This issue’s question

“I have been looking at ways to manage signature mandates, what options are available? How do they work? And are there any other developments in this space that can benefit corporates?”

One of the biggest challenges treasury departments worldwide are facing today is the efficient and secure management of banks and bank account related information and processes. Visibility and control over the bank accounts globally, the ability to effectively store bank account related information and documentation (including signature mandates), as well as centrally managing the processes on the lifecycle of this information is fundamental for CFOs and treasurers to minimise risks and adopt automated processes.

In order to achieve these goals, many corporates decide on a comprehensive solution for the management of their bank accounts. Effective and structured bank account management can be easily realised by implementing a solution, which is one of the main steps treasury departments take to fulfil governance and compliance regulations. In addition, the adoption of a central bank account repository, for collecting both data and bank documentation, ensures that processes are optimised and performance is measured and monitored.

In my previous role as Head of Global Treasury at SAP, I faced a similar challenge and can recommend that the management of signature mandates should be provided by external experts as a service. This allows treasury departments to focus on strategic topics which help to deliver better business results.

The key advantages and acknowledged benefits in adopting a Bank Account Management solution, provided as a service, are gaining complete control and effective management of all bank relationships – including bank master data, legally binding documents as well as signatory mandates.

Through automated approval workflows for requests to changes in bank mandates, secure and audit proof processes, such a solution provides full corporate compliance. In addition, complete integration with existing back office infrastructures improves efficiency and cost reduction, through automating manual processes and monitoring their performance. All departments involved benefit from easy access to real-time information for strategically managing signature mandates.

Furthermore, the recognition that the banks are using electronic exchange of Bank Account Management (eBAM) information, including the electronic opening, closing and maintenance of bank accounts as well as generation of audit reports, is picking up pace in the market, especially within large corporations. The business case is now becoming fundamental as a growing number of companies, across all sectors, aim to resolve governance and compliance issues as well as minimising risk.

We have provided our customers with a best practice service model to globally manage signature mandates within all bank relationships and providing efficient, low-risk business workflows which embeds governance processes as corporate regulatory requirements.

My final recommendation is to approach this challenge by establishing a model which captures all of the bank details into a central ‘source of truth’, which is the fundamental milestone in achieving a global overview of signature mandates.

When discussing treasury topics with our clients, one of the key challenges that is constantly raised is the management of bank accounts and related signatories. The complexity, the time to process changes with banking partners and the highly manual process result in large inefficiencies and little visibility and control over this highly error and risk prone process. Auditability and compliance are key in this area – there are a number of initiatives that organisations can drive to reduce the complexities.

Rationalisation of bank accounts is an activity that many are constantly working on. By having less bank accounts the management of bank accounts and related signatories will clearly be reduced. The introduction of SEPA has introduced new possibilities but it has not been fully leveraged by many corporate treasurers. The benefits that the rationalisation bring should be balanced with other factors such as bank wallets, counterparty risk but also making sure that the services for the local entities continue to be serviced.

A second option would be to move away from bank-branded electronic banking to a multi-bank payment solution, coupled with bank communication such as host-to-host or SWIFT. By using such solutions you will have the benefit of approving payments in a multi-bank payment tool and securing the payment files with a company token. Organisations benefit from operational efficiencies by eliminating duplication of user and bank account data in multiple e-banking platforms.

A third, and more significant, efficiency and control mechanism would be to migrate to a central bank account management (BAM) solution. In recent studies, 15% of treasuries reported to have a tool in place for managing bank administration and relationships. The majority of these tools include Excel reports or simple homegrown database solutions. While these types of tools provide visibility on the number of bank accounts and signatories, they lack control, auditability and efficiency. It is remarkable to see that in many corporate organisations the accounts payable process requires high levels of security, while the management of the underlying mandates and signatories has lower controls.

It is vital to have all documentation and letters readily available and easily generated. This requires streamlined BAM for all processes and exchanges within the company and across different countries. Internal and external reporting and correspondence to internal and external stakeholders should be automatically generated, taking out the risk- and error-prone paper trails around this process.

Besides bank BAM solutions, there are many proven solutions in the market available that provide bank account management functions including workflows (to open, close and modify bank accounts), activity lists, dashboards and report generators that can be sent straight to the banks. In the last few years, ERP integrated solutions have also been introduced in the market – further leveraging efficiency and compliance around BAM.

Although the exchange of the related XML-based eBAM messages needs to mature in the next few years, corporates can reap benefits of visibility, control and efficiency over their bank account management processes as of today.

As the financial community seeks to reduce costs, mitigate risk and streamline their processes, corporates face challenges in managing their relationships with multiple banking partners – particularly when different channels, different protocols, different formats, and different data requirements need to be factored into the implementation process. A number of initiatives seek to address the ambiguity of how corporates and banks interact with each other, in particular regarding messaging formats and standards. Of note is the CGI-MP initiative, an industry-led effort that is gaining prominence as a key frame of reference for the implementation of ISO 20022 (an international standard that’s designed to simplify global business communication) payments messages between corporates and banks which represent the next generation messaging standard for SWIFT.

CGI-MP (Common Global Implementation – Market Practice) embodies the notion that, “a corporate can use the same message structure (for each message type) to interact with all of their transaction banks across the globe for payments initiation (credit transfer and direct debit), account and status reporting.”

The goal of CGI-MP is to provide a forum for both financial (banks and bank associations) and non-financial institutions (corporates, corporate associations, vendors and market infrastructures) to progress various corporate-to-bank implementation topics on the use of ISO 20022 messages and to other related activities in the payments domain. In particular, it is to simplify implementation for corporate users and thereby promote wider acceptance of ISO 20022 as the common XML standard used between corporates and banks. SWIFT operates the ISO 20022 Registration Authority (RA) as the guardian of the ISO 20022 Financial Repository and the www.iso20022.org website.