J.P. Morgan and SWIFT have developed a new electronic format for corporate clients to send messages to their banks around opening, closing and modifying accounts. J.P. Morgan has already begun using the format, ISO 20022 eBAM (which stands for Electronic Bank Account Management).
"eBAM solves a very big problem for corporate clients, particularly large corporate clients who have many bank accounts around the world," says Louise Gorman, managing director, product executive, treasury services at J.P. Morgan, who spoke to Bank Systems & Technology at the NACHA show this morning. "They have manual processes today to manage those accounts. With the Patriot Act and increased audit requirements, they're being asked to provide a list of their accounts around the world, along with the names of the signers and information about the products they're using. When you have 2,000 accounts, that's lot of work. Historically clients have used spreadsheets, databases, and lists, but given audit and security concerns today, that's increasingly inadequate." Gorman notes that these clients' treasury departments are being asked to do more with less every year, and they often have a full-time person dedicated to these chores.
While theoretically corporate clients could simply call their bank to close an account, Gorman notes that the identity of the caller has to be validated and that that can soak up a lot of a client's time. In the eBAM message standard, messages have to be digitally signed.
Banks have typically been accepting instructions to open or close accounts or change account attributes by paper and fax. "We want to increase control and security, as well as our efficiency in responding to the client's reqquest," Gorman says.
The eBAM standard, Gorman says, will help automate these processes. "It lets us talk to each other in a language we all understand."
Gorman says she hopes other banks will start using eBAM-style messages with their corporate clients. "We want to make sure we work together as a group," she says. "If other banks, including the smallest of banks, don't adopt this standard, we won't solve our clients' problem." These messages don't have to go through SWIFT, either, she notes. They can pass through proprietary pipes banks have set up with their large clients.
Corporate clients can use software to send eBAM messages if they wish, Gorman says. She points to Wall Street Systems' acquisition of Speranza Systems yesterday as evidence of the growing importance of this type of software. Speranza makes a web-based platform for financial and corporate organizations to help them set up efficient processes around administering bank relationship and signatory/authorization management. "Electronic bank account management is a change agent, and Speranza is one of the options clients have been installing," she says.
Digital signatures are part of another initiative J.P. Morgan is working with SWIFT on called digital interoperability, Gorman says. Today, most banks use secure tokens to help secure electronic dialogues with their clients. Large clients have 15 or 20 of such keyfob tokens, and some paste the name of the bank as well as the user ID and password on back of each one, a purpose-defeating but necessary shortcut given the number of tokens they're carying. Bankers have already gotten together in Brussels (through SWIFT) to solve this problem. Gorman expects an announcement to come out later this year.