A new electronic hub created by Alterna Technologies Group Inc. promises to go a ways in helping corporate clients save time and money in connecting to and transacting business with regional and international banks.
Alterna Bank Information Exchange, or ABIX, sets up EDI (electronic data interchange) connections among corporations, institutional clients and their banks by providing standard interfaces for the exchange of information.
Traditionally, connecting output files from a companys ERP (enterprise resource planning) and accounting systems to a banks transaction and reconciliation platform required three to 12 months of development work at a cost of as much as $100,000, according to Alterna officials.
For companies that deal with more than one bank, the cost is multiplied further because each bank may have different payment, reporting and security formats and large companies can have multiple connection points to a single bank.
Alterna officials declined to give a specific dollar amount for the upfront fee they charge for membership in the ABIX network, but they said it is a fraction of the amount it takes to develop a single interface.
Corporate customers of Citigroup Inc.s Citibank unit always had a way to get a software link to the bank, but it was through point-to-point solutions. “[ABIX] provides a more multibank facility for our customers to get to us,” said Dorothy Rule, who heads the treasury solutions group for the Citibank e-business unit. Rule estimated that through the network, Citibanks customers will reduce overall implementation costs by about 25 percent.
The problem many corporations face is multiple units in different geographic locations using a variety of ERP systems that may connect to a number of banks—which can quickly eat IT assets on both ends.
ABIX works in conjunction with Alternas Auros offering, an Internet-based software platform that provides cash and liquidity management functionality—reconciliation, cash forecasting, netting, payments processing and account management—to corporate users. ABIX provides the standard interface between Auros and banks. Alterna is working on initiatives for non-Auros clients as well, officials said.
ABIX member banks work with Alterna to streamline generic, reusable interfaces for corporate customers. The banks certify those interfaces and offer them to corporate clients, which use the standard implementation time to simplify integration with the banks platform. The Calgary, Alberta, company has worked with more than 70 banks—including two of the biggest in the United States, Citibank and Bank of America N.A.—to create the interfaces. Nearly 80 interfaces are expected to be certified by June. Once a bank builds a connection, it can be reused for multiple corporations.
The Citibank e-business group has gone live with a certified reporting interface; next, it expects to complete a low-value funds transfer certification and, in the third quarter, a high-value certification.
The certifications will go a long way toward standardizing implementations to Citibank, according to Rule.
“Previously, we would have to provide proprietary software to each of our customers so they could utilize our products and services,” said Rule, in New York. “Normally, treasuries would have their own applications and would need a connection to get into our software. We want to move away from that.”
Using standardized interfaces saves a lot of implementation time, said Tom Spataro, officer of treasury reporting development and support at Sun Life Financial, a unit of Sun Life of Canada Inc. that uses Auros as a treasury management system. While Sun Life has completed most of its interfaces with the seven banks it works with, the implementation time cost Spataro between six weeks and three months.
“The amount of time you can save in implementing—especially when banks merge—would give us a lot more flexibility as a company,” said Spataro, in Wellesley Hills, Mass. “It would allow us to concentrate on merging a company, rather than technical aspects. … What we want to do here is concentrate on business and not worry about stuff going on in the background.”
Citibanks Rule said ABIX is a step in the right direction. “We believe our customers will look to banks and say, What certificates do you have?” she said. “We believe it will ultimately impact client decisions on what banks they use, on how easy it is to use technology and if its hard to connect in.”