Electronic bank account management (eBAM), an automated approach to the opening, closing and management of bank accounts seems simple, right? So simple in fact, that when the idea was first introduced a few years ago, corporates were just clamoring for the technology. But, was it a pipe dream? Or just the wrong timing? Why didn’t it gain the traction first expected? And why is there all the hype again?
While the promises of eBAM – greater efficiency and visibility into bank accounts, risk mitigation and the removal of manual, paper-based bank account management processes – were attractive, a number of obstacles stood in the way.
About two years ago, SWIFT piloted the eBAM initiative with a select group of banks, solution providers and corporations. Although the pilot illustrated the power of an eBAM solution, the reality soon sunk in. Changing a paper-based process that had been in place since the advent of commercial banking would take time (even if it was addressing a critical pain point for corporations). Standards and common terminology needed vetting and global considerations needed to be contemplated. Compliance and audit requirements also needed defining.
Suffice it to say, the market just wasn’t ready for eBAM. As interest remained high, the hype subsided as banks and solution providers re-tooled their offering. eBAM never went silent, but most organizations accepted the fact that it was far from ready. And frankly, most corporations didn’t want to be the first to test a product in development.
I had the pleasure of attending the AFP Conference last week in Boston, and I can say that eBAM is once again a hot topic. In fact, it’s probably the “next big thing” in treasury management. But why, this latest surge in interest? For one thing, banks and solution providers have been advertising successes in the market, and confidence is growing. Test messages are successfully being exchanged between banks and vendors; banks are beginning to announce their readiness (albeit in select regions and with select branches); and legal barriers are gradually diminishing.
This is all a positive step forward, but some challenges still remain. Legal barriers among banks must fall even further to allow for standardization of bank account management processes across jurisdictions. Organizational challenges such as migrating from a paper intensive bank account management world that relies on disparate technology to a fully automated environment
driven by advanced messaging will take time and effort. Additionally, a single approach to processes and formats must be developed and implemented. The eBAM community must enforce eBAM as a standard, and not a set of standards or individual customizations. And lastly, additional success stories will be necessary.
eBAM continues to have tremendous potential, and it will someday fundamentally change the way in which corporate treasuries manage and report on their bank accounts. However, several barriers remain between small scale implementations and mainstream adoption. The hype may subside again, but rest assured that eBAM is here to stay.
VP, Treasury Solutions