eBAMeBAM

The Advantage of Automating Bank AccountThe Advantage of Automating Bank AccountManagement through SWIFTManagement through SWIFTg gg g

SCAFP Webinar

August 9, 2011

Agenda

• Bank Account Management BasicsBank Account Management Basics

• Benefits of Using eBAM

• Using SWIFT for eBAM TransportUsing SWIFT for eBAM Transport

• Industry Adoption of eBAM

• Resources• Resources

• Q&A

eBAMeBAM

The Advantage of Automating Bank AccountThe Advantage of Automating Bank AccountManagement through SWIFTManagement through SWIFTg gg g

Bank Account Management BasicsPresented by:  Ric Thompson, Strategic Treasurer

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About Strategic Treasurer

Technology –C h / Ri k M

Treasury Structure –C h M / B kiCash / Risk Management Cash Management / Banking

Financial Risk Management /FAS133 Assistance

Working CapitalOptimization

Experience Market Awareness Project Assistance

They’ve “sat in your seat” / worked on similar projects and know what to 

anticipate.

They continually survey the market of technology vendors and financial 

service providers to narrow the list of qualified candidates for their clients’ 

specific needs.

This highly dedicated team of specialists provides additional, valuable resources.

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Bank Account Management Basics

• Account Management is not simply keeping a list of accounts

• Why?– Each account is a point of exposurep p

– Each account is a point of cost

• What?– Policy, Controls, Structure, Automation

• Bad examples– Parmalat ($4 BB)

– Satyam ($1 BB)

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For more about these examples please see:The Strategic Treasurer: A Partnership For Corporate Growth. Craig A. Jeffery, John Wiley & Sons, Inc., Hoboken, ©2009.

Problems with ‘Simple’ Account Management

• Process to open/close accounts where the customer is KNOWN is bcumbersome 

• Large number of banks/accounts – Legal and tax driversL b f ti iti thl b i• Large number of activities on monthly basis– Open/close/change activities – Different requirements for each bank /within banks– Different requirements for each countryDifferent requirements for each country

• Unknown – uncontrolled accounts• Wrong or no products/controls on accounts• Signers (wrong gone deceased)Signers (wrong, gone, deceased)• Limits and policy compliance• Completion  and closing the loop  

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Scenario

Policy?Policy?HR reports?Feedback?

Policy??

Authority to remove?

HR reports?Feedback?Limits?

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yWho else needs to know?

Approvals?

Formal Framework and Policy

An organization with more than 100 accts needs a formal framework policy and automationframework, policy and automation.

• Structure – Do you need all of those accounts?

• Controls ‐ examplesControls  examples• Internal Controls

– Managing signers, Managing accounts, Access, Approval limits, Security

• Account level and transaction level controls• Account level and transaction level controls– ACH Debit Blocks/Filters, UPIC, Positive Pay, Etc…

• Management Process • Workflow

• Limiting exposure

• Authorities

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• Audit trails

Framework and Controls

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Rationalize Account Structure

Creating a simplified bank structure by ruining your ability to control or manage your accounting and destroying your tax

TREASURYTREASURY CONTROLSCONTROLS((((

((((

control or manage your accounting and destroying your tax structure is NOT the solution

TREASURYTREASURY CONTROLSCONTROLS

((((

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Bank Account Management Landscape

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E‐BAM Automating the ‘Conversation’

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eBAM

• Electronic transmission of Bank Account Management messagesg

• 15 standard messages in XML format

• Designed to fit common business processesDesigned to fit common business processes

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Corporate Benefits of eBAM

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Status of eBAM/SWIFT eBAM

• Bank Adoption p• Secure Digital ID ‐

– Works withSWIFT S Si t K (3S K )• SWIFT Secure Signature Key (3S Key)

• IDENTRUST

– Creates the legal framework that is essential

• Know Your Customer– Existing customers

• Known individuals

• Additional requirements – Banks have different document requirements

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Conclusion

• Bank Account Management is more than a list ofBank Account Management is more than a list of accounts (Policy, Controls, Structure, Automation)

• 8 banks or 100 accounts – automation (don’t build)( )– “I know excel/access/Sql…”

• eBAM messages are not a panacea for lack of g pcontrol or bad process 

• eBAM  using the new standard messages is an exciting new and useful tool that should move the industry toward end to end automation

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eBAMeBAM

The Advantage of Automating Bank AccountThe Advantage of Automating Bank AccountManagement through SWIFTManagement through SWIFTg gg g

Using SWIFT for eBAM TransportPresented by:  Tom Dadko, BankServ

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Key Components

• The eBAM solution packages the following p g gcomponents into a single product:– A set of 15 ISO 20022 XML messages

d d h h d ll d d l– A standard technique on how to digitally sign at individual levels

• Via the XML message• Or, related attachments (PDFs)

• A messaging service:  In our case SWIFT FileAct– In our case SWIFT FileAct

– However, XML messages can be sent to the bank through other systems as well.

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eBAM Transport Architecture

Both the corporate and banks need to have the required infrastructure to enable eBAMinfrastructure to enable eBAM

Corporation

CORPORATE BANKS

Treasury Management 

System

Bank Account SWIFTSWIFTFileActFileAct

PILOT

Management Tool

FileActFileAct

eBAM Module

OTH

Corporates should have a Bank Account Management Tool that  Banks need the back‐end

ERS

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gis eBAM enabled

Banks need the back end connections to enable eBAM

eBAM Architecture: Another Perspective

CORPORATE BANKS

Corporation

Treasury Management 

System

T

Customer Ops

Docs

SWIFTNetSWIFTNetFileActFileAct

XML + DocsXML + Docs

y

Bank Account Management 

Tool

XML

Treasuryg

Digitally Signed

eBAM Module

P i h i dPaper Docs

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Customer OpsPaper version when requiredDocsDocs

Business Scenarios:Bank Account Opening

CORPORATE BANKS

Corporation

CORPORATE

1. Account Opening Request

2. Account request Acknowledgement

BANKS

Treasury Management 

System

Bank Account SWIFTSWIFT

2. Account request Acknowledgement

3. Account Opening Additional Info. Request

4. Account Opening Amendment RequestManagement 

Tool

eBAM Module

5. Account Request Acknowledgement

6. Account Report

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eBAM Industry Adoption

• The following banks are listed as operationally ready on the SWIFT Sit *Site: *– Bank of New York Mellon– HSBC– BNP Paribas– BNP Paribas

• However, we know that other banks are also making plans for eBAM…for example:– Bank of America– JPMorgan Chase– Citi

• Technology Readiness for the Digital Signature and IDs• Integration with Bank Account Management systems• Exceptions:

– eBAM can only apply to existing customer‐to‐bank relationships (KYC)

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* Source: http://www.swift.com/corporates/banks_certification.htm

Digital Signature Requirements

• Managing bank accounts involves an exchange ofManaging bank accounts involves an exchange of information between authorized individuals and the bank.

• This information is known as bank mandates, which requires:– Name

– Function

l h h h d d l h d– Financial Limits which the individual is authorized to transact

– A signature for the individual

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A signature for the individual

Digital Signatures/IDs ‐ Current

• Bank Mandates are currently captured on paper viaBank Mandates are currently captured on paper via a “signature card”

• However, with eBAM the signature is no longer needed

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needed

Signature Options – Now

• Transport signatures of authorized individualsTransport signatures of authorized individuals(e.g. CFO, Treasurer, GL Accountant) 

• Digitally sign the XML message containing the g y g g ginformation on authorized individuals. – This signature will replace today’s wet signature of the main mandatory. 

– This signature is at the individual vs. the corporate level

Si tt h t t th XML t i i• Sign an attachment to the XML message containing the non‐standardized information and paper documents

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documents

Digital Signature Technology Options

• Technology to be used: Digital IDTechnology to be used:  Digital ID 

• Vendors:  3SKey (SWIFT) or IdenTrust

• Key Features:Key Features:– An ID verifies both seen/signed and authorizing person

– Private key, held by the individual in the corporate, signs y, y p , gthe message

– Public key authenticates the signature for the authorized i di id lindividual

– Eventually, one key will be required for all banks• Vs. multiple tokens currently required by each bank now

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Vs. multiple tokens currently required by each bank now

eBAM Next Steps

e

In addition, they are working on a Central Utility Pilot• Central Utility validates XML instructions, including bank andCentral Utility validates XML instructions, including bank and 

country‐specific implementations• Banks offer a single “source of truth” for bank/country 

requirements to vendors and customersq• Corporates offer an "administrators database", with the legal 

representatives of an organization• A GUI allows corporates to manually initiate EBAMA GUI allows corporates to manually initiate EBAM 

transactions• Access through SWIFTNet and/or internet• Registration and access control is 3SKey based

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• Registration and access control is 3SKey‐based

eBAM Resources

• SWIFT’s eBAM Solution Overview:http://www swift com/corporates/resources/Offering/EBAM SolutionDescriptiohttp://www.swift.com/corporates/resources/Offering/EBAM_SolutionDescription_Jan2010.pdf

• SWIFT’s eBAM Fact Sheet:// / / / /http://www.swift.com/corporates/resources/Offering/SWIFT_EBAM.pdf

• SWIFT’s eBAM and Digital Signature guide:http://www.swift.com/corporates/resources/Getting Started/MIG ISO20022/Ehttp://www.swift.com/corporates/resources/Getting_Started/MIG_ISO20022/EBAM_Signature_Specifications.pdf

• SWIFT ponders eBAM utility move:http://www finextra com/news/fullstory aspx?newsitemid=21941http://www.finextra.com/news/fullstory.aspx?newsitemid=21941

• BNY Melon implementing eBAM for UTC (a BankServ client):http://www.swift.com/sibos2009/news/sas_bny_mellon.page

Q&A

Please feel free to ask questions

THANK YOUTHANK YOU