Computers
Corporates are not new to making electronic payments. In the early 1980s, cash management
underwent transformation as the fax and telephone were replaced as the key means for
companies to make payments to one another. It took just two years from the introduction of
electronic payment systems until they became standard.
And yet, while consumers have been able to set up, manage and close retail bank accounts
electronically for years, corporates have remained unable to do so themselves. It has been
talked about at workshops and conferences, but little progress had been made until recently.
In 2010, the corporate equivalent of internet banking – electronic bank account management,
or eBAM – finally appears to be taking off. The opportunity to ‘dematerialise and automate’
this bank account management process was grasped with both hands by corporates when
SWIFT announced the release of its eBAM messaging standard earlier in the year.
Banks will have to work hard to strive to ensure their back office systems can process eBAM
messages, but they too, are now taking a real interest in doing so. So now that eBAM is on the
cusp of becoming an industry standard, it raises the question: why is eBAM taking off now?
Electronic bank account management was already under consideration prior to the 2008
financial crisis, but that event overtook early plans to create a standard and it was inevitably
left on the back burner. Now, however, that financial crisis has become one of the key drivers
of eBAM adoption, as it fundamentally changed the way banks and corporates assess financial
risk.
Pre-crisis, the automation of services between unrelated enterprises was rightly seen as
innovative. Although the potential benefits of eBAM in terms of cost reduction and efficiency
were already apparent, it was still considered more risky than opening, maintaining and
closing bank accounts using the traditional methods – paper and wet signatures.
The financial crisis reset this attitude. The natural sense that the status quo is the safer, less risky
option was dealt a blow. It forced companies and banks to reconsider how they do business
together. In this environment, the corporate treasury has been given a new lease of life, tasked
with examining processes and protocols anew, with a view to better understanding liquidity
and exposure to risk. Corporate Treasurers and banks have both become more open to new
ways of working than they were before the crisis, and the transformative potential of eBAM and the need to embrace the future of the treasury management system.
