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Best Practices in Bank Account Management
| 29-09-2016 | TIS (Treasury Intelligence Solutions) | sponsored content |
This article aims to describe the current “eBAM Market Best Practice” that can be achieved by using the TIS (Treasury Intelligence Solutions GmbH) cloud-based electronic Bank Account Management (eBAM) platform.
Corporates and the eBAM project
Many corporates are in need of a comprehensive tool for managing banks and bank account related information and processes. Typically, the main requirements are to have visibility and control over the bank accounts maintained globally and the ability to effectively store bank account related information and documentation, as well as centrally managing the processes on the lifecycle of this information. Furthermore, a typical requirement is for a system that corporates can use for electronic opening, closing and maintenance of bank accounts, including generation of audit reports. In the chapters to follow, TIS provides detailed information about the eBAM Market Best Practice and how the TIS Bank Account Management SaaS (Software as a Service) can fully cover the requirements as well as provide further added-value services to our customers.
The Market
Corporations worldwide face tremendous challenges to cope with an ever increasing volume of information. As more and more internal governance and compliance regulations receive high-level attention, it is essential to have this information at hand, quickly and at the push of a button. Managing bank accounts is one of the main drivers that encourage CFO and Treasurers alike to minimise risks and adopt automated processes. In addition, the accounting teams that manage this data on a daily basis are often under pressure to optimise their own processes as well.
Effective and structured Bank Account Management is understood to be one of the main steps Treasury Departments should take to fulfill governance and compliance regulations. In addition, by implementing a central bank account repository, both data and processes can be optimised and the performance can be measured and monitored. We are also seeing an increasing demand for banks to make use of an electronic exchange of Bank Account Management (eBAM) information.
eBAM is based on the exchange of 15 standardised ISO 20022 XML messages, developed by SWIFT, which mainly cover the processes of opening, closing and changing bank accounts and mandates.
The key advantages and acknowledged benefits in adopting an eBAM solution are:
The Challenge
So what is the main problem? What are the biggest challenges corporates are facing? The most painful issues can be summarised as follows:
Together with the financial crisis of the recent years, this has encouraged many organisations to steer towards a professional – and ideally electronic – Bank Account Management strategy. (e)BAM adoption often accompanies the fundamental new approach corporates must adopt in assessing financial risk today
The “Status Quo” graphic in Figure 1 (page 4) represents these challenges.
Bam Evolution
The evolution of a Bank Account Management can be divided into three main phases:
PHASE 1 (Status Quo for majority of corporates):
Manual, paper-based and non-transparent processes for managing bank accounts and mandates
PHASE 2 (Bank Account Management):
Implementation of a web based “Software as a Service” (SaaS) BAM solution to automate and streamline internal processes and make them transparent. This includes a centralised document management internally and externally, towards the banks
PHASE 3 (eBAM):
Evolving towards an extensive eBAM solution where electronic and automated workflows also used for the external communication with banks.
The manual and paper-based workflows used to communicate with the partner banks regarding bank accounts and mandates have a long and familiar history. One of the main disadvantages is that these are critically slow and error-prone processes, often leading to governance issues. They do not support today’s auditing, compliance and regulatory requirements and include the use of:
Phase 2 – Bank Account Management
Introducing a web-based SaaS Bank Account Management (BAM) solution provides a clear approach to obtaining the required overview of all banks and bank accounts. Globally, this is a centralised and audit-proof solution, including accurate master data management and electronic workflow based processes for requests to open/close/change bank account activities. The main aspects are as follows:
Phase 3 – Electronic Bank Account Management
By moving towards an eBAM solution, additional benefits can be achieved.
The main added-value is a straight-through-process (STP) with participating banks. A set of 15 standardized ISO XML messages can be exchanged on an eBAM platform to cover all main bank account and mandate workflow (opening, changing, closing, confirming).
In addition to the advantages of phase 2 this enables corporates to also streamline and automate the external communication with their banks. The painful and laborintensive paper-based workflow is substituted by electronic communication. Currently, this only works for existing corporate-to-bank relations. The Know-Your-Customer (KYC) process at the beginning of a relationship cannot be accomplished electronically yet. The key eBAM benefits are described in chapter 6 “Best Practice Processes”.
Best practice processes
In our view and based on customer feedback, the new TIS eBAM solution (as shown below in figure 2) currently represents the best practice in the market.
Our model
The TIS model is based on key elements that are part of efficient, low-risk business workflows also embedding current regulatory requirements. Bank accounts can be managed globally, regionally or on division/entity level, with a clear segregation of duties and a customisable notification/alerting functionality:
Best Practice Governance Processes – Master Data & Inventory
Electronic business workflows provide an overview of group-wide requests for opening, changing or closing bank accounts, keeping all master data up to date in a central repository. This also enables real-time access to any related information at the push of a button. All information is made centrally available and integrated with various back-end (ERP) system which require information, such as account data, authorisation rights and daily limits.
While workflows can be automated and delegated to the responsible employees, the solution provides a constant overview of the master data and user permissions on a central level. With the electronic and customisable inventory process local or entity managers can be obligated to confirm the accuracy of the relevant data.
Centrally Managed Authorisations – Workflow & Authorisation
All relevant bank account processes, including authorised signatory details, can be confirmed and monitored in an audit-proof, compliant and customisable way, including a four-eye principle. By guiding and enforcing the approval and change management processes for bank-and account data, internal audit requirements are also met.
Levels of restrictions, signature cards, digitalised signatures and credentials, legally binding country- and bank-specific documentation are all managed and securely stored in a central repository.
Integration
Centralisation of information, documents and processes delivers great benefits; however, eBAM reaches its full potential if all the information can be integrated with the various business systems used in the company, such as ERP or treasury systems. These systems usually depend on – or even are the source of – the information, which is centrally managed. The integration also facilitates the decentralised maintenance and usage of information and at the same, enables complete central governance. Integration scenarios include central approval of accounts which are created within the ERP systems, distribution of signature authorisations or limits as well as account data.
Certified integration capabilities, such as offered by TIS (e.g. SAP certification), ensure that the functionality meets the quality requirements of the vendors and compatibility of the integration scenarios with new releases.
Benefits
The eBAM advantages meet all challenges outlined in chapter 4. This best practice approach can be summarised as follows: Automated, flexible and consistent STP processes for opening, maintenance and closure of bank accounts, providing clear global visibility, accurate accountability
Requirements
Regarding an eBAM implementation strategy, we recommend that some key elements are taken into consideration in order to realise a flexible and customisable multi-bank and multichannel integration:
Hoe voorkom je faillissement?
| 28-09-2016 | Maarten Verheul |
Hoe verbeter je de liquiditeit en regel je betalingen?
Dagelijks heb je te maken met het grote spel van CASH. Cash binnen halen en plannen, hoe geef ik het uit en wat moet ik al reserveren? Soms moet je je zelfs wel eens bemoeien met de key accounts van debiteuren om op tijd genoeg geld te hebben voor een betaling die niet later kan zoals salaris, BTW, loonheffing en dergelijke.
Voorkom te alle tijde, dat je zo laat betaald, dat kredietverzekerde crediteuren je bedrijf achterstallig melden bij hun kredietverzekering. De kredietverzekering kan limieten van andere klanten verlagen of zelfs intrekken en dan heb je niet bij één, maar bij meerdere crediteuren cq leveranciers problemen.
Dan kan je nog omzetten naar cash buiten debiteuren zoals Sale Lease back. Nieuwe investeringen alleen nog leasen. Als je een eigen pand hebt ,ook al zit er hypotheek op, kan je met sale lease back van het pand wel eens ineens uit de zorgen zijn.
Ook een financiële reorganisatie kan helpen. Schulden omzetten in aandelen. In mooie woorden heet dat conversie in aandelen. Maar ook leningen omzetten in achtergestelde leningen.
Velen denken waarschijnlijk dat dit onderwerp de ‘ver van mijn bed show’ is, maar dan kan je toch wel eens bedrogen uitkomen. Wat kan je zoal tegen komen in een bedrijf? Niet alleen bezig zijn met korte termijn, maar ook met lange termijn. Rekening houden met worst case scenarios zoals 35% daling in omzet. Strategie aanpassen zoals prijswijzigingen. Als controller moet je ook meedenken met en als een ondernemer.
Alle genoemde zaken en natuurlijk ook de Cash Flow komen aan de orde als je tegen een faillissement aan zit. Belangrijk is om de signalen van een faillissement op te pakken. Te veel aanmaningen, te veel deurwaarders en incassobureaus, in bijzonder beheer bij de bank, dat zijn allemaal signalen. Als je er niets mee doet, dan is het te laat.
Ik ken de signalen. Ik heb ooit een faillissement voorkomen, terug uit bijzonder beheer van de bank naar normaal beheer en 5 jaar later bedrijf succesvol verkocht aan Private Equity.
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Blockchain and the Hyperledger project: beyond the hype
| 27-09-2016 | Carlo de Meijer |
Let’s have a look how this collaboration platform performed! But first, what is the Hyperledger Project, and what is their goal?
What is the Hyperledger Project?
As they describe themselves on their website:
“The Hyperledger project is an open source collaborative effort created to advance blockchain technology by addressing important features for a cross-industry open standard for distributed ledgers. It is a global collaboration including leaders in finance, banking, Internet of Things, supply chains, manufacturing and Technology. The Linux Foundation hosts Hyperledger Project as a Collaborative Project under the foundation”.
Goal
Main goal is to build an enterprise grade, open source distributed ledger framework and code base to drive blockchain innovation. This should enable organisations to build and run robust industry-specific applications, platforms and hardware systems to support their individual business transactions. All of these innovations will work with an open-source code and distributed ledger architecture.
Through the creation of a framework that integrates different components for different use cases, the consortium is seeking to bring cohesion to a number of independent blockchain efforts that are in the process of developing protocols and standards. The collaboration should help identify and address important features and currently missing requirements for a cross-industry open standard for distributed ledgers.
Codebases
The Hyperledger Project is made up of different codebases donated to the Linux Foundation, contributed by several of its members including IBM, Digital Asset Holdings, Blockstream, Ripple and others to further the Project goals. IBM alone donated 44.000 lines of codes. In total, there are now 160 code contributors (including individuals that may not be working on behalf of any company). It provides a vehicle for companies to collaborate on features.
Members
The Hyperledger Project has gained a lot of industry support in advancing blockchain technology. Since its formal launch in February this year, with original 30 founding members, this number jumped to 80 in a half year time.
New Hyperledger members thereby come from all over the world, including Europe, the US and Asia. They have joined a rapidly growing and diverse group across various industries, including finance, banking, trade finance, supply chain management, manufacturing, technology etc.
The Hyperledger Project has backing from many big corporates. Amongst its members there are a large number of established names from technology giants like IBM, Intel, Cisco, Accenture; to financials with names as JP Morgan, BNY Mellon, ANZ Bank, HSC, Wells Fargo; exchanges such as London Stock Exchange, Deutsche Borse, organisations like SWIFT, CLS, DTCC, Digital Asset Holdings, as well as the bank-backed blockchain consortium R3CEV.
Incentives
Why are they all joining the Hyperledger Project?
There are various motivations and reasons why companies are joining this Project. But in general, Hyperledger is seen by many as being “at the cutting edge of blockchain”. Major institutions are increasingly viewing the Hyperledger Project as a venue for further engagement. International collaboration cross-industry, organised effort plus local experience are thereby looked at as key to ensuring the scalability and the adoption of distributed ledger technology.
For them the Hyperledger Project is uniquely positioned to foster the collaborative approach needed in order to advancing the blockchain ecosystem and promoting blockchain’s extensive application to serve as the future credible infrastructure. They hope, by working with this growing community, to further Hyperledger’s vision and open blockchain development efforts. This by sharing ideas, experiences, expertise and knowledge in an effort to bring blockchain’s emerging technology to market
“A key factor of the project’s success will be member expertise and guidance” – Brian Behlendorf
Recent developments
The Hyperledger project has been rapidly moving forward since the start. Next to the announcement of a growing number of organisations joining their collaborative platform, we have seen a number of interesting developments surrounding the Hyperledger Project.
Election Technical Steering Committee
The governance structure has been further strengthened. The Hyperledger Project recently elected a new Technical Steering Committee (TSC) consisting of 11 members. The members include representatives from names like R3CEV (the other blockchain consortium), Digital Asset Holdings, IBM, London Stock Exchange, and DTTC. The composition of this TSC reflects the importance of these players in the Hyperledger Project, from both a technology as well as a business point of view.
Hyperledger Project and SIBOS Innotribe
Hyperledger Project announced it will sponsor the Innotribe Networking event at Sibos 2016, on Wednesday, September 28. The conference will be held on September 26-29 at PALEXPO in Geneva. As the world’s premier event for financial services, Hyperledger Project is looking forward to discussing open source distributed ledger technology and its potential to transform the industry with leading companies and experts.
Trade Finance Proof of Concept
The Hyperledger Project as well as the bank-backed blockchain consortium R3CEV announced initiatives to develop blockchain prototypes for trade finance innovation on the same day. Both initiatives were exploring how distributed ledger technology could streamline the existing old-fashioned, paper-based and expensive world of trade finance, using letters of credit. They thereby tried to tackle trade financing challenges via this technology.
Hyperledger Project trade finance proof of concept
The Hyperledger Project trade finance proof of concept comprised HSBC, Bank of America Merrill Lynch and IDA (Singapore). Aim of the various parties was to use a blockchain prototype to streamline global trade. The application mirrors a paper-intensive letter of credit (LC), whereby participants could execute a trade deal automatically through a series of digital smart contracts. They thereby used the open source Hyperledger Project blockchain fabric, thereby supported by IBM Research and IBM Global Business Services.
R3CEV blockchain trade finance initiative
R3CEV and 15 of its blockchain consortium members have “successfully” completed two prototypes using distributed ledger technology for smart contracts. The banks designed and used so-called smart contracts on R3’s Corda distributed ledger platform to process accounts receivable (AR) purchase transactions, invoice financing or factoring, and Letter of Credit (LC) transactions.
The involved member banks in the trials include: Barclays, BNP Paribas, Commonwealth Bank of Australia, Danske Bank, ING Bank, Intesa Sanpaolo, Natxis, Nordea, Scotiabank, UBS, UniCredit, US Bank and Wells Fargo.
Competition or collaboration?
HSBC, involved in the Hyperledger Project trade finance PoC, but also member of the bank consortium R3CEV, asked if there was no duplication, and if so, expressed the view that “we will all have to come together, because this has to be industry-led”.
According to HSBC “… now we need to get the technical teams together to understand the pros and cons, because part of what we have learned is also the technical limitations of distributed ledgers, in terms of the number of nodes you can have or the quantity of data you can have on it. So now may be the time to share those and see how we can put our heads together to take this to next level.”
“R3 is a member of the Hyperledger initiative and as such we will continue to explore ways to utilise the code being developed by its open source community in the real-world products we are developing with our consortium members”, said HSBC.
Hyperledger hackaton Amsterdam
ABN Amro, IBM, Holland FinTech and Linux Foundation are to run the first-ever Hyperledger hackaton, inviting coders to develop new financial applications capable of running on distributed ledgers. This one-and-a-half day hackaton will take place on 11-12 October in Amsterdam and is open to developers, tech students and fintech companies that are experimenting with blockchain technologies.
Hyperledger Project to address academic lecture ISITC
Leading members of the Hyperledger blockchain Project will address the European branch of ISITC, the International Securities Association for Institutional Trade Communication. The academic lecture to be held at the London Metropolitan University is intended to give the members an idea of what differentiates the Hyperledger Project from other blockchain projects.
This event that will be held in London is the latest effort by ISITC’s newly formed Blockchain DLT Working Group to lay the foundation for a global effort to standardize distributed ledger technology. The DLT Working Group that emerged earlier this year was invited to create a list of 10 blockchain standards for future development. It has changed its task slightly to focus on a cross-industry framework from which a modified list of benchmarks might eventually emerge. The Working Group prioritised working with other standards bodies and consortia like the Hyperledger Project to minimise overlap.
Hyperledger Project “ Blockchain Explorer “
As more companies like Bank of America and HSBC begin to unveil proofs-of-concept (PoC) using the Hyperledger protocol, a more standardised way to search its data is just part of what it will take to scale. Even beyond building out standards, creating common codes may allow organisations to focus on creating industry-specific blockchain applications.
The Hyperledger Project is now building an open-source tool that will let anyone explore the distributed ledger projects being created by its members. Instead of overlapping efforts and of launching competing open source services, unified effort emerged the blockchain explorers being developed by the likes as IBM, Intel and DTCC. The joint project has been named the “Hyperledger Explorer”. Creating common code will allow organizations to focus on creating industry-specific applications that enhance the value of this technology.
This tool would make it easier to learn about Hyperledger from the inside, while still protecting the privacy. When completed, the Hyperledger Explorer is expected to give Hyperledger developers and non-technical users access to block information, transaction data, network information (such as a list of nodes) and chain codes or transaction families. The Board and the recently newly formed Technical Steering Group will be working on these code proposals in the coming period.
Standardisation
The Hyperledger Project thinks it is still too early to strive for a technical standard for a general purpose inter-chain communication protocol (or even data format). Instead, they would like to encourage the different ongoing proposals to converge towards common architectures and or/even common tech stacks or set of reusable modules. This could serve as the starting point for the development of standard APIs, enabling the inter-chain communication and thus start the discussion around the technical realisation of such a protocol. Parts of this common code could also be reused by other projects, thus contributing to a standardisation of the blockchain technology overtime.
Carlo de Meijer
Economist and researcher