Navigating bank mandate management: A corporate treasury playbook for the digital age
In the complex realm of corporate finance, efficient management of bank mandates is crucial for seamless financial operations and fraud prevention. This playbook delves into the basics and challenges of bank mandate management, highlighting how Cygnetise's innovative solution can transform the process for corporate treasuries.
In the complex world of corporate finance, managing bank mandates is a critical yet often overlooked area. Efficient management of bank mandates not only ensures smooth financial operations but also guards against potential fraud and errors. In this playbook, we look at the fundamentals and challenges of managing bank mandates and explore how Cygnetise's innovative solution can revolutionize the process for corporate treasuries.
What is a bank mandate?
A bank mandate is a legal document that specifies who is authorized to access and manage a corporate bank account. Also known as an account signatory or authorized signer, it lists the persons who can sign checks, authorize transactions, and conduct other financial operations on behalf of the company. The importance of maintaining an up-to-date bank mandate cannot be overstated, as it directly impacts the security and efficiency of a company’s financial transactions.
Key aspects of bank mandates:
Designation and authority: Account signatories are officially named as individuals on the bank account, ensuring accountability and traceability.
Operational permissions: Signatories can view balances, initiate payments, subscribe to new services, and add or remove other signatories.
Setup and modifications: Establishing or modifying a bank mandate usually requires direct contact with the bank through a relationship manager, often involving significant paperwork and time.
Kleinwort Hambros Bank reduces 95% of time spent on managing authorised signatories
The challenges of bank mandate management for corporate treasuries
Managing bank mandates can be challenging for corporate treasuries, particularly within large multinational organizations. As businesses expand, tracking and updating multiple signers across potentially thousands of bank accounts spanning dozens of financial institutions globally becomes increasingly burdensome for treasury teams. This responsibility is crucial not only for internal record-keeping but also for external audits, FBAR and SOX compliance, fraud prevention, and more. Traditionally, managing this process has involved navigating a labyrinth of emails and manually updating spreadsheets, which is both time-consuming and error-prone. Finance professionals frequently express frustration with outdated systems and the lack of real-time visibility into signer data.
A member from a leading professional group focusing on global cash and banking operations described the annual task of managing bank mandates as “painful”, noting the significant challenges involved in simply keeping track of authorized signers. They highlighted that while current systems allow for detailed reports and visibility into who has access to banking portals, a similar level of clarity and ease should exist for managing signatory information.
In response to these challenges, there’s been a major push towards the rollout of electronic Bank Account Management (eBAM) systems - an initiative launched by SWIFT over a decade ago. However, while eBAM automates the process of opening, closing, and maintaining accounts, the existing technology does not provide a complete account data repository and the right level of authorization granularity, which remains a critical gap in the process.
To tackle this, leading banks like Citi and J.P. Morgan have developed their own digital signer portals and solutions and are currently piloting these with select business customers. Citi's Digital Signer Management program, part of its CitiDirect online banking platform, allows clients to view current signers and initiate updates, providing global, real-time reporting and on-demand signer summary reports. This represents a centralized digital repository for signer information.
Similarly, J.P. Morgan's Authorized Signer solution, offered through its Access platform, has been designed to improve the visibility and reporting of account and entity signers, simplifying BAM for its clients’ treasury teams. While these technologies offer increased transparency and streamline the process for the banks, they unfortunately do not seem to address the main challenge for clients with multiple banking relationships, who will still need to navigate and update several different banking systems.
In addition, seamlessly integrating these solutions’ data flows with other third-party technology databases like Treasury Management Systems (TMS) appears to be yet another issue in the process. So, while these platforms promise real-time visibility into signer data, achieving full integration continues to be a major hurdle, highlighting the ongoing need for improvements in digital banking solutions for corporate treasuries.
Cygnetise's solution for managing bank mandates
Cygnetise’s cloud-based signatory management application revolutionizes the management of authorized signers and bank mandates, tackling the critical challenges faced in treasury and BAM. Leveraging cutting-edge technology, Cygnetise offers a highly secure environment for maintaining and updating authorized signatory data.
The application's real-time update and sharing capabilities provide all stakeholders—including issuers (publishers) and receivers (subscribers) of bank mandates—with immediate access to the most accurate and up-to-date signer information. This dramatically reduces the risk of fraud and errors, enhancing the integrity of financial transactions.
Cygnetise's user-friendly interface simplifies the management process, enabling corporations to seamlessly manage and distribute signer details across all their banking relationships.
Core functionalities include:
Real-time notifications: Changes to mandates are updated instantly, ensuring all parties are consistently aligned, which minimizes delays and errors associated with traditional manual processes.
Secure storage and access controls: Signatory data is securely stored with stringent access protocols, ensuring data integrity and security.
KYC documentation storage: The platform streamlines the storage and verification of Know Your Customer (KYC) documents for each director and signatory, reducing paperwork and expediting compliance processes.
Comprehensive audit trail: Every modification to the signatory list is recorded with detailed timestamps, essential for minimizing disputes and enhancing fraud prevention.
Centralized signatory register: Facilitates a standardized approach to managing signatory information across various banking interfaces, improving accuracy and reducing errors.
These innovations not only streamline operational workflows but also significantly reduce operational costs by digitizing manual processes, while enhanced security and compliance features add an additional layer of defense against financial risks.
How to prevent mandate fraud and operational losses in banking
5 best practices for managing bank mandates in the digital age
In this section, we’ve outlined five best practices for corporate treasurers to effectively manage bank mandates in the increasingly digital and complex financial environment:
Centralize control and oversight: Develop a centralized control system for all bank-related activities to ensure data integrity and streamline compliance monitoring
Standardize procedures across regions: Harmonize internal procedures for managing bank accounts across different jurisdictions to ensure consistency and operational efficiency
Enhance security and compliance: Apply advanced security measures like digital signatures and encrypted data storage, and conduct regular compliance checks to safeguard against fraud and ensure regulatory adherence
Maintain an audit trail of all mandate changes: Keep a comprehensive and timestamped log of all changes to bank mandates to enhance traceability and accountability
Adopt advanced technology: Automate and standardize the management of bank mandates with eBAM systems and/or digital authorized signer management applications like Cygnetise to reduce operational costs, enhance security, and minimize the risk of fraud.
In conclusion, the management of bank mandates plays a critical role in corporate treasury operations, impacting both security and efficiency. In this playbook, we’ve outlined some of the key strategies and innovative technologies like Cygnetise that are transforming this landscape by streamlining the process and significantly reducing the risk of operational losses and financial fraud.