Empowering a Digital Treasury. Bank account management report: Complex, manual processes leading to increased payment fraud risks and high costs

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1 Empowering a Digital Treasury Bank account management report: Complex, manual processes leading to increased payment fraud risks and high costs

2 Introduction Bank account management has and continues to be a manual and labor-intensive effort often requiring the dedication of multiple staff members. The process has generally lacked automation, frequently involving paper-based transactions done via fax, mail and , and sometimes even entails visits to local bank branches. When managing bank accounts, corporations are frequently challenged by a lack of process standardization from country to country, and even bank to bank. Many companies lack a centralized repository for all bank accounts they hold; some may reside in treasury systems, while others may be kept in payments systems, and some even on spreadsheets. This challenge is especially apparent in corporations with noncentralized treasury operations where bank accounts may be managed at a branch or legal entity level with no visibility at the corporate level. All of these factors lead to increased risk of payment fraud and high transaction and personnel costs related to opening, closing, and maintaining bank accounts and managing bank fees. In this report, FIS reveals results from a survey of over 200 treasury professionals to better understand the challenges corporations continue to face around their bank account management processes and how they can overcome them. 2

3 Key findings: complex, manual bank account management processes Bank account management challenges Current bank account processes Roadblocks preventing the simplification and automation of bank account management 61% 60% 62% Multiple legal jurisdictions make governance and standardization of processes difficult Manual/paper-based processes Different process in each financial institution Bank account management challenges Number of bank relationships 61% 41% Multiple legal jurisdictions make governance and standardization of process difficult 11+ bank accounts 3

4 Bank account management processes still manual and complex Bank account management environments are still complex. Forty-one percent of study participants work with more than 11 banks and 19 percent work with more than 31 banks. Sixty percent of study participants are manually maintaining their accounts and signatories. Additionally, 14 percent are opening more than five bank accounts per month and 9 percent are closing more than five bank accounts per month. By having numerous bank relationships and manually managing accounts, including the opening and closing of accounts, corporations lack visibility and control, which leads to payment fraud. If an opener of an account leaves the company, how quickly is this communicated and to whom if processes are managed in a spreadsheet? The company is at risk of that opener withdrawing funds from the account. By automating bank account management processes, corporations can put controls and workflows in place, including approval processes. How many bank relationships do you have? 21 to 30 8% 11 to 20 14% % How many accounts do you open monthly? 11 to 20 1% 5 to 10 10% 20+ 3% <5 23% 5 to 10 36% <5 86% How are you currently maintaining your accounts and signatories? Bank account management tool 28% Access database 12% How many accounts do you close monthly? 5 to 10 5% 11 to 20 2% 20+ 2% Paper / Manual 60% <5 91% 4

5 Bank account management challenges When it comes to bank account management, 61 percent of study participants identified that multiple legal jurisdictions make governance and standardization of processes difficult, followed by mandate management at 45 percent and lack of visibility on all bank accounts at 42 percent. How challenging are the following: Inefficient processes increase our exposure to fraud 11% 30% 26% Lack of visibility on all of your bank accounts 12% 14% 7% Given that 60 percent of study participants are manually maintaining their accounts and signatories, it isn t a surprise that mandate management is challenging. 19% 24% 15% Lack of resources to manually maintain accounts 16% 17% 9% A bank account management solution can help corporations overcome these challenges by consolidating the various bank account management processes into one solution in order to automate and standardize the internal controls and facilitate the communication with the banks. A bank account management solution can also help companies automatically maintain supporting documentation, correspondence and electronic messages and deliver them via SWIFT or directly to banking partners. 12% 25% 24% 19% 12% 8% Mandate management 15% 15% 25% 20% 15% 10% Multiple legal jurisdictions make governance and standardization of process difficult 19% 10% 10% 16% 21% 24% (1=least challenging; 6=most challenging) 5

6 FBAR filing made easier Companies headquartered in the US must comply with IRS requirements and provide a Report of Foreign Bank and Financial Accounts (FBAR). Fifty percent of study participants are required to file for FBAR. As with general audits, this is an especially daunting task when organizations have many different bank accounts located around the world. This not only affects US companies and their US-based employees but their employees outside of the US who are often gathering data for the report if the company is not utilizing an automated solution. Manual tracking is burdensome and time-consuming, and inefficiencies may lead to inaccurate or incomplete reports. How many are filing for FBAR? 50% To comply with government regulations, a bank account management solution can feature built-in functionality for generating the FBAR report and other similar reports, saving both time and effort. 6

7 Manual bank fee analysis processes leads to high costs Sixty-four percent of study participants do not have a tool to help analyze their account analysis statements and 52 percent aren t even receiving an account analysis file from their bank. Additionally, 37 percent of fees for services are managed in a decentralized environment. Corporations can be mischarged by banks for their fees and balances, and without visibility into accounts and bank fees, they are at risk of losing hundreds of thousands of dollars, pounds, euros, yen, etc. By automating bank fee analysis, treasury professionals can produce timely reports on bank services, fees, compensation practices and efficiently track trends and differences in bank service charges. They can make comparisons between banks, pricing history, volume/ price comparisons, month-to-month and year-to-year (along with balance information). They can facilitate the import and storage of monthly bank fee statements. As monthly statements are imported, analysis between scheduled and actual prices can be also be generated. Do you have a tool to help you analyze your account analysis statements? NO 64% YES 36% Does company currently receive account analysis file? Are fees for services managed in a centralized or decentralized environment? Centralized 63% YES 48% Decentralized 37% NO 52% 7

8 Reduce payment fraud and errors Improve operational efficiencies Leverage technology to drive automation across bank account management and bank fee analysis processes. Increase controls with workflow and alerts Gain visibility with central repository Track all user actions to create audit reports Generate FBAR reports for better regulatory compliance Support generation of XML ISO20022 ACMT messages Support creation of PDF documents for manual communication Accurately compare expected bank fees Track trends and differences Compare fees across different banks Run month-over-month and year-over-year analysis 8

9 Appendix Annual Revenue How many accounts do you open monthly? 9% 8% 9% 30% 16% 12% 16% 1% 2% 6% 6% Africa ANZ APAC Europe Midlle East >$100m $100m - $500m $500m - $1b $1b to $5b $5b to $10b $10b to $25b <$25b 61% 24% North America South America Industry 1% 11% 10% 9% 7% 6% 4% 4% 4% 4% 4% 3% 3% 3% 3% 3% 2% 2% 2% 2% 2% 1% 1% 1% 9% How many staff focus on bank account management? 60 to 10 7% 21+ 3% Agriculture & Fisheries Automotive & Parts Chemicals Construction & Materials Financial Services Food & Beverage Healthcare Insurance Manufacturing Media Metals & Mining Oil & Gas Pharmaceuticals & Biotech Public & Government Real Estate Retail Services (Non-Financial) Technology Telecommunications Textiles & Apparel Transportation Travel & Leisure Utilities Other 1 to 5 90% 9

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