What is eBAM?

Alexa Cook: 

Hey guys, welcome to The Treasury Update Podcast Coffee Break Sessions, the show where we cover foundational treasury topics and questions in about the same amount of time it takes you to drink your coffee. 

Alexa Cook: 

I’m Alexa Cook, consultant at Strategic Treasurer and today’s host. Today we’ll continue our new foundation building Coffee Break Sessions by discussing eBAM. I’m joined with Craig Jeffery, managing partner and founder of Strategic Treasurer. Welcome Craig. 

Craig Jeffery: 

Hey Alexa. 

Alexa Cook: 

So let’s dive right in and unpack this. What is eBAM? 

Craig Jeffery: 

eBAM stands for Electronic Bank Account Management. And before you turn off this podcast, I think it’s important to know that this conversation will be relevant to you, even if you think and know that eBAM may be far off for your organization. So that’s just my little pitch there. 

Alexa Cook: 

Okay, great. How does eBAM work? 

Craig Jeffery: 

I’ll start with bank account management. Bank account management is, how do we keep track of our services, our accounts, our signers, the documents related to that, adding and changing those things, because there’s a lot that goes on in supporting your customer. So that’s the process. And so how is that supported? Is that supported with paper documents, with wet signatures going forth with some of the different interesting chops that occur that you have to send with documents more in a physical world as opposed to a digital world? So bank account management has always had to support this type of activity. Now, electronic bank account management says, let’s see if we can move out of the paper based world, out of the physical world and convert this to digital. And so instead of sending papers, please open an account. Here’s the authorized signers back and forth, here’s our organizational documents that say authority has passed on to these people. 

Craig Jeffery: 

It says, let’s have a series of messages and conversations that are put into the form of digital messages that relate to a conversation. Just like you’d say, I want to open up a bank account. Here’s the information you need. I send you the information, and I authorize the information. Your account’s set up, your services are set up. That conversation that’s supported with paper can also be a conversation that has a lot of digital components where I’m saying, open this account, add these signers, delete these signers, put on these services, can now be messages that make up part of a conversation digitally. And so there’s a standard set of messages for those. 

Alexa Cook: 

Okay. I guess we could maybe look at what some of the benefits are. I’m hearing that going paperless is a time saver and a paper saver, but what are some of the other benefits of moving towards eBAM? 

Craig Jeffery: 

So, it would be a time saver if everything wasn’t a broken process or a separated process where it gets printed and managed there. Maybe it makes sense to say eBAM has been around for a while now, for more than five years. When it came out, everyone wanted to talk about it because setting up accounts, changing signers was a big pain. We wanted to reduce that pain and automation helps us reduce that pain. The problem was people can blame the banks and say not all the banks had integrated all these messages into the all of their backend systems, because sometimes it would print out and then someone would run the paper over and enter it into another system. So we can fault the banks to some extent there. But the real issue had to do with all of the corporate users. Most of them, not all of them, but most of them didn’t have a highly organized bank account management system and process for doing that. 

Craig Jeffery: 

And if your data is managed on paper, stuck in different files, you can’t interface those files to a bank, of course. It has to be put in a digital form and the digital form has to also support processes to create messages and to communicate back and forth. If it’s not set up there, you can’t do it. That’s why eBAM never realized its potential growth that everyone hoped it to be. It’s a big pain, but if you’re not digital in your backend, you can’t be digital on your connection. And I think that was part of your question. I forgot what the other part of your question was. 

Alexa Cook: 

Just some of the benefits. So it sounds like some of the benefits that a lot of people were hyped about could not be realized, just because it was a heavier lift for a lot of companies to get to where they need to be with eBAM. 

Craig Jeffery: 

Yeah. So I’m still bullish on eBAM over a longterm horizon, and it’s probably 10 to 15 years. And I don’t say that just because that’s a safe time that people will have forgotten this amazing Coffee Break podcast, but because it takes a while for people to make changes on those. But what I do see is I see more organizations are moving to electronic methods of managing bank accounts and their spending on these areas, compliance is pushing them. FBAR for example, requires a lot of work and it’s much easier to run when you have a system to do it and those systems can support it. And so I think that it will pick up over time, but it will take a while. But regardless of whether you’re using eBAM or not, fixing the underlying bank account management process is very, very healthy and needed for organizations. 

Craig Jeffery: 

This is no longer nice to have, it’s a minimum standard of good corporate conduct. Especially when you’re over 80 or 100 bank accounts, you’re dealing with three, four or five or more banks, you need to have this organized well, it should be organized electronically, it should support processes, it should support your compliance aspects of it that you can say, here are the services we have with these types of accounts. So I would say I’m very hopeful for it over time, but that’s going to be a while. But for fixing bank account management and putting that in a better place, there’s companies that are converting to better processes every day now. And it’s not as fast as we’d like or we think, but that’s a very healthy activity. 

Alexa Cook: 

Okay. And now I might be reading between the lines, but what am I’m getting is that there’s definitely not a one size fits all type of solution. Is that correct or… 

Craig Jeffery: 

Yeah. For bank account management there’s not, but there’s a certain level of capabilities that organizations need to have. So whether you get a standalone dedicated bank account system, whether you get a module from one of the key providers of treasury systems, for example, either one of those, there’s some different capabilities that exist. So, if you get it within your TMS, great, it’s going to be nice and integrated. If it’s standalone, that can work just fine too. 

Craig Jeffery: 

There’s other ones that are related more towards legal structure. We found those to be good for legal structure and entity, not very good for actual bank account management. It’s more like, oh, we’ve put some placeholders here, but we didn’t build any processes. Anytime you have a certain level of accounts, you need more processes. If you have five entities, everything’s with one bank, you can use a one of the legal entity systems just because you just need a place to house them. You don’t need to support the process, and that can be fine. But when you start to expand, you need systems that will support an effective, well-controlled process because we have to protect our accounts. The way we protect them is through access to those, to the banks, to the accounts authorizations, whether it’s through the portal, whether it’s official real signers on those accounts, as well as the services at the transaction level or the account level that are defensive in nature. 

Alexa Cook: 

Okay, so you’ve mentioned different ways that the data can be managed, but what type of information are companies managing through eBAM or these BAM systems? 

Craig Jeffery: 

It would be things related to the banking entity, maybe the top level bank, maybe the country level bank, all the documents they have, it’s storing those, the sign on information, the correspondence you have. It would keep track of all the elements and characteristics of the bank accounts, where they are, the BIC code you might have associated with the bank, who are your contacts, when they’re opened, signers, when they’re active, when they’re deactivated or when they’re going to be deactivated. What services, including what services are being added, deleted and over time. So things related to signers, services, accounts, banking structure and all the documentation that goes along with that. 

Alexa Cook: 

So you can cover a lot in those systems. 

Craig Jeffery: 

Yes. Yep. 

Alexa Cook: 

So I’m going to just recap really quickly. We’ve identified that eBAM is the services, accounts, changes and administration, supporting the know your customer. And then some of the key points are that it is relevant to everyone, maybe not eBAM, but definitely bank account management that needs to be strong. A good strong bank account management process is just good corporate conduct and should be a leading practice by companies. eBAM itself is managing the different bank entity elements, characteristics, documents, signers, all sorts of information. So it’s definitely something that companies should be aware of and using. 

Craig Jeffery: 

Yeah, I would add a little bit to that definition of eBAM because it’s the exchange of that information electronically. It’s those digital conversations made up of those different messages. So messages and conversations. Yeah, it would be part of the eBAM wares. 

Alexa Cook: 

Without the messaging it’s just BAM. 

Craig Jeffery: 

Yeah, exactly. Yep. 

Alexa Cook: 

Okay, great. Well, is there anything else that you wanted to add to that? 

Craig Jeffery: 

No. 

Alexa Cook: 

Okay. Well, then I think that covers it all today. Thanks everyone for listening and thanks Craig for joining me. And don’t forget to tune in every first and third Thursday of the month for a new Coffee Break Session podcast. 

OUTRO: 

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