2010 AFP Annual Conference: Blog

Publication: gtnews.com

Post 1: Multichannel Bank Account Management (9 November 2010)
Electronic bank account management (eBAM) was in the spotlight at a session during the first day of the AFP Annual Conference 2010, with a panel discussion providing corporate, bank, and standards association perspectives.

One of the most compelling sessions on the first day of the AFP Annual Conference 2010 in San Antonio looked at the topic of electronic bank account management (eBAM). A buzzword of the past 18 months, eBAM can be a confusing topic due to the large number of players in the market and the fact that the concept itself is evolving. This session provided a corporate perspective from Barbara Quiroga, director, cash operations, lead, Delta Airlines; a bank view courtesy of Hilary Ward, certified cash manager (CCM) global product manager, global transaction services, Citi; and the thoughts of an international standards organisation thanks to Stacy Rosenthal, head of corporate and payments strategy, SWIFT. 

The session set out to demonstrate how the use of eBAM can help corporates be more efficient in their global banking relationships, particularly in areas where paper and manually intensive processes exist. 

Corporate Approach 

Quiroga began the session by illustrating the challenge that Delta faces in managing over 100 banks, operating in 80 countries and dealing with around 20 legal entities. Managing this number of relationships can be time consuming and challenging, and so the prospect of simplifying processes through eBAM was appealing to the Delta, particularly as their treasury structure is heavily centralised. To start the process, Quiroga explained the eight-point checklist that Delta drew up, listing what the company wanted out of any eBAM process that it entered into. These were: 

1. To eliminate paper. 
2. Control bank accounts in a centralised way. 
3. Track the progress of bank account requests internally and across the company’s banks. 
4. Search for and request changes to a single signatory across all applicable bank accounts. 
5. Use search capabilities to generate reports. 
6. Update the corporate address, contact data, legal structure and any other data and/or information associated with a bank account. 
7. Create a virtual signature card for each signatory that is legally binding and regulatory compliant. 
8. Provide authoritative reporting for corporate compliance needs. 

Quiroga reported that Delta had started implementing their eBAM programme in February of this year, and that it is ahead of schedule. The Delta case study is a great example of how corporates should approach eBAM - by having a clear idea of what they want to achieve with the implementation of eBAM and using these points as a way of measuring progress and the success of an implementation. However, it is worth noting that an eBAM project will only truly be successful - and indeed worthwhile - if the corporate implementing it already has a firm grip on their existing bank account management programme. This was a point emphasised by Citi’s Ward in her presentation. 

Bank Perspective 

Ward described how traditional bank account management was limited by issues such as: 

• A reliance on paper. 
• Manual processes. 
• Long cycle times. 
• Unreconciled records. 
• Embedded risk, such as numerous hand-offs and resolutions subject to interpretation. 
• Country- and bank-specific processes. 

The positive news surrounding eBAM is that the electronic processes involved have the potential to yield a number of benefits to bank account management, including visibility and control, security - with identity automatically built in to processes - and efficiency. However, Ward continued, “if you don’t know where the ‘BAM’ is, how are you going to get to the ‘e’?” In other words, eBAM isn’t going to fix a mismanaged bank account management programme. 

Standards are Needed 

SWIFT’s Rosenthal also agreed with the point that corporates need a solid foundation from their existing bank account management structure before embarking on an eBAM project. But looking at wider trends in eBAM, she argued that it is necessary for all stakeholders in the eBAM project to collaborate and define ‘common’ market practices. Rosenthal pointed out that standards in this area are evolving and will continue to evolve based on market adoption and feedback. 

The need for common standards is seen in the amount of banks and vendors offering solutions that are being marketed as eBAM. This was picked up by a delegate attending the session, who asked the panel who the ‘real’ vendors for eBAM are. 

In response, Delta’s Quiroga suggested that it depends on the process that the individual company operates internally, and that those tasked with selecting eBAM partners should find the best fit for their company. She also pointed out that there are lots of things that corporates can be doing while waiting for their bank to offer the desired level of eBAM support - the primary of which would be focusing on their current bank account management practice. 

Answering the same question, Rosenthal advised the delegates present to speak with the banks and vendors that they currently work with today, in order to help develop and shape the eBAM offerings of the future. There are around 12-15 vendors in the eBAM landscape at various stages of development, she advised. Looking to the future, it will be interesting to see how this market plays out, in terms of competitors falling away or partnering up.

Post 2: Closing the Gap Between Bank Cash Management Offerings and Corporate Needs (10 November 2010)
A session on the second day of the AFP Annual Conference 2010 examined how to close the gap between corporate expectations and bank solutions in the area of cash management. 

A theme of the AFP Annual Conference 2010 that came up in a session yesterday was the idea that corporates and banks need to work much closer together when developing appropriate treasury offerings and tools. This theme was reiterated in a session featuring representatives from Citi and AT&T, as well as Aite Group who announced findings from a recent corporate survey. 

According to the Aite Group survey, over 50% of the large corporates they polled had business with more than 20 banks. So it would be fair to say that corporate banking relationships are complex, overlapping and also fluid. Within these myriad relations, corporates are hungry for information on issues such as cash and liquidity visibility, risk factors and working capital automation. For the latter topic, many treasurers I’ve spoken to at the conference are particularly keen on learning how to move to straight-through processing (STP) and to eliminate both paper and silos from their organisational processes. 

Returning to the Aite Group research, but this time on the financial institution side, the survey found that one-third of banks described the credit crisis as being a ‘near disaster’ for them. However, as Christine Barry, research director at Aite Group, explained, those banks that had survived the credit crisis in better shape are now finding opportunities in the market through a variety of value-added tools they can offer their corporate clients. These include areas such as fraud prevention tools, more advanced liquidity and cash management tools, account receivables and payables management - an area where corporates are keen for more automation. All of these areas are being driven by new technology, and Barry made the point that technology is critical to future bank success. Technology helps to measure risk, promote accessible data and allow financial institutions to provide strong product offerings. 

Another interesting area of the research looked at the customer service experience corporates had when dealing with their banks. Asked whether they had ever switched banks because of poor customer service, 76% of corporates said they would, which backs up the idea of corporate banking relationships being fluid, as mentioned earlier. Numbers like these mean that banks are placing an ever-increasing emphasis on the client experience, and new technology is allowing banks to respond in, for example, some of the following ways: 

• Customer-driven dashboards. 
• Multibank reporting. 
• Strategic tools for better liquidity management. 
• More granular entitlements. 
• Real-time information. 

And corporates are ready and willing to invest in these new products if they are a good fit for their company. Sherri Bazan, corporate manager, domestic cash management, AT&T, explained that they have been developing a number of different treasury initiatives in the quest for greater automation and efficiencies. Some of the AT&T projects include: 

• Simple IBAN redirection solution. 
• Move from cheque to electronic payments. 
• Counterparty risk project. 
• Future improvements - electronic bank account management (eBAM) and automated clearing house (ACH). 

The overall feeling from this panel, and from the mood of the conference overall, is that corporates are keen to embrace technologies and systems that create financial and time-management efficiencies, but they have to be solutions that are created with the corporate in mind. Corporates are looking for end-to-end visibility and reachability in their treasury management processes, and solutions providers that understand how they can fit into this world will surely be successful in the years to come. However, that understanding can only come through detailed dialogue with their corporate clients.