Multinational corporations typically operate hundreds, and in some cases thousands, of bank accounts around the world. The administration of each - opening, amending and closing, maintaining up-to-date mandate and signatory information, and ensuring that account operation takes place securely according to company policy - is onerous. Typically, all or much of the processing has been performed manually, and accordingly is inefficient, error prone and expensive.

It can in fact take months to open and close a bank account, with up to a full working day's effort needed to complete some processes.  Added to this, there may be continued maintenance requirements for active accounts. Bank account administration is, therefore, clearly an area that would benefit from effective automation. 

Corporate treasuries have sought more efficient bank account management through stand alone technology solutions, and more recently through solutions integrated within their treasury management system. Such solutions provide a central repository to hold up-to-date bank account information, and enable workflow control to be exercised over a sensitive administrative process. They offer many of the components needed to solve a resource intensive business issue. However, communication with banks has been the least efficient component of the work flow, having been achieved by e-mail, fax or physical document transfer. 

The missing element, an automated linkage to the banks to close this control and efficiency gap, is offered by eBAM - electronic bank account management. eBAM was pioneered in 2007 by a working group of corporate treasurers. The eBAM working group is now in the process of ratifying the standard, and publication is imminent. eBAM adoption follows on naturally from the increasing corporate adoption of Swift. Significantly, IT2 Treasury Solutions' survey of 120 treasurers in Q4 2009 revealed that 63% of respondents thought that eBAM would be an area of importance for their organisation over the next 18 months. 

Via eBAM, the treasury management system is integrated with bank communications, so that treasurers can use streamlined STP workflows, with bank account administration taking place in the same robust, secure and controlled STP environment as is standard for payment and deal settlement management. eBAM - and SWIFT - are of no practical use to a treasury without a TMS to create the required messages and to control the related workflows. 

 ‘Visibility and control are the keys to the new demands for bank account management that are now being imposed on central corporate treasuries,' states Adrian Rodgers, director of ARC Solutions. ‘The only way to achieve an acceptable level of visibility and control is to automate the process, with for example Swift providing robust and secure legitimacy for the eBAM platform that links treasury management systems with banks' account management systems.' 

Some of the detailed business benefits of eBAM adoption depend on the dictates of specific areas of treasury policy. One noticeable recent development is a new requirement in some corporates for treasury to have a mandatory authorisation role in the opening and maintenance of all  bank accounts in the organisation.  This change reflects treasury's enhanced role in overseeing and managing the corporations' financial risk.

Another benefit of a robust bank account administration system is that it renders treasury audits much more straightforward - and therefore less costly and time consuming. In an organisation in which eBAM is fully integrated into the corporate treasury technology, it is straightforward for auditors to review the workflows and documentation such as account mandates and authorised signatories, and  focus on the key controls such as segregation of duties enforcement, authorisation steps and error repair processes.  eBAM clearly offers a range of attractive benefits to corporate treasuries; but what is the advantage to banks? The answer will lie in the competitive advantages that banks which support eBAM will enjoy, through the provision of a superior facility to their clients. It remains to be seen how aggressively European and US corporates will push their banks into eBAM adoption. On the evidence available it seems likely that this will occur over the next year or so, as an inevitable element of the trend towards streamlined, transparent and powerfully controlled corporate treasury operations. The challenge ahead for the eBAM concept is that enough banks will appreciate the real benefits for them, and will become enthusiastic adopters of eBAM.