The pressures on corporate treasury departments for complete visibility of their operations, accountability, and risk and fraud control continue, as do the efforts of the banks and other third-party cash and treasury management systems and service suppliers to develop the solutions required.
Connectivity
Improving connectivity has been one of the main priorities for both banks and corporate treasury departments in 2010. The banks have been installing multi-channel solutions, such as the Total Channel Solution from Tieto, as shown in Figure 1, which offers consistency of service regardless of the contact channel: mobile phone, iPad, PC or paper.
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Figure 1 - Total Multi-Channel Solution |
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Source: Tieto |
Corporate treasurers’ preference for bank-agnostic communication systems and services continues, with a 25% increase in companies connected to SWIFT in 2010; by January 2011, there were 726 registered companies on the SWIFT network, slightly more than half connected via a service bureau. The majority of SWIFT corporate users, 71%, are in Europe with 19% in the Americas and 10% in Asia Pacific. The volumes of messages are growing fast, with an increase of more than 50% in basic FIN messages and more than 150% in FileAct messages in 2010. And SWIFT connectivity is no longer the preserve of the large global MNCs, mid-sized companies (those with annual turnover of less than €1 billion), are increasing in number and already represent 40%.
But SWIFT is not alone in improving connectivity between companies and banks. All the corporate treasury management systems suppliers have improved their connectivity services and several new ERP-to-bank integration services have been launched. Sierra Atlantic’s BankON service, as shown in Figure 2, enables the fast and easy integration of banks with corporate clients’ ERP systems. Citi’s CFX ERP Integrator extracts payment details from their clients’ ERP databases.
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Figure 2 - ERP-to-bank integration |
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Source: Sierra Atlantic, Inc. |
But SWIFT connectivity can be unnecessarily expensive and restrictive. Fiona Hamilton, VP EMEA operations at Volanté Technologies, believes that for many companies a multi-pronged approach can be more effective. SWIFT is an obvious choice for payment instructions requiring indemnification guarantees, but cash management reporting, client reporting and general corporate notifications do not require this level of security. Global networks such British Telecommunications MSM, with 99%-plus reliability of connection, costs per message often many times cheaper, depending on volumes, and setup costs for connectivity to the network considerably cheaper too, can offer an advantageous alternative. And SWIFT often cannot provide connectivity to all companies party to a supply chain. Hamilton concludes, "Corporates should implement a 360-degree approach to information exchange facilitating choice in security, least-cost routing, end-point reach and quality of service. SWIFT is certainly part of the solution but corporates should leverage the competition that is out there."
Automation of bank relationship management
The implementation of the new electronic Bank Account Management (eBAM) standards is proceeding slowly. The vision, to replace paper-based bank account management processes with electronic straight-through processing systems, is clear but not easy to deliver. The problem is that, although the format of the eBAM messages for the exchange of bank documents can quite easily be agreed, it is proving far more difficult for banks to standardize their documentation. Only a few banks have as yet tested eBAM with live pilots. At the moment eBAM is only really happening within bank groups, where some of the larger banks have managed to standardize their automated account opening and account management world-wide. General, more widespread, take-up of the eBAM standards is likely to take many years yet.
By comparison, the TWIST global Bank Services Billing (BSB) standard is a real success. There are already 18 banks committed to use the BSB standard for billing and statements and several have already implemented it. A new XML 20022 version is being developed and there are plans to extend the BSB standard to enable the electronic invoicing of all bank services. There is also a plan to bring together the BSB and eBAM standards to provide a comprehensive set of bank-to-customer administration standards which, if adopted, will make the evaluation of bank charges considerably easier for corporate clients.
Corporate treasury management systems suppliers are already beginning to develop fully integrated solutions for bank relationship management using these new standards. The solutions, as shown in Figure 3, combine bank fee analysis (TWIST BSB), statement aggregation and bank account management (eBAM).
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Figure 3 - Integrating bank relationship management |
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Source: SunGard |
Business networking
There are some 600 million members on the Facebook network, more than 90 million members on the LinkedIn network and countless others on smaller networking sites, all adding up to a phenomenal amount of interest in this area of web-based technology. Although networking has always played an important part in cash and treasury management conferences and other events where companies, bankers and suppliers meet and socialize, web-based business networks will make interaction between cash and treasury management professionals so much easier. The internet is ubiquitous, available 24/7 and free. Business networks are not only beginning to transform the way cash and treasury products and standards are developed and supported, they are also offering treasury professionals a new opportunity for sharing their expertise and experiences.
Deutsche Bank’s Drive DB provides an interactive, secure online environment for collaborative product development. The bank’s corporate users and product developers share ideas for developing new bank products and services via the web-site and take votes on which they consider the best. Drive DB was launched in October 2010, pre-populated with eight ideas from Deutsche Bank’s product developers. The site has proved very popular and has over 1,000 users who have come up with an additional 19 product ideas on payment systems, notifications, single-click investigations and accounting, as well as other aspects of transaction banking proposed by employees of Deutsche Bank’s client companies across a wide range of job functionality and commercial activity. Deutsche Bank has found the interaction invaluable in improving an understanding of and relationships with its corporate customers.
