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X9 to Introduce Corporate Cash Reporting Standard

The Accredited Standards Committee X9 (Annapolis) announced plans to create a new standard for corporate cash reporting. A Cash Management Reporting working group will convene Sept. 2 that will bring together participants from the banking, corporate, vendor and government sectors to help establish a more uniform way for reporting cash positions.

Rather than starting from scratch, however, the working group will take the existing 20-year-old BAI standard for cash management reporting and revise it, Cindy Fuller, executive director at X9, told BS&T. "We want to narrow it, improve the readability and interoperability."

According to Jim Wills, senior business manager, banking initiatives at SWIFT, corporates have to deal with numerous formats when reading their transaction statements, as each of their banks tends to report this information in different ways. "Each bank reports differently," he says. "Corporate transactions are complex and diverse. The existence of a standard is critical. If it's not clearly defined, everyone will interpret it differently. This becomes difficult and expensive for corporates to deal with."

The BAI standard is issued by the Bank Administration Institute in Chicago. Fuller says the organization hadn't been maintaining it much over the last few years. Finally, BAI eventually handed over the management and copyright of the standard to X9. Now, with the involvement of SWIFT, X9 is working to make this a national American standard. "It's a big undertaking, but the industry tends to gravitate toward best practices and standards," says Fuller.

The idea is to make the verbiage more definitive so that there will be less wiggle room for interpretation. Eventually, there might be an opportunity to introduce the updated BAI standard to the ISO arena, the international standards body, notes Fuller.

"The benefit for the corporate is to have a new, fully vested BAI message standard that is aligned with today's cash management reporting practices allowing them to better manage their working capital," says Rene Schuurman, global product manager connectivity services, Citi Global Transaction Services (New York). "And for banks, this will help drive standardization and reduce custom enhancements resulting in cost savings and faster client delivery of services."

It's not just an American standard either, adds Wills. "We are working from a wonderful foundation. BAI is the most widely used U.S. standard. It's in every financial institution and corporate," he explains. "BAI is used globally as well. We want to create a standard with global applicability. The corporates are global with accounts around the world. If the banks can implement the standard consistently, there will be enormous benefit to companies in saving money and mitigating risk."

The BAI codes are mainframe applications. These will all be updated to take into account new kinds of transactions, such as SEPA (Single Euro Payment Area) credit transfers. Other transactions may be deleted. XML will also come into play. Extensible markup language is the syntax used in the ISO 20022 financial messaging standard since it provides richer detail to corporates. "This is also a server-based technology, so it will be easier to make changes going forward," says Wills. "But there will probably be technology challenges as we migrate from mainframe to server-based technology for this."

And the timing of this announcement couldn't have been better, says Fuller, given the current financial environment. "We might not look at these standards in good times," she notes. But now we want to look at every opportunity. The corporates are making us understand this is a terrific time to do this work. There will be definite payback. But it's going to be an evolution rather than a revolution."

In other words, whatever the final product is of the X9 working group, don't expect a big bang rollout. In addition to creating the standard, Wills says there will still be work around developing the technical documents and implementation guidelines.

"We'll probably have our first publication within the year, but it's not going to boil the ocean," notes Wills. "We want to do what's achievable."

Fuller says the group will most likely deliver the new standard in parts, depending on the needs of the corporates. Adds Wills, there are certain pain points the corporates consistently bring up in his meetings with them, the main one being the lack of uniformity in reporting by banks.

The working group is being co-chaired by representatives from three sectors. Along with SWIFT's Wills, there is also Citi's Schuurman, and Bill Lundeen, group manager, global banking, at Procter & Gamble.

Still, there have been efforts in the past to get corporate banking standards off the ground, but they never quite came to fruition. What will be different about the X9 initiative, says Fuller is that this standard will be continually maintained for relevance.

"[The BAI standard] is widely embedded in legacy systems and any change will occur slowly," explains Fuller. "Implementing change will take years. When looking at what's needed next, we want to try to hear the voices of all our participants."

Wills says this is a significant development, given how ingrained BAI. "There are only a few financial services standards as deeply embedded as this one. One is the check standard and the other is lockbox. The BAI cash reporting standard is embedded at every financial institution and corporate in the U.S. It represents a significant amount of money corporates spend with their banks. It's all about information. Corporate live based on the quality of information. It's critical to the decisions they make."

Adds Citi's Schuurman, the true value of this initiative is to apply long-awaited enhancements to the BAI message format. "Corporates and banks around the world use BAI statements for a variety of purposes and many custom enhancements have been made," he explains. "There are, for example, no standard codes for activities originating from SEPA payments or UK Faster Payments. With this industrywide initiative, we will bring focus back on the core principles of the message, standardize and harmonize transaction codes, and establish a roadmap for continuous maintenance governed by X9."

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