Consumers expect to be able to open banks accounts online, but corporations have just started to do the same with business accounts using an automated system that captured the gold for Wall Street Systems (WSS) and BNY Mellon.
In fact, several other organizations were involved in the award-winning pilot of the electronic bank account management (eBAM) system, such as the SWIFT network, which transmitted the required messages, and three large companies including Swiss Re.
WSS already had an application to automate bank-account maintenance, but its use was limited until the vendor asked SWIFT to provide connectivity between BNY Mellon and its corporate customers and create a standard to transmit eBAM messages. Companies can have hundreds of bank accounts, often split among several banks. But until eBAM, opening accounts and making other changes required wet signatures on multiple hard-copy documents, which then were tucked away in file cabinets.
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Still, there wasn't much demand for the back-office solution. Glen Solimine, head of eBAM at WSS, notes the challenge he faced raising capital as CEO of Speranza Systems, which developed the eBAM application. "Sophisticated investors used to the power of online banking for their personal use could not imagine that this was still a problem for corporations," Solimine says.
That changed when the 2008 financial crisis made automating bank-account management a top concern. WSS acquired Speranza in 2010.
"It's become an issue about flexibility and control," Solimine says. "Number one, knowing where all your accounts are and, if the financial institution starts getting into trouble, how quickly can you move your accounts out of that business and into another one."
The pilot's goal was to conduct a thorough test that took into account every imaginable message and scenario and provided a framework for banks to seamlessly implement eBAM. Fifteen messages were tested under 100 scenarios. The test analyzed and identified key parameters in three areas: internal controls, the actual transmission of messages and how effectively the messages conveyed the necessary information.
Solimine says an array of global banks, including J.P. Morgan Chase, Citi and HSBC, are at some stage of implementing eBAM. He expects regional and community banks will eventually adopt the solution—a no-brainer considering the reduction in costs and errors that can be achieved by switching from paper to an automated system. Electronic documents are easier to audit than paper stuffed in filing cabinets. And when a corporate client's officer with signing authority on an account leaves the company, electronic documents are much easier to modify than paper forms.
"Banks get a huge efficiency pump out of this," Solimine says.
That's also true for companies, whose executives may have signing authority for hundreds of bank accounts. Solimine notes the transparency of eBAM's electronic records, which lets companies see quickly which accounts a departing executive has signing authority on, so they can notify the banks to make appropriate changes.
Swiss Re, which has thousands of accounts at dozens of banks globally, was interested in the eBAM solution early on and approached its banks about the initiative. One of them, BNY Mellon, had been seeking to educate corporate customers about eBAM and jumped at the opportunity to participate in the pilot.
Initially Swiss Re was assigned to test a portion of the messages involved in the process but it ended up testing all of them. Swiss Re is headquartered in Zurich, with operations and banks all over the world, and Solimine says its involvement in the pilot demonstrates the "real world" capabilities of eBAM.
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