, service information, bank contacts and all related documentation. A key advantage of an integrated account management solution is that the same single database also contains the more dynamic relationship information such as account balance and transaction data, fees, trading and competitiveness statistics and these can be updated by the system in real time.
Another element of the solution, is found in IT2’s process-driven approach (see related article) that will allow treasurers to visualize their account administration workflows, so that they can define, document and control them within the system using the IT2 Process Maps, and use IT2 to enforce clear segregation of duties. These processes, for example, can be implemented using IT2 Process Maps:
• Bank Account Opening Requests
• Bank Account Maintenance Requests (including mandate, signatory and service changes)
• Bank Account Closure Requests.
Again, pending full eBAM adoption by a wider range of banking partners, the IT2 solution may be as much a tracking and document management tool for phone, email and paper-based communication as an electronic document processing system in line with the full vision of eBAM.