Corporate to Bank Connectivity – 10 Questions YOU Need To Ask 6

Most discussions about SEPA are no longer about compliance but instead about how to achieve process efficiencies and process improvements. Have a read of SEPA compliance, Tick. What next…? for some general information about what to consider now that SEPA compliant processes have been implemented. This post will focus on one specific area – corporate to bank connectivity. There are a variety of bank connectivity options out there, this post will firstly define bank connectivity, highlight some of the available options and finally outline 10 questions to ask yourself before you do anything else!

Corporate to Bank Connectivity:

As part of the SEPA project corporates, and indeed small and medium sized businesses, converted the legacy file format into a SEPA compliant XML format – i.e. a PAIN.001.001.03 for SEPA Credit Transfers and a PAIN.008.001.02 for SEPA Direct Debits. So as part of the SEPA project we changed what we are now sending to the banks (i.e. the format), but we have kept in place how we send the file to the bank. The means by which a bank and corporate communicate, send and receive data, with one another is bank connectivity. To take it further bank connectivity is more than just the method by which corporates and banks connect with one another, it also considers the data formats being exchanged and the controls, security and integrity of the overall end to end process.

Bank Connectivity Solutions:

There are numerous ways to connect with a bank, the following lists some of the popular bank connectivity options:

  • Manually entering the transaction into the banks internet banking portal
  • Manually uploading/downloading a file into/from the banks internet banking portal
  • Using a host to host connection, directly to/from your ERP system to a bank back office system -this may also be referred to technically as FTP (File Transfer Protocol) or SFTP (Secure File Transfer Protocol)
  • Utilising SWIFT (Society for Worldwide Interbank Financial Telecommunication) connectivity – various connectivity options are available
  • Leveraging in-country ( for example BACS in the UK) or regional options such as EBICS (Electronic Banking Internet Communication Standard) in Europe
  • System specific connectivity options

Bank Connectivity – 10 Questions You Need to Ask….

..before you consider or embark on implementing a bank connectivity solution. Please note these questions are specifically referring to instances where you are currently sending payment or direct debit files and/or receiving bank statement (such as BAI2 or MT940 formats) files from your bank

  1. In which countries / locations are you currently connecting with a bank?
  2. Which banks are you currently connecting with?
  3. Which source systems (ERP – Enterprise Resource Planning, TMS – Treasury Management System, in house) are being used?
  4. What formats are currently being exchanged – corporate to bank and bank to corporate?
  5. What is the volume, urgency and frequency of the payments / direct debits?
  6. Are all existing bank connectivity processes known and documented?
  7. What system/process controls and security procedures do you currently have in place?
  8. Which teams support and maintain your existing bank connectivity processes?
  9. What are your current back up / disaster recovery procedures?
  10. In an ideal world, what would your bank connectivity set up and process look like?

As you can see the focus for these questions is to understand your existing environment, once you know this you can start to question and challenge your existing set up. For example, can you centralise the payment sending process, perhaps to a shared service centre? Are there opportunities to rationalise the number of banking relationships, or at least reduce the number of banks to whom you are sending  payment / direct debit files? Can you reduce / centralise the system(s) from which you run the payment process?…. The objective is to understand your current state as a way to start defining your future state. Implementing a corporate bank connectivity strategy can help to significantly simplify, standardise and centralise your existing bank related processes. There is no single corporate to bank connectivity solution, each corporate requires a different solution based on their specific requirements. The above questions should help guide the solution that works best for you.

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That’s my top 10, do you agree with these questions? Which of your top 10 questions have I missed? Let me know below….

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