We have reached the tipping point in bank billing transparency globally, and it is exciting. The vision of creating a global standard for bank fee reporting started with a few individuals willing to do the work, a few large corporations willing to apply pressure, and a few global banks willing to be leaders in providing transparency to their customers.
In February 2008, Barclays announced in a press release that they were the first UK bank to introduce the TWIST BSB 3.1 industry standard for bank services billing (BSB) to General Electric. Twelve years later, a bank is finally considered ‘behind technologically’ if they cannot produce a BSB file, based on recent feedback from the corporate members of the SWIFT CGI-MP Working Group 5.
“BSB capability is a very important consideration when awarding business for Nestlé,” said Shabbir Ahmad, Global Head of Cash Management at Nestlé, which has presence in around 180 countries. “If a bank cannot produce the industry standard BSB file, it leaves the impression that the bank is behind in technology and gives the impression that they are not up to the standard. If you cannot provide this type of file now, when the standard has been out for 10 years, how will your bank keep up with the rapidly evolving industry disrupted by fintech companies?”
Banks cannot say they are a leader in technology and not be able to produce a basic bank fee report in the ISO 20022 industry standard.
If your bank is late to the party of providing bank billing, here are a few reasons you should invest in this capability now:
- Your corporate clients want it. Especially the big ones.
- Commercial clients are including this capability in RFPs, and banks need it to win business.
- It helps clients overall. Clients who use multiple banks have the definite advantage of gaining visibility into their fees across all banks, countries and markets. This allows for cross-market/cross-bank comparisons and benchmarking that open the lines of communication in an important and informed way.
- Bank fee reporting helps clients in their own standardization and efficiency journeys. One treasurer reported to the CGI working group that he used the data to consolidate treasury functions and identify opportunities for more straight-through processing.
- BSB files are not only a means to oversee the bank, but rather the medium to provide the data treasurers and CFOs need to monitor subsidiaries and ensure compliance with internal rules and initiatives. For example, one corporate client mentioned that they have an internal rule that offices should not be accepting checks or cash as payment. When volume showed up on the statement, it raised a flag internally.
- Your competitors can.
- The large global banks are making more and more noise in developing countries and are all able to produce the ISO standard reporting of bank fees.
- Data is an important element in this day and age. Being able to provide this product is key. Bank sales teams like having the BSB reporting as an ‘opening line’ and an easy sale. The sales team also needs (and likes) this type of data with AFP Global Service Codes included because it helps them price RFPs and better forecast revenue for the bank.
- It’s not about leading the industry anymore, but rather just keeping up.
- It helps your own bank.
- By reviewing fee income and implementing camt.086, banks can identify billing leakage and opportunities to streamline and simplify across different countries, branches and markets.
- Providing a BSB file is an opportunity to stand behind the global standard when the bank is faced with multiple clients, all asking for different types of spreadsheets and custom reports to meet their individual needs. Providing the standard file makes it much easier to manage and control (from the cost perspective) these special requests from customers.
- In this low-interest environment, fee income is becoming more important to the bank. Without aggregating fees, the bank cannot perform any analysis or benchmarking with other banks to see where the market is going.
Banks that want to keep up with the industry standard, but have not, are most likely facing one of the following challenges:
- It is difficult to get budget. Requests for billing improvements compete with upgrades and fixes required by new regulations. Billing itself does not turn a high profit. Banks need to have big clients, and the revenue they bring help pay for the cost of these improvements. Corporations do not want to pay a fee to receive a bill. Those who view the camt.086 as a bill feel strongly about this. Those who see it as a report may be more likely to pay. If the bank’s current vendor provides the option of camt.086, it is an easier sell. If it’s a brand new service and the current vendor cannot produce the file, this fundamental shift can be difficult, and the project becomes a much larger challenge. In these cases, banks that have completed their projects will tell you it is critical to have the right resources on the project that have the needed experience. This may involve the need to hire consultants or new employees as well as an investment in new technology. If the bank is a large global bank with regional payment platforms, analysis platforms, and a mix of technology, each platform will produce inconsistent reporting. If each platform were to produce the camt.086, this could be a quick-fix way to provide a single synchronized report across all regions to a corporate client. This solution has advantages; however, it may lead to the bank sending camt.086 files from different platforms that are inconsistent across the markets and/or a situation where a bank can only provide the files in certain countries. This is frustrating for a corporation that uses the same bank in 10 countries but can only receive a file with bank fee reporting on a part of their activity. This is an all too familiar story for some corporations.
Banks may believe that by providing transparency, it will result in a fee reduction and less revenue to the bank, but corporate clients disagree. The increase in customer satisfaction will result in more business and a better relationship overall.
The time is now to develop what is necessary to produce the ISO 20022 standard for bank fee reporting. You cannot afford to be late.