Covering Bank Services Billing Standards Market Adoption: ISO 20022, TWIST, and AFP Global Service Codes

Headlines

•  16+ major banks provide billing statements in the BSB format.
• 13+ financial systems support BSB for bank billers and corporate bill recipients.
• BSB can be used with bank accounts held in 100+ countries based on the banks now providing bank billing statements in this standard format.
• AFP Global Service Codes (GSC) see growing use with over 50 subscribers including banks and application vendors. GSC provides a standard encoding by fee type to make it easier for recipients to understand their billing statements.
• Corporate practitioners attribute value to use of the BSB format:
  • Reduced costs
  • Detailed information on bank transaction services usage
  • Accounting for unit consumption of banking services

In this edition

• Introduction
• BSB – A Brief History and Timeline
• Managing Bank Fees – Quo Vadis?
• Paul Burstein Remembered
• CGI-MP and Bank Billing Statements – A Status Update
• BSB Benefits
• BSB Availability – Survey Results
• Progress in the Standardized of Bank Billing Codes
• Bank Services Billing – The Process
• BSB Q&A
• Editorial Board / Resources / Contacting the Newsletter staff

Introduction – Robert J. Blair, Consultant

The BSB Newsletter was first published in 2008. Its purpose:

• For banks – Encourage banks to make billing statements available in BSB format
• For corporations and other BSB users– Identify which banks can supply billing statements in this industry standard format. Identify which application providers and software products support the standard for bank bill analysis & reporting

Newsletter content has been primarily focused on periodic surveys of banks, corporate practitioners, and financial application providers.

Prior editions were developed by Paul Burstein, until recently a consultant and for many years a corporate treasury practitioner with GE and advocate for development of the BSB standard and the AFP’s Global Service Codes. Regrettably Paul has passed (see page 3). This edition of the newsletter is the work of a number of billing subject matter experts. A full list of authors and editors is available at the end of the publication.

The newsletter will continue to carry news on adoption, evidence from treasury practitioners on value derived from use of the standard, details market, and bank and systems support for the standard. The objectives of the newsletter are to inform and to promote adoption.

Additional content planned for future editions of the newsletter will include:

• News of BSB related developments including status updates on industry developments, regulatory developments as they relate to bank billing statements and e-invoicing, public events and presentations covering BSB, etc.
• Details of market support for the standard –  There is substantial support for BSB in a number of payments markets (e.g. German and US). Corporate practitioners have recently expressed interest in domestic China (and other countries’) banks support for the standard.

While a number of the global and regional banks now cover (or plan to cover) all of their footprint, what levels of support for BSB can be found in domestic banks in important markets around the globe?

Billing standards covered:

• ISO 20022 BSB (camt.086) – Developed by TWIST and SWIFT, this is the latest version of the TWIST standard and the focal point of new industry developments as well as harmonization (normalization of use) across banks.
• TWIST BSB – Still in use and supported by a number of banks, application vendors and corporations.
• AFP Global Service Codes – Standardized billing item codes for use with BSB.
• Legacy and domestic bank billing standards including ANSI x12 822, various other.

Analysis of bank bills can be complex and challenging. The newsletter will continue to promote the standard and seeks to improve understanding of bank bill analysis and the value standards bring to this activity. The creation of billing standards was driven by the interest of corporate treasury practitioners such as Paul Burstein of GE and many others. The continuing interest and advocacy of corporate practitioners is essential to the adoption and value of the BSB standard.

BSB – A Brief History

BSB is the latest development in a long history of bank billing standards developments. Unlike prior Electronic Account Analysis standards such as the US ANSI x12 822 which focus on a single domestic market, BSB supports requirements in all payments markets including tax and value added tax, currency and multicurrency, etc.

The initial version of the standard was developed by TWIST to TWIST syntax. The second generation of the standard was developed by TWIST and SWIFT addressing minor corrections and moving the BSB schema into the ISO 20022 family of standards. Published in 2012, the ISO 20022 BSB specification (camt.086 in ISO20022 terminology) has seen increasing support from banks and financial application providers as well as increasing use by corporate treasury practitioners. This standard is also the focus of Work Group 5 (the work group in Common Global Implementation – Market Practice addressing harmonization of the BSB standard).

As with other industry standards, BSB was developed in partnership with many interested parties including corporate practitioners, transaction bankers and financial application providers. The catalyst for these developments has been the corporate practitioner’s desire for billing transparency, accuracy and (preferably) consistent presentation of billing data across banks. Use, and the continuing advocacy by corporate treasury practitioners in support of BSB, are important factors in the relevance and success of the current standard.

BSB Timeline    

2006      TWIST BSB published 2006.
2007
2008      The new TWIST BSB standard sees first use.
2009
2010
2011      AFP publishes Global Service Codes to standardize service item identification.
2012      A new version of BSB is published by ISO 20022 (camt.086).
2013      The new ISO 20022 version of the standard sees first use.
2014
2015      CGI-MP forms Work Group 5 to harmonize use of the ISO 20022 BSB standard

Managing Bank Fees – Quo Vadis? Hubert Rappold, TIPCO

Putting the BSB standard to good use…

The year is 2016 A.D. and Treasury departments are entirely optimized with highly automated end-to-end processes. Well, not entirely… The area of bank fee controlling still holds out against optimization of processes. And life is not easy for the treasurer who needs to deal with a multitude of international banks.

Occasionally treasurers might feel like the Romans trying to invade a village of indomitable Gauls still holding out against the invaders. The good news is that many banks have finally realized in recent years that the electronic provision of bank fee statements will lead to a stronger relationship with corporates. For treasurers, the benefits are clear and are listed below:

• Of course, the first and main benefit is monetary: If a price was agreed with the bank, you would expect the billing to reflect price. To err is human, so it is always worth checking if the agreed fee found its way into the bank‘s billing engines.
• If you have a clear overview of all cash management products used on a global basis, you can quickly see whether those products actually make sense. You might discover that some of the products are quite costly and could be replaced by more appropriate ones.
• If you have a clear insight into all the fees billed, you can quickly check if entities in one country/region are paying more for a service than they should compared to their peers. You can then initiate negotiations with the bank in question.
• If you are charged a considerable amount of repair fees you might ask yourself why these fees are levied. To avoid these costly fees in the future, a check of your internal systems and processes might be appropriate.
• Using your fee structure you can quickly identify unused accounts for which you are still paying maintenance fees. Doing this allows you to identify accounts to be closed.
• If the bank fee statement is detailed enough (e.g. also includes tax, address and VAT information), formats for electronic invoicing can be created to further facilitate straight through processing of bank fee data to ERP systems.
• In some countries, you can deduct VAT based on the information contained in a consolidated bank billing statement provided by the banks.
• If you collect your bank fees over a year, you will automatically get the perfect data material (volumes, services per region) for the next banking RFP, thus avoiding time consuming and error-prone data collections from subsidiaries.
• In case your boss asks you to “do more with less” — voilà you have captured and aggregated your bank fees. J
• Bank bills are a treasure trove of information regarding your bank relationships, internal processes, and costs per transaction. Information available in bank bills could answer such questions as: What is my payments mix (electronic vs paper, ACH/giro vs wires, etc.), payment services usage by country, relative efficiency of one units use of bank services (number of accounts, etc.) versus another.

The benefits of all these points clearly exceeds the mere cost-saving aspect of bank fee controlling. The growing importance of automated bank fee controlling is also emphasized by a number of indicators:

• CGI-MP established a dedicated Work Group 5“as part of the CGI-Initiative. This group fosters the further development of the camt.086 message specification.
• Treasury associations, banks, corporates and vendors started initiatives in Germany, France and Austria resulting in combined events and conferences.
• European Union initiatives are in progress to make electronic billing a requirement for all vendors (including banks).
• The AFP in Denver, the Finance Symposium in Mannheim and the AFTE days in Paris hosted numerous events about bank fees.
• Large and medium sized companies are starting projects to take advantage of the benefits discussed above (with a bank agnostic approach).
• Students continue to write numerous master theses about bank fees to combine practical and theoretical aspects.
• More system vendors are coming to market with bank fee controlling and analysis software solutions.

What can you do as a corporate to help these initiatives along? Simply ask your bank to send you electronic bank fee statements in the BSB, ISO20022 camt.086 format or the earlier version, TWIST BSB. The ISO 20022 version of BSB is the most recent version and preferred (where available) due to corrections to the earlier version and additional industry harmonization efforts by CGI-MP Work Group 5. A list of banks/countries where this is possible is published annually in this newsletter.

Alea jacta est – the days of opaque bank fees have come to an end.

It does not matter if this is achieved by market pressure or by law. Banks are now in a position where they must seize the day – carpe diem to improve the lives of treasurers.

CGI-MP and Bank Billing Statements – A Status Update

The industry group Common Global Implementation-Market Practice (CGI-MP) has established a work group (WG 5) to harmonize use of the BSB standard. The stated objectives of this group:

• Build upon the foundations laid by ISO 20022, TWIST and AFP.
• Clarify message schema capability and where required enhance message schema to meet the requirements of cash management products e.g. addition of balances, interests, value dates, tax etc.
• Extend the set of mandatory fields to support the requirements of e-Invoicing to meet global regulatory requirements.
• Improve the implementation and validation guidelines to assist banks with adoption and standardization, focusing on core capabilities that should be implemented.
• Further explore the drivers (technology, economic, operational) that will enable the broad adoption of standards by banks
• And in a second phase: Expand the global, universal service code set to include additional bank services e.g. guarantees, loans, derivatives, securities etc.

Status of WG 5 activities:

• Completed – Established a BSB focused discussion group with AFP.
• Ongoing –
  • Banks are mapping line items in their proprietary bank statements to TWIST and camt.086 to help provide more efficient implementation procedures for corporates.
  • An e-Invoicing gap analysis is in progress to identify any needed enhancements to the ISO 20022 standard to address that requirement.
• Upcoming –
  • Publish e-Invoicing gap analysis findings & recommendations.
  • Determine strategy to close gaps.
  • Expanding awareness of BSB to corporates through conferences and events
  • Analysis of AFP Global Service Codes current use.

BSB Benefits

The primary motivation for receiving electronic billing statements is simple. Corporations want to know how much is being spent for services rendered and to validate the information to ensure that the prices and charges are accurate.

BSB can be used to:

• Check all bank calculations (find errors)
• Examine each and every line item charge
• Check expected balances, volumes and service prices
• Allocate bank charges automatically
• Perform modeling and “what if”
• Compare divisions, departments, regions, etc.
• Import/export data to general ledger and budget systems
• Perform bank-to-bank comparisons
• Perform trend analysis over time
• Satisfy Sarbanes-Oxley requirements
• Identify unused services
• Archive statements electronically

A complete and accurate record of every service volume, every service price, every service charge, every balance on deposit, every interest rate, and every tax calculation for every account in every bank for the last “X” months is a powerful resource indeed. The only practical way to enable this resource is through use of electronic billing statements in a standard format.

BSB Availability – Survey Results

– The heart of the newsletter is a periodic survey of banks, technology providers, and corporate practitioners to assess support for the standard.

As of the November 2014 survey, 15 banks (now 16 with the recent addition of Commerzbank) are in production with BSB (either or both the newer ISO 20022 version on the original TWIST version). Other banks may be in production but have not publically declared. 13 application vendors are known to support the standard:   9 for end users (bill recipients), 4 for banks.

Note: Adoption progress is as of the last survey, Nov 2014.   The next survey is now in preparation and will be reported on in a future edition of the newsletter.

New additions to these lists would be both appreciated. Please contact the newsletter staff at the address provided on the last page of this newsletter.

From a recent survey given at the AFP conference in Denver, CO (the annual US corporate treasury conference, October 2015) we learned:

1. Only 16% of the 48 corporate treasury practitioners who participated in the survey and have international bank relationships currently receive BSB formatted billing statements from their banks.

2. BSB is a significant part of the corporate treasurer’s service requirements and buying decision – 51% of respondents indicated that a bank’s BSB capabilities would impact their bank services buy decision.

As with other industry standards, BSB was developed in partnership with many interested parties including corporate practitioners, transaction bankers and financial application providers. The catalyst for these developments has been the corporate practitioner’s desire for billing transparency, accuracy and (preferably) consistent presentation of billing data across banks.

Progress in the Standardization of Bank Billing Codes 

As of January 2016 there are over 50 subscribers to the Global Service codes.  Among them are the top 15 global banks, including the largest 5 banks, large corporates from across various industries and a variety of technology vendors and treasury consultants.

 Bank Services Billing – The Process

The message standard involves a simple workflow, with the financial institution sending to their client a consolidated reporting of activity and service charges. No supplemental messaging related to status, resend, acknowledgement, etc. has been provided. Message delivery (communications protocols, security, handshaking, etc.) is by bilateral agreement between the two correspondents.

Steps in BSB Service Setup and Operation:

1. Setup – Bank and account holder agree to exchange the BSB message standard by agreed means (Online or File Transmission including SWIFT).
2. The bank compiles statistics on services usage throughout the billing period (frequently monthly) and creates a billing statement (or invoice) at the end of the billing period.
3. Operational Flow (simple) – The bank generates billing statements with bilaterally agreed frequency, transmits (or posts to an online system) billing statements in the BSB format.

BSB Q&A

1. What is the “Bank Services Billing standard (BSB)”? The BSB standard defines an electronic statement that can be sent by a bank to its wholesale customers (e.g., corporations, governments, institutions) detailing their usage of financial services and their related charges. A BSB statement includes volumes and associated charges for all billable services rendered during a billing cycle, usually one month.
2. Why was BSB created? This standard was developed by TWIST at the request of a corporate interest group, led by General Electric.
3. What value does it offer corporations and other wholesale bank clients? And banks? BSB has been created to help corporations:

• Enhance control over the cost of banking services
• Automate account reconciliation and account for bank fees
• Simplify the task of complying with market regulations such as Sarbanes Oxley
• From the perspective of the bank, BSB represents a new information product which helps differentiate bank transaction services

4. What information is included in a TWIST BSB statement? A TWIST BSB statement is designed to report on all bank services rendered during the reporting period. A BSB statement includes:

• For one or more accounts in a client/bank relationship
• For a defined period in time, typically the most recently concluded monthly bank billing cycle
• Identification of all chargeable services used in the period
• The volume of those services during the period
• The per item and total charge for those services
• Select balance and interest information
• Relevant tax information

5. Where can BSB be used? Any & all countries.
6. What reporting period do the BSB statements cover? Any period as agreed between the bank and its client. A single calendar month period is most common.
7. What industry recognized codes can be used in the optional element to identify service fees? Different code series may be used to identify service fees including bank proprietary codes as well as the Global Service Codes published by the AFP.

 Editorial Board

• Robert J. Blair, Consultant.
• Andrew W. Griebenow, HSBC
• Emmanuel Léchère, Redbridge DTA (ex bfinance)
• Sandrine Legoff, BNP Paribas
• Bridget Meyer, Redbridge DTA (ex The Montauk Group)
• Jacques Molgo, Air Liquide
• Lisa Novick, Citi
• Martin Postweiler, Merck Group
• Hubert Rappold, TIPCO

Resources

• AFP – The Association for Financial Professionals
  • Global Service Codes – Source of the billing fees codes list as well as a whitepaper providing details on history and use.
  • http://www.afponline.org/servicecodes/
• CGI-MP – Common Global Implementation-Market Practice
  • A group of banks, corporate treasury practitioners, and financial application vendors working to harmonize use of BSB and other standards. Work Group 5 addresses BSB.
• ISO 20022 – International Standards Organization
  • Current version of the standard (ISO 20022, camt.086) and related documentation. including:
    • Message Usage Guide describing “…the data content requirements of the Bank Services Billing (BSB) standard as defined by ISO 20022.”
    • Sample file
      • Field by field cross reference documentation: ISO 20022 to TWIST to ANSI x12
    • ISO 20022 Newsletter with periodic coverage of BSB
    • https://www.iso20022.org/display_news.page?dataitem=en/20120716_bsb_publication
  • TWIST – Transaction Workflow Innovation Standards Team
    • AFP presentation on BSB, and this newsletter, FAQ, business process information.
    • http://twiststandards.org/news/iso-bsb-electronic-billing-statement/
  • Wikipedia
    • A non-technical introduction to the standard.
    • https://en.wikipedia.org/wiki/Bank_Services_Billing_Standard

Contacting the Newsletter Staff-Comments, Contributions, Additions to the Mailing Lists and Surveys

Contacts:

• Survey – To participate in the BSB survey:

news@redbridgedta.com

• Newsletter – To join the mailing list, comment on this edition, or contribute news or articles to a future edition of the newsletter:

TWISTBSB@TWISTstandards.org

Please feel free to share this publication with others interested. Copies of this and prior BSB newsletters are available on the TWIST Standards site:

http://twiststandards.org/