Bank account management – the opening, closing and updating of accounts and their signatories – is not the most exciting task for a treasurer. It is a very manual, heavily paper-based, time-consuming task, and one often fraught with error.

Cash visibility has also historically been a challenge for corporates due to the paper-based processes involved. “Accessing timely information about accounts from different banking partners across the globe is a daunting task. There is a lot of work required from both the corporate and the bank to obtain this information,” explains Manoj Dugar, Product Head, Core Cash, Asia Pacific at J.P. Morgan. As such, the information that corporates hold about their accounts is often not real-time.

Aside from the governance and audit challenges that having such little visibility presents, the lack of true information can also present a wave of control issues which can have more dire consequences. “Not having up-to-date information means that you don’t know who can access the accounts,” says Marcus Hughes, Business Development Director at Bottomline Technologies. “Despite internal controls, in a worst case scenario it is conceivable that an organisation will fail to inform a bank that a signatory on an account has left the organisation, meaning the ex-employee, should they wish, could fraudulently access the account and transfer the funds.”

Electronic bank account management (eBAM) looks to solve these challenges and mitigate the risks around bank account management by automating the process and improving visibility and control.

So what exactly is it? Well, there are mixed views on what truly constitutes eBAM, but fundamentally, eBAM is a simple concept. True eBAM looks to allow corporates and banks to fully automate the account management process, end-to-end, using a set of industry-standard messaging formats; a secure electronic platform that can provide access to online forms (that can be pre-populated) and provide the necessary information around the account management process. In addition, eBAM is intended to create an electronic work flow ensuring process efficiency which, as the information is collected, a real-time electronic database containing information about these accounts is created and maintained within the platform.

The Holy Grail

Seven years on from the first eBAM breakthrough, and the development of the eBAM standard message formats in 2010, the landscape looks very different to how many expected. “There has been and there continue to be two streams of eBAM – the bank-led portals and the SWIFT-led portals,” says J.P. Morgan’s Dugar. Corporates with a select number of banks are therefore able to access some single-bank eBAM functionality, but the Holy Grail of true end-to-end eBAM remains out of reach. The question is why?

According to Bob Stark, Vice President Strategy at technology vendor Kyriba, “although multi-bank functionality is often reported as a stumbling block, banks are actually well versed in multi-bank technology – multi-bank reporting and the ISO XML bank-agnostic payment files are just two examples,” – so this should not be seen as a major eBAM hurdle.” Technology vendors are also up to speed in this area and the job for them is fairly simple. “For TMS suppliers like ourselves we just have to ensure that we produce and communicate the prescribed messages on behalf of our clients,” he says. “The communication flowing both ways with the banks are simple.”

The real challenge, says Stark is that “the banks are currently trying to understand and decide how these messages are going to replace the complex legacy documentary process which they have in place. Many actions are triggered when an eBAM message is received. It is not just a case of receiving electronic messages rather than paper-based ones.”

On the same page?

Damian Macinante, Citi’s Asia Pacific Public Sector and Non-Bank Financial Institutions Sales Head, Treasury and Trade Solutions, goes one step further in his appraisal of the current state of play. “It is one thing to have a harmonised solution from a client-facing perspective, but a large degree of the benefits that derive from eBAM come from what the bank does with the information once it arrives,” he says. The promise of the solution is not only to automate for corporates but also banks. “Due to this, it will take time for all the participants involved in delivering multi-bank eBAM to develop a harmonised solution because of the disparate data flows in each system.”

Although the delays have been frustrating for the corporate community, Stark preaches patience. “The project and the banks shouldn’t be seen as moving slowly,” he says. “They are just working through the process.” The responsibility on the banks’ side to ensure that everything works is cited as a key reason for the time being taken. “It is like an iceberg; the simple stuff is what we see above the water, but the dangerous stuff – and what is taking the time to ensure that it is done right – is below the surface and out of the public eye.”

Unique challenges to Asia

Despite the delays, corporates are still asking for the product. In Asia Pacific, a region which Treasury Today’s Corporate Treasury Benchmarking Studies have previously shown to have less interest in the product than Western Europe and the US, demand is starting to appear. “In nearly all of my meetings with clients there is a conversation around eBAM,” says J.P. Morgan’s Dugar. “Asian corporates are keen to leverage an eBAM platform and want to see it taking hold in the region much more quickly.” However, the region amplifies many of the challenges which surround the eBAM initiative.

Digital signatures are a key pillar of eBAM and these have caused a legal headache in a number of countries worldwide. In Asia Pacific in particular these pose a major stumbling block. “Singapore, Hong Kong and Australia accept digital signatures in some format, but if we start to look at other countries in the region, it is still something that the regulators need to accept as an alternative to wet signatures,” says Citi’s Macinante. “Currently there is a lack of legal precedent so from this perspective the regulators are still trying to understand the implications.”

Stark believes that as eBAM develops there may need to be a pragmatic approach from corporates. “The regulatory challenge in Asia Pacific is a big one. I can certainly foresee corporates rolling out the solution in full across most of the region, and then countries, such as China, having to use a limited instance.”

J.P. Morgan’s Dugar is also optimistic. “For eBAM to fully work corporates need to centralise; the banks and industry players need to establish best practice; and standards and regulatory barriers such as the lack of acceptance of digital signatures need to be removed. All of these are moving in the right direction – it is just the timing and scale which is yet to be determined.”

However, Bottomline’s Hughes echoes Bishop’s point that many corporates worldwide and in Asia have other priorities besides eBAM. “It has great potential and corporates want the solution but it is not top of their priority list,” he says. “We still find the main focus is on cash visibility and cash concentration as well as efficient working capital management, so these are being actioned on, not eBAM.”

A lack of enthusiasm for local banks to adopt the product is a final challenge in the region. “When implementing the solution, it is desirable for a treasury to obtain 100% coverage over their accounts,” Jarno Timmerman, Head of Treasury South East Asia Pacific, AkzoNobel, told Treasury Today Asia earlier this year. “Many regional banks do not yet support SWIFT connectivity, so therefore if a corporate has accounts with these banks only part of the standardisation and improved straight-through processing that eBAM delivers will be able to be achieved.”

Driving forward

With eBAM moving at a glacial pace on the surface, many treasurers are asking not only when true eBAM will become a reality, but also whether it will at all. The good news is that a number of factors appear to be driving the initiative forward.

The banks have a large role to play in the development of eBAM, not only in ensuring that they can accept and act on eBAM messages but also in encouraging the regulators to accept the necessary technology – such as digital signatures. “The regulatory environment won’t evolve itself,” says Citi’s Macinante.

He also says that the education element is vital, especially in Asia Pacific, not just for the regulators but for the local banks and corporates. “Although we are seeing demand for this service in the region, this is primarily from multinationals who are pushing it through their internal structure,” he says. “Many local corporates are very comfortable using paper-based products so moving away from these is going to be a big change. Only with greater exposure and education will they become more comfortable with the technology, its security and benefits. There is certainly a mind-set change that needs to happen in the region overall.”

The push towards treasury centralisation may be another driver in the region. “To obtain full value from eBAM corporates need to centralise their treasury structure,” says Dugar. “Many multinationals and large local corporates have adopted this structure and we see a trend developing across the region. The drive towards centralisation in the region may therefore be an enabler for corporates to leverage the product and bolster demand.”

A final driver towards true eBAM is the adoption of the product by local banks in the region. As Timmerman mentioned, currently there is little interest from local banks in adopting the technology. But Stark expects this to evolve over time. “Corporates may be unwilling going forward to do business with those banks who don’t offer eBAM. Therefore we may see a follow-the-leader mentality in the region as the product develops and becomes more established.”

The next chapter

In some respects the future is already here as some banks do offer corporates a form of eBAM. However, the product which corporates and banks are looking for, true multi-bank eBAM, remains some way off. “We will get there,” prophesises Stark. “eBAM has a bright future, the questions remain around the timing. In my opinion it will be sooner rather than later, as the banking community is making lots of progress with their work in the background.”

Looking specifically at Asia, Hughes believes that the project might take more time. “The US and Europe will be quickest to adopt eBAM as they have more centralised treasury structures, greater corporate usage of SWIFT, and an easier regulatory environment for adoption. There are many more hurdles to jump, so the ability to deploy true multi-bank eBAM may remain some way off in the region.”

Case study

Gazprom Marketing and Trading: eBAM in practice

Andrew Bishop

Head of Cash Management

With eight different banking relationships and 140 accounts globally, the bank account management process at Gazprom Marketing and Trading (GM&T) is complex. “Historically, we used SAP and spreadsheets to manage this process,” says Andrew Bishop, Head of Cash Management at Gazprom Marketing & Trading. “In order to achieve greater control and visibility of our account status, we wished to move away from a spreadsheet solution as eBAM gave us greater systemic control.”

Ninety percent of GM&T’s accounts are with its main cash management banks, who are also one of the pioneers of the eBAM initiative. “We engaged with our bank to see what the solutions current status was and what it could offer us,” says Bishop. “The bank was honest in saying the product wasn’t yet complete but GM&T saw the value and decided to implement the solution.” At this stage it became clear that there was work to be done in order to have a truly single multi-bank solution.

“We could only use the eBAM solution with that one bank and although this helps, our preference was and remains to have a multi-bank solution,” says Bishop. Through discussions with various industry players Bishop realised that the lack of a bank agnostic solution isn’t necessarily the fault of the banks. “It is a wider community issue. Different players would say that they are ready, but in reality there are many different issues being ironed out across the board,” he says. “As a corporate with different bank relationships, a single multi-bank solution is what is needed.”

Challenges of eBAM

GM&T is now live with a proprietary eBAM solution, although Bishop says that implementing this wasn’t an easy task. “The bank required us to authenticate any requests using a digital certificate sent from a designated authoriser. This is great in principle but the technicality of implementing this software was problematic due to the different settings required on the user’s computer.” For Bishop, a simple software package that corporates could download to use eBAM would be an improvement. “The current process required a lot of interfacing and effort from both our IT and the banks and this was not ideal.”

A further challenge GM&T encountered surrounded the regulations in certain countries. “In Singapore, for example, we have a selection of accounts,” explains Bishop. “Although we have eBAM rolled out in Singapore, the regulations still require that the execution of any instruction to the bank is paper-based.” Despite this, an electronic database is still maintained by the bank for GM&T which is update manually form the paper instructions. “Once you dig down, the full service eBAM which is offered in countries like the UK just isn’t available in Asia yet. This is against the principle of being able to electronically communicate with banks – all the risk that is present with using paper is still present, and work needs to be done to overcome this challenge.”

Best practice

“The current product that we have in place is simple, but it is an improvement on our previous bank account management process with additional control and reporting capabilities,” says Bishop. “From our experience, it’s worthwhile considering all of the pros and cons of embarking on the current eBAM offering and ensuring that you are clear in terms of the global solution offering. By assisting our partner banks, I’m sure the regulatory challenges in Singapore can be overcome.”

“I think multi-bank eBAM will happen eventually; we have seen similar examples before such as electronic payments,” says Bishop. “But with everything else that the industry is contending with at the moment it is just a matter of priority. We are close – eBAM just needs somebody to take hold of it and push it over the line.”