eBAM: Towards a Bigger Picture
What would you do if you called a cable company asking to subscribe to its services for the very first time, and you were put on hold for 10 minutes because there weren’t any sales representatives available? The answer is obvious… none of us has the time or the patience to wait, especially when the market is flooded with other similar service providers. Today, competition is fierce.
More specifically, many of us have bank accounts with more than one bank, yet what happens if we are not happy with the client service we get from bank ‘X’? Would we cancel our account? Probably not. Would we do more business with bank ‘Y’ that provides us with a better service? Almost certainly yes.
It stands to reason that the scenario would not be any different for corporates looking to form new relationships with banks.
Typically, a large international commercial organisation will work with, perhaps, 20 or more banks across multiple geographies, each with its own way of doing things with regard to all aspects of cash transaction management. And the result has been that corporates have had to manage each of these different sets of processes separately, at significant cost to the efficient running of its business. At the same time, the essentially manual-based processes involved have also given rise to concerns over the security of such transactions.
More broadly, what has become clear to both banks and their corporate customers is that the issue of service quality needs to be addressed. Furthermore, a large part of this has to be driven by standardising banking processes so that corporates can deal with each of their banking partners on an identical basis, in order to save time, money, and improve visibility and control of their cash.
This is easy to say, but much harder for the banks to achieve of course. One early and important move in establishing a common approach was the emergence of electronic bank account management (eBAM) two years ago. eBAM is a joint initiative of corporates and banks and launched by SWIFT.
The objective of eBAM is to facilitate the onboarding and account management process between a bank and its corporate customers by providing standard messages for the opening, maintenance and closing of bank accounts, and a standard way of communicating these messages.
Today, larger corporate customers have an increasingly important say in the management and direction of their banking relationships. Yet what is also clear is that, for the banks, the basis for much customer service improvement is underpinned by process.
And, as the eBAM pilot has already shown, properly implemented business process management (BPM) can deliver both greater external service quality and internal operational efficiencies – thought by many to be fundamentally incompatible goals.
The impact of the credit crisis continues to be felt by corporates and financial institutions across the world. All companies, regardless of their size or location, are taking a ‘back to basics’ approach when it comes to cash management, with a heavy focus on visibility, security and efficiency.
One key area for corporates has been to pay closer attention to cutting the lengthy implementation cycles around bank account management (BAM) and ensuring that their bank relationships are both robust and secure in the long term.
BAM’s current process is a country-specific, manual, paper-based activity, incurring high costs and inefficiencies for both corporates and banks. In response, eBAM aims to standardise the process, with the goal of enabling straight-through processing (STP), thereby reducing commercial risk, ensuring greater consistency of service delivery and increasing the speed of bank account opening.
The eBAM Charter reflects the high priority put on this development and sought to encourage those corporates already underway with parallel activities to pool their resources and contribute to a single industry-wide standard.
As a result, a small group of banks and corporates was established to drive a pilot implementation. The goal was to build momentum by adopting a practical, pragmatic approach that would show tangible results rapidly and form the basis of a global roll out, involving all banks and their customers.
Put simply, every time a corporate wishes to open or close a bank account or make a change, they can just put it in the form of an XML-based SWIFT message, thanks to eBAM. This is then automatically sent to all partner banks for appropriate and immediate action.
This contrasts sharply with the situation that otherwise exists, in which a complex and differing number of steps have to be undertaken with each banking partner on an individual basis to make any change within their system – even in the case of a simple address change – a process which is both cumbersome and frustrating for the client.
Following the successful completion of the eBAM pilot in August 2009, the International Standards Organisation (ISO) process is currently underway and banks are putting plans in place for full implementation in 2010.
The amount of work to make this happen, especially from the banks’ perspective, should not be underestimated. However, the rewards in terms of competitiveness, enhanced service quality and customer retention will, we believe, more than justify the effort.
The first touch points between any supplier and customer are critical to the establishment of a longer-term mutually beneficial relationship. In an environment in which customers have greater choice and are less tolerant of service failings, the ability of a bank to reduce on-boarding from several weeks to a matter of days or hours will gain significant advantage.
At the same time, though, there is a greater recognition by banks as to what they must do to improve service. Latest research indicates that there is still a gap in perception between banks and corporates as to the current level of performance and how far banks still have to go in meeting customer demands.
It is also important to recognise that, when automating previously manual, paper-based processes, it is essential to challenge the underlying process, rather than simply – as in the case of eBAM – replacing paper with electronic messaging. Without this, all that happens is that the business runs the risk of continuing to achieve the wrong result, only quicker.
So how does BPM play a central role in enabling banks to give corporates what they need – and improve operational efficiencies – at the same time?
A rules-based BPM solution for account opening, for example, optimises and automates end-to-end processes from the point of sale to the back office, to increase revenues, improve customer satisfaction and reduce costs.
Critically, an integrated process and rules environment provides workflow automation, rules-driven decision-making, intent-driven user interfaces and the ability to integrate and orchestrate back-end and third party systems – so replacing the existing multiple disparate systems with a single integrated platform across the enterprise.
At the same time, this offers an inherently flexible and agile approach, which enables the business user to implement and manage change, as well as respond rapidly to evolving client needs. With initiatives such as eBAM in the forefront it seems that, at last, help is on its way.