Your remote control in bank account management


An increasing focus on bank account management is being observed among European corporate customers. Worldwide treasury trends such as centralization, standardization and the increasing independence of banks have been gathering pace for several years. These trends have spurred the implementation not only of traditional treasury management systems, but they have also driven an increase in centralized payment factories, bank rationalization plans and SWIFT connectivity solutions.

The need for control over basic company-wide treasury activities such as payments, purchasing bank products and account authorizations has increased significantly among corporate treasurers. This is explained by the prevailing preference among finance and treasury executives for controlling cash flows, economizing on bank relationships and mitigating risks (e.g. credit default but also cash fraud).

Entitling a person to authorize payments used to be a compulsory, time-consuming paper trail and carried considerable correspondence costs. Meanwhile paper-based authorization contracts need multiple signatures and are sent to the bank by recorded delivery.

However, from the beginning of this decade, treasury software vendors, SWIFT and other connectivity suppliers as well as banks have started pilots for the release of applications for electronic bank account management (EBAM) solutions.

The main characteristics of EBAM include the ability to obtain an instant overview on the current status of all bank accounts and related services, all authorized persons and their signing limits. Opening or closing an account and managing its signatories and mandates will be simplified by bank connectivity and the creation of the right documentation by the application. All actions are logged so obligatory audit deliverables can be automatically retrieved.

EBAM is nothing less than your flight data recorder in bank account communication. Moreover, a bank fee and services analysis tool is expected to be provided. The entire banking relationship is presented in a familiar web- or SWIFT-based environment and operated by personal digital signatures and subsequent XML messages.

EBAM is expected to add value for large corporates with a significant number of bank accounts (more than 50), the authorizations of which are to some extent managed by treasury. It will also be valuable for corporates whose business is reflected by regular bank account openings within existing bank relationships.

The account opening process as illustrated in the figure above is initiated by an authorized individual within the corporate organization that is known and identified by the bank. Please note that know-your-customer (KYC) procedures are handled separately and that the use of digital IDs and signatures is subject to local regulatory conditions.

Effective corporate bank account management depends on the underlying processes, policy and infrastructure. Effective processes feature a highly frequent reporting practice with respect to all related information on bank accounts. All guidelines as required for an effective control over the companies’ worldwide bank account structure must be part of the treasury policy that should be adhered to. The effectiveness of procedures is, to a large extent, subject to the existing technical infrastructure. For example, a payment factory will provide significant control and visibility of cash balances if payments and reporting of all bank accounts are with the payment center’s scope.

Finally, it is key to determine the economic value added, so expected time and effort gains should be monetized consistently. As a result, your EBAM objectives can be attained thus making your expedition in bank accounts a pleasant one.