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Getting to grips with bank accounts

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Corporate treasurers are adopting a variety of strategies when it comes to streamlining bank relationships and gaining greater control over their accounts – from harnessing eBAM to building an in-house bank.

by Rebecca Brace

Published: November 18th 2019

Large multinationals often maintain dozens of banking relationships and thousands of bank accounts. In some cases, a multi-banking approach is necessitated by counterparty limits or local requirements. In other cases, sprawling banking structures can develop over time, introducing unnecessary complexity and risks – such as the risk of fraud when bank account signatories leave the company. These challenges can be tackled in a variety of different ways, as the following four treasurers explain.

Achieving a real-time view

Jim Scurlock, Head of Cash Management, Microsoft

Jim Scurlock, Head of Cash Management at Microsoft and winner of the 2019 EuroFinance Award for Treasury Excellence, says the company has built its own cloud-based bank account administration tool which has given a real-time view of the company’s accounts. “I can look at my phone right now and see, in real-time, how many bank accounts we have, in which countries, with each of the banks,” he told delegates at this year’s EuroFinance International Treasury Management event in Copenhagen.

What’s more, the insights provided by the tool empower the company during conversations with those banks. “Banks are always asking how they can do more for us,” Scurlock says. “By having our banking data on Azure, we can have a much more thoughtful conversation on service backed with facts. Do you know how long it typically takes you to open up a bank account in each country? Or we can compare multiple different banks and see that it takes one of them 30 days longer to open a bank account in the same geography. It allows for a more insightful conversation.”

Embracing eBAM

Some treat the challenge as an automation problem. Jens Otto, Head of Financial Settlement & Operations at German-based utility E.ON, explains that with over 1,500 bank accounts and 450 legal entities, the company had been facing a clear need to standardise and automate its bank account management database across different countries and banks.

Jens Otto, Head of Financial Settlement & Operations, E.ON

Consequently, the treasury team embarked on a project to standardise processes and automate workflows across its banking relationships. “We wanted to have a workflow for the whole lifecycle of the bank account, from the opening until the closing of the account,” says Otto.

In the first instance, this meant going through all the company’s banking forms and collecting data fields manually in order to create the database. With the foundation work complete, the team’s attention turned to the ‘e’ part of eBAM. This involved creating an umbrella agreement for the eBAM process, as well as drawing up powers of attorney (POAs) for group entities.

Under the new process, the treasury sends structured XML messages to the bank for actions such as account opening, account closing and changes to the mandate. Relevant documentation and KYC information is sent to the bank simultaneously as attachments. The company is currently implementing eBAM with two of its banks, and is preparing new implementation projects with three additional banks with the hope of adding in as many as possible in the future.

Less is more

Joanna Bonnett, Group Treasurer, Page Group

Other companies may take a different tack when looking to reduce the challenges associated with bank accounts. Joanna Bonnett, Group Treasurer of specialist recruitment business Page Group, says that with 94 subsidiaries, the company “decided to remove local bankers and put in one dominant banker globally.”

The new structure includes one main global bank, supported by two additional banks in hard-to-reach jurisdictions. As a result, the company has removed 19 banks (and 15 banking platforms) from the mix, while rationalising bank accounts and replacing the previous voluntary pooling arrangement with an automated multicurrency pool. Key to the project’s success, Bonnett says, was managing external relationships via monthly steering group calls with Executive level bankers, TMS relationship managers and other IT contractors.

Bringing it in house

Last but not least, geo-data specialist Fugro sought to save costs and reduce complexity by rationalising its relationships and accounts. With the company holding over 1,000 bank accounts, each of which cost around $100 per month to maintain, Group Treasurer Simon Karregat embarked on a project to eliminate manual work, maximise straight through processing and reduce the number of bank accounts held through the adoption of an in-house bank.

Working with corporate payment solutions provider Treasury Intelligence Solutions (TIS) and Bank Mendes Gans (BMG), Fugro set up an in-house bank structure, with each in-house bank account automatically linked to a global cash pool. “Wherever there is a local account, it can be swept into the cash pool,” says Karregat. “There’s just a limited manual interference.” The resulting benefits have included annual savings of €500k as a result of a 50% reduction in local bank accounts, as well as at least €2m annual savings following the reduction of local idle cash and overdrafts.

Simon Karregat, Group Treasurer, Fugro

“This must be seen as rationalisation and using our own funds more effectively,” comments Karregat. “It is not our business to please banks.” He adds that the treasury still sees banks as having an important role – “although it will be more focused on one or a limited number of local banks, with whom we value the relationship and make use of the various services provided and needed on the local level.”

In conclusion, an in-house bank may not be right for every organisation. But as these treasurers demonstrate, there are plenty of options available for companies looking to streamline their bank accounts.