The electronic bank account management (eBam) initiative has come a long way since it was conceived some eight years ago. Standards have evolved, a central repository has been piloted and applications and mono-bank platforms are being developed. But still, the standards need to be perfected, the repository has stalled and there is no multibank product on the market yet. Despite its teething problems and challenges, banks, corporates and third parties say they are committed to the eBam ideal. Where are we now?
On the back burner
Swift’s central utility for eBam was a central document database and multibank platform for banks and companies to manage their bank accounts electronically. It was piloted with banks and corporates in 2011 and there was much expectation in the market for a viable multibank repository for storing eBam messaging data that would be made available commercially.
But this didn’t happen and Swift decided in early 2013 to put its investment in the central utility on hold. This was seen by some as a setback for the eBam initiative. Swift’s Sebastian Rojas, solution manager for the corporate market, says: “At this stage, it was not possible for Swift to build such a central platform, or to find a sufficient number of banks to step into the project. Therefore, we have decided not to proceed with building a live eBam central utility.”
In reality, the shelving of the central utility (for now) has not been seen as an insurmountable challenge for the progress of eBam. Vish Patel, chief architect, VP, product at IdenTrust, says: “eBam is not a homogenous environment. Some customers were relying on the progress of the central utility while others were using the internet as a delivery channel. It would be much better for the industry if there were a homogenous way of delivering messages. However, we have always believed the central utility was part of the puzzle but not the entire answer to the puzzle.”
The central utility would have created a focus for the eBam initiative. Even so, there have been other market developments that have pushed eBam forwards anyway. These developments may not have been happening fast enough for everyone’s liking, but this has not been a deterrent. One treasury consultant at a large blue chip company says: “The eBam market is still not mature in terms of technology and few banks are really participating, making any activity in eBam very difficult for us. However, it is on our agenda but other projects have priority.”
The laboriousness of signing and processing paper bank account documents manually means that eBam remains a very attractive proposition for companies, despite the current lack of multibank platforms and central data repository. The blue chip treasury consultant adds: “You can spend days managing mandates and physically signing 200 banking packages for change of signatories.”
Signs of life
With that in mind, some of the eBam developments in the past 12 months have been welcomed by corporates eager to see this initiative come to fruition. These developments come alongside the progress that banks have made in their proprietary eBam offerings. At the same time, vendors are also developing eBam functionality that is integrated within Enterprise Resource Planning (ERP) systems or Treasury Management Systems (TMSs). Some of the developments include:
One of the concerns voiced by some corporates has been the lack of agreement among banks on the correct standards. A treasury manager at one multinational says: “While there have been some developments in the past year, the main concern is that Swift has dropped the idea of a central repository to collect all the bank specific requirements to the otherwise agreed formats. Bringing a true harmonised format to the market like CGI [Common Global Implementation] for payments would be preferred.”
This concern is now being addressed. On 31 May 2013, ISO published a new edition of its ISO 20022 financial message standards. This included an updated version of the account management (ACMT) messaging standards. Swift’s Sebastian Rojas says: “This is a very positive step and it proves that the industry is moving forward to follow one global standard.”
Common global implementation
The CGI initiative is a forum for banks, corporates and other market players to discuss progress in bank-to-corporate use of the ISO 20022 financial messaging standards as well as other related payments projects.
A working group within CGI is mandated with working specifically on eBam messages and harmonising the way standards are implemented. Judith van Paassen, a partner at Zanders Treasury & Finance Solutions (one of the companies participating in the working group), explains that this is a meaningful step forward for eBam standards. “The eBam working group will meet once a month and its work will be ongoing as corporates start to use the eBam messages. As the messages are put into practical use, new issues and glitches will arise, and we will discuss how these should be handled.”
There are several types of eBam messages, including messages for account opening, account closing, reporting and the authorisation of payments or other services by signatories. Each message has numerous fields that need to be filled in.
So far this has been a grey area, where there has been confusion and disagreement on which fields should or shouldn’t be completed, with different requirements and languages in different countries. Zanders consultant Peter Geurts adds: “For example, the use of appendices in eBam message fields is not fully clear. There can be hundreds or thousands of fields in each message, so the messages are very comprehensive. However, there can be many local ‘flavours’, such as different languages, which could add a lot of complexity.” These are the types of issues that the CGI working group hopes to resolve.
Alongside the reliability and integrity of the delivery of the eBam messages, the need to ascertain the correct identity of who is executing each message is also a crucial aspect of the eBam puzzle.
IdenTrust’s Vish Patel says: “We believe the ID mechanism is a critical element in eBam. If banks and corporates don’t trust the ID mechanism then the whole system will not work. They need a 100% guarantee that these are authorised instructions. A trusted ID mechanism provides that guarantee.”
IdenTrust’s own Trust Network is an alternative to Swift’s 3SKey identity token. Both tokens are available as a cryptographic USB device. IdenTrust’s solution is also available as a smart card
One of the problems with USB devices is that corporates worry they may not be able to use them – many companies have IT policies that ban the use of USB memory sticks. However, Swift’s Rojas says: “We chose the hard [USB] option because hard devices are much more secure than soft certificates – so this was a security choice, which was made with the banking community. Some corporates block USB ports – so USB sticks used for storage are not permitted. But 3SKey is not a storage device – it is cryptographic processor. We are not aware of any users not being able to use our 3SKey tokens because of such limitations. Those users who have had concerns have been able to resolve these once they call our support desk.”
It is now also possible to use the 3SKey tokens on MAC computers and on new operating systems such as Windows 8. Swift is also looking to extend the use of the 3SKey solution on a range of mobile devices and will communicate further on such mobile capabilities in 2014.
Progress has been made at least with regards to eBam standards. However, other market events and initiatives have meant that eBam has slipped down the list of priorities for many companies and banks. Many in the market expect banks and corporates to return to focus on eBam after the February 2014 Single Euro Payments Area (Sepa) compliance deadline.
In the wake of the global financial crisis, new regulations have been ushered in and have meant new compliance pressures for corporates.
Unlike Sepa, regulations such as the Report of Foreign Bank and Financial Accounts (FBAR) in the US have meant additional reporting requirements on foreign bank accounts for US-resident entities. This involves reporting on all foreign bank accounts to the Internal Revenue Service (IRS) and, for companies that don’t even know how many bank accounts they have globally (and this is a common problem) the task is extremely complex and lengthy.
The treasury manager at a global company, who wishes to remain anonymous, says: “I don’t think the financial crisis has done anything negative to the momentum of the eBam project – on the contrary, regulations in the US require more visibility and control of your bank accounts. However, in Europe, everything that needs IT in the project is on hold until after Sepa.” The possibility of knowing exactly how many bank accounts you have is of great value when it comes to regulatory compliance. Christos Kiosses, global product manager for eBam at Hanse Orga (a financial software products developer), explains that having this systematic knowledge, transparency and control brings other benefits too. “You can only manage your bank relationships if you know how many you have and eBam is the basis for this. In addition, our product (the Finance Suite eBam Module) offers the functionality of analysing the bank performance according to certain KPIs,” he says.
For example, companies can import the electronic bank billing statements and verify whether banking errors have occurred. Hanse Orga offers an SAP integrated solution that can automatically detect when a bank has overcharged for bank account activity. It also offers a dispute resolution workflow manager with the bank. Kiosses adds: “An eBam tool is the prerequisite to running a proper bank fee analysis and to comply with the FBAR regulation.”
An eye on the road
So what is the future for eBam? It has been a long time in the making but there is still much to be done before an attractive multibank solution and clear messaging standards are widely available. Despite its early teething problems, it is inevitable that bank account management will go digital – and sooner rather than later.
The first step for corporates is to streamline and quantify their existing global bank accounts. This is a complex project in itself. The next step of making account management digital is a technical and legal process, which requires resources.
However, before corporates embark on an eBam project they need the right applications to be on the market. Swift’s Rojas explains the necessity of a multibank solution for the market. “We see various proprietary platforms being launched but there is demand for a common solution which corporates can use with all their banks – and we do see the commitment from banks on this,” he says. “Corporates don’t like multiple solutions – and eBam is all about simplification and harmonisation.”
IdenTrust’s Patel gives this advice: “For corporates, if you haven’t invested yet on transferring your paper bank account management processing to electronic, then yes you have a big job ahead. But for those starting out now, there are more options than there were even two or three years ago in terms of quicker and more efficient deployment. We encourage our customers to start with specific eBam functions, whether it’s certain geographies, groups of accounts, or just a certain function such as only automating signatory management.”