Bank account management (BAM) has not changed in decades. It requires a signature, reams of paperwork, and tedious manual communications between banks and corporates. Electronic bank account management—or eBAM—promises to change all that.
EBAM will let treasury departments send electronic messages to banks, open and close accounts, manage signatories, and obtain account information without manual intervention, while reducing errors, shrinking response time, and increasing regulatory compliance.
EBAM has been in the works for almost 10 years. However, the number of actual users is small, including Microsoft, GE, eBAY, Dell, Boeing and Delta Air Lines. So why is it taking so long to gain wider acceptance?
Part of the answer is related to the development of the infrastructure that enables eBAM. It was not until 2010 that SWIFT came out with a standard XML message set, certified as ISO 20022. Some banks are ready to implement eBAM and, according to SWIFT, six banks are working on it. There are only four software vendors that currently offer eBAM solutions. Plus, the path to implementation requires that before companies can put the “e” before “BAM”, they must first get their account management workflows and databases in order. Further, there are regulatory and legal hurdles that hamper wider adoption.
Despite these concerns there is a great deal of optimism as well as growing consensus that eBAM is poised to take off. Many bankers, vendors and corporates are looking toward 2013-2014 as the turning point for eBAM as it gains broader adoption.
To help corporates prepare, AFP has created the CTC Guide: Bridging the Gap: From BAM to eBAM. “What was most telling about the experience of reporting and writing about eBAM was just how much passion there is around the topic,” said Nilly Essaides, author of Bridging the Gap. “This, on the face of things, is a very dry, technical issue. But for its proponents, be they bankers, vendors, standard setters, or corporates, this area elicits strong emotional reactions.
Essaides believes eBAM will “revolutionize cash management. It’s the biggest thing in cash management since electronic payments,” she said. “It’s a revolution that's been long in the making.”