Fintech Insights

FIS Study Reveals that Corporations are at Risk of Fraud with Manual Bank Account Management Processes

February 02, 2018

Surprisingly, bank account management processes have not evolved for many corporations. FIS released a new market report titled “Bank Account Management Report: Complex, Manual Processes Leading to Increased Payment Fraud Risks and High Costs,” which surveyed more than 200 corporate treasury professionals across the globe that reveals some of the challenges corporate treasury professionals still face, including:

  • Complexity: 41 percent have more than 11 banks, with 19 percent having more than 31 banks.
  • Manual Processes: 60 percent are manually maintaining their accounts and signatories. Additionally, 14 percent are opening more than 5 bank accounts per month and 9 percent are closing more than 5 bank accounts per month.
  • Lack of Standardization: When managing bank accounts, corporations are also frequently challenged by a lack of process standardization from country to country, and even bank to bank. In fact, 61 percent of study participants identified that multiple legal jurisdictions make governance and standardization of process difficult.
  • Lack of Centralized Repository: 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.

With such complexity, manual processes and a lack of standardization, it is not surprising that many organizations have difficulty keeping track of all of their bank accounts, which means they also have difficulty monitoring and controlling account access rights and permissions to open and close bank accounts. This control gap exposes a company to fraud and makes audits more difficult. Let’s take an example. Imagine a company has an employee who is a signatory on bank accounts. That person leaves the organization. Because the company has manual bank account management processes, the treasury professional overseeing the bank account management function doesn’t find out until a month later that the person left and that the former employee still has signatory authority on those accounts with the bank. During that month, the former employee empties those bank accounts and commits fraud. This could have been avoided with the right technology in place.

By centralizing bank account management processes into a single, bank account management solution that automates and provides a workflow-based application with optional connectivity to facilitate electronic bank communications, companies can reduce their fraud risks and costs. This enables treasury professionals to introduce standard workflows for opening, closing and maintaining bank accounts, eliminating the need to spend the day filling out forms, calling local staff and banks, hunting down missing information, and chasing unexecuted tasks. 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. Further, it provides reporting capabilities to help comply with regulations requirements like FBAR reporting (FINCEN 114s) and efficiency surrounding the audit process.