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eBAM: Who Should Take the Lead?

  • By Andrew Deichler
  • Published: 6/11/2015

NEW ORLEANS -- The latest meeting of AFP’s Treasury Advisory Group (TAG) began this week with a discussion on electronic bank account management (eBAM). Although the idea of eBAM has been floated around for a while, the future of the initiative is unclear at best—leaving corporate treasurers to ponder how much they actually want or need it.

Tom Hunt, CTP, director of treasury services for AFP, is currently weighing the possibility of holding an eBAM roundtable session at the 2015 AFP Annual Conference in Denver. “There seems to be a desire by the industry to gather the banks, corporates and the associations—the movers and shakers in the field of bank account management,” he said. “It’s meant to bring them together, in a working session, and figure out how to move the industry forward.”

Craig Martin, executive director of the Corporate Treasurers Council (CTC), explained that while SWIFT has positioned itself to be a leader in eBAM, many banks are opting to offer their own solutions and are cutting SWIFT out of the equation. “SWIFT is sweating a little bit because they’ve got their name all over it,” he said. “Each bank is working on their own solution, but it’s individual. So corporate treasurers are wondering, ‘Why can’t we have a standard, uniform bank account opening process?’”

The problem, Martin noted, is that the banks can’t all agree on a standard. However, they do agree that a standard should be in place. Therefore, in this upcoming session, both banks and their corporate treasurer clients may be able to come together and find out what the pain points are and how to improve the process.

Issues for treasurers

One treasurer for a major multinational corporation said that his organization spent a long time looking at implementing eBAM. He explained that smaller banks want to go it alone and not involve SWIFT, while the largest banks want to stick with SWIFT. “So we definitely saw different opinions from the banks,” he said.

When looking at how his company allocates its resources, the treasurer noted that eBAM simply isn’t a priority compared to other ones. Furthermore, implementation creates bigger questions for the organization as whole. “We have a lot of subsidiaries with a lot of bank accounts,” he said. “How many banks will be set up?”

One difficulty in trying to establish a standard is the fact that different countries have different regulatory environments, noted another treasurer. “Maybe we should look at what we can standardize amongst the banks that are happy; what can be a standard routine,” he said. “Then, when you go to, say, Malaysia, Bank Negara asks for something specific, which compels the banks to ask for it. So maybe you say, ‘Alright, for one country you have these two or three more documents, etc.’ This is one thing I’ve always found to be a stumbling block for standardization.”

A bank executive said that the first step should be establishing a multibank system in the U.S. International banking can come later, due to all of the complications. “Some countries don’t recognize electronic signatures versus paper; that’s going to take time. It’s going to be country by country, and it’s going to be a very long, hard road,” he said. “But I think if we could get a multibank system in the U.S., that would be a start,” he said.

He added that this would simplify the know-your-customer (KYC) process that has to be in place for eBAM. “We can share KYC so that instead of every bank is asking for the same information, you give it once, and that’s it for all the banks,” he said.

Martin noted that it’s nearly impossible to have the eBAM conversation without also having a KYC conversation, so this approach makes sense. “Why does a corporate have to repeat this information every time with every bank?” he asked.

So who takes the lead?

So who is going to take the lead on eBAM, SWIFT or the banks?

The bank executive said there has been pressure on SWIFT to be the third party that could potentially move eBAM forward. But the banks, SWIFT and corporates all realize how difficult it is and no one is really stepping up to the plate.

SWIFT does have a lot at stake here; the financial messaging network has its own channel for eBAM and wants corporates and banks to use it. But does SWIFT really want to handle the compliance piece of the equation? “If I’m SWIFT, I want to be a facilitator in this process, but I don’t want to be the owner of the KYC, checking the documents and making sure everyone is compliant,” said the bank executive. “Let’s be honest; there are plenty of banks that have been fined for KYC issues. That’s the hesitancy.”

Assuming SWIFT doesn’t want to be the “owner” of eBAM, who does?

Logic would tell you that it would be the banks. The problem is that they are only interested in it for their own purposes. “I want to make it as easy as possible to open accounts with my bank. I don’t necessarily want to make so easy for them to open accounts with other banks. So that’s the challenge,” the bank executive said.

 Between now and October, when the 2015 AFP Annual Conference commences, we will likely see little movement on eBAM, aside from various banks releasing their own products. But perhaps this upcoming session can at least get some of the gears turning and help all three parties—corporate treasurers, banks and SWIFT—find some common ground on where to start.

For now though, one TAG treasurer summed up the state of eBAM perfectly: “Everybody who could make it happen is saying, ‘What’s in it for me?’.”

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