FEMALE HAND USING MOBILE BANKING ON WHITE SMARTPHONE

Online banking security: The importance of secure communication

 

Often, the banking and treasury functions configured in an enterprise resource planning (ERP) solution like Microsoft Dynamics 365 involve sophisticated and thorough approvals and other processes. However, without file storage available in the ERP solution itself, some businesses implement unsecured bank communication and file transfer strategies. The consequences for these businesses and their financial partners could be drastic, particularly in today’s environment. Additionally, these companies miss out on valuable opportunities to further automate their financial processes.

Online banking security risks: The importance of end-to-end protection

With billions of dollars at stake, it’s no surprise that banks and other financial institutions are prime targets for cybercrime. A 2019 article from Trend Micro identified that banking customers and infrastructure are prominent targets for cyberattacks. Customers face phishing attacks, browser injects and other threats.

The last link, the weakest link: Why secure communication matters

If you have a strong chain overall, but there’s one weak link, what do you have? A vulnerable gateway.

Today, that final link in the chain could be even more crucial than in the past. Previously, a centralized workforce that relied on a tightly controlled corporate network could at least offer greater security, even if the processes undertaken on that network could be improved.

Today, when remote work is the norm, distributed workforces rely on home networks that employ varying levels of protection.

In this environment, it’s even more crucial that financial processes employ strong security throughout the entire workflow.

Too often, the weakest link in the chain is at the point where files are transferred to and from the bank. Without secure file storage available within Dynamics 365, businesses may rely on individual workers to upload an editable file containing sensitive information from their desktop web browser to the bank’s interface. Receiving files from the bank is similarly risky. Conducting this kind of business from a home network multiplies the risk factor.

Additional considerations: Lost efficiency for manual banking processes

Using manual, unsecured communication channels with your bank also undercuts your ability to automate time-consuming, labor-intensive processes. This is especially true for receiving bank statements. When an individual is responsible for directly receiving and maintaining these records — then reconciling them as well — the process can take up an excessive time, distracting from the completion of other tasks and introducing the potential for human error.

Secure communication for online banking

The growing importance of secure communication has become clear in many circles, from messaging to videoconferencing. For online banking security, end-to-end protections must entail secure communication between the business customer and its financial institution. Specifically, the exchange of files between the company and the bank must be conducted through a secure channel.

How it works: The Bank Communications Hub

The Bank Communications Hub (BCH) serves as a secure channel through which businesses can communicate between the Dynamics 365 ERP and a bank. Without the need for additional on-premises infrastructure, the BCH can be implemented through a secure cloud configuration. This solution stores files for Dynamics 365 and communicates securely and directly with any bank or other legal entity of your choosing. For example, in Dynamics 365, business users can create, approve and submit vendor payments for execution, after which the BCH will carry out that workflow.

Importantly, the BCH allows businesses to remain bank independent. Because the configuration can be integrated with any bank worldwide, companies are not committed to remaining with one bank simply because of their secure communication software solutions.

Instead of forcing individual contributors to manually exchange files with their banks, the BCH provides a more secure communication channel, limiting the potential for bad actors to intercept and exfiltrate sensitive data. This process also ensures that files are stored securely prior to their transfer and after they are received from the financial institution.

Better online banking security, plus enhanced automation

An additional feature of the BCH is the ability for businesses to further automate their financial processes, even when those workflows involve secure communication with outside financial institutions. For example, receiving and reconciling bank statements will require less manual processing and interaction when these processes are automated through the BCH. The hub can import statements according to the business’s desired cadence, not requiring an individual to download, manage or store the statements. From this secure storage point, automation can be used to create statements within the company’s ERP, setting the stage for an efficient reconciliation process that’s mapped to the company’s unique needs and capabilities. This automated solution provides greater security, less human input, improved accuracy and better efficiency overall.

The Bank Communications Hub is a unique solution from SK Global Software that helps facilitate many other value-adding processes and automation capabilities for accounting and finance departments. Learn more about our banking and treasury solutions. Get in touch with us today.

spreadsheets and accountants

6 tips and tricks for implementing a new banking and treasury solution

Businesses of all types are looking to implement first-quarter strategies that will help them improve efficiency for 2021. Going live with a new banking or treasury solution is a top concern for many accounting and finance professionals as the year draws to a close.

What motivates these forward-thinking business leaders? According to a 2019 survey from Deloitte, the top driver for applying treasury technology was the desire to automate manual processes, with 72% of respondents saying that doing so was a critical or very important concern for them. At 68%, the second most important cause was risk mitigation, including a need for greater security and less human error.

Top 6 tips for going live with your treasury or banking solution

If you want to reap the benefits of a new treasury or banking solution, getting a head start with these six tips can help ensure that your implementation succeeds in achieving the business's goals.

1. Solidify processes first

One possible issue for implementing a new banking solution is attempting to use the setup and integration timeline to also smooth out difficult processes that have previously been conducted in an ad hoc or nonstandard fashion. In reality, all business processes that interact with the new solution should be firmly established prior to the implementation. The technology is not meant to help organizations troubleshoot and re-engineer existing processes. It is intended to streamline and improve those operations. Think about it this way: If you can't explain a particular process to your integration partner, then they certainly can't explain that process to a computer program.

2. Avoid siloed decision-making

Banking and treasury solutions should be part of the conversation as soon as you begin to explore how your enterprise resource planning (ERP) software will handle finance functions. If you think you will need outside support for a banking or treasury solution, involve your potential partners early on, and allow them to inform your decision-making process for the overall ERP setup. For example, your bank may use one of several different platforms — like a host-to-host platform or a portal. If an ERP implementation proceeds without considering downstream effects like these, it could be difficult to readjust once you're ready to focus on your treasury solution.

3. Bring in the bank — or the banks — early

Lead times for your bank could present a hurdle, too. Keep in mind that it could take between six and 12 weeks to set up a new service with these institutions, and testing will take time as well. Build that timeline into the scope of your larger ERP planning.

Multinational companies may have relationships with several different banks around the globe. If they're looking to streamline and create efficiencies with their ERP implementation or a new banking solution, consolidating their efforts to work with just one key financial partner, or a few, may be part of the strategy. If this is where you think you might be headed, it's important to make this decision in the initial stages of the project.

4. Complete robust testing with the bank

As we mentioned, testing the new treasury solution with your bank can take time, but this is a crucial step. Make sure to not skip past it. In fact, wherever possible, opt for robust, realistic testing scenarios instead of just accepting the minimum standards for executing the implementation. In particular, make sure that you test at a comparable payment volume to your normal delivery loads. Also, include testing for country destinations where you'll be delivering payments in the future. If you regularly send out hundreds of payments to several different countries, you should verify that these parameters will work under your new solution. The same holds true for testing imports like bank reconciliation and settlements.

5. Manage your transition period thoughtfully

On the date that your new banking solution is scheduled to go live, you should be cautiously optimistic about the execution. However, this isn't the time to test out mission-critical million-dollar international vendor payments. The transition period, known as a cutover, is a crucial time. Run key payments on the old system before cutover, and you'll breathe easier.

6. Stick it out with your partner

Your treasury solution should add value for your organization. In order to make sure that you maximize the benefit you receive from implementation — including for reconciliation, cash application and vendor payments — keep your supporting partners on through the end of the month. They'll help you tweak processes and operations for optimal efficiency going forward.

MY ACCOUNT key on a keyboard

What to ask your bank about integrated communications

Integrating with your bank to enable direct communications between your treasury platform and their internal infrastructure comes with considerable benefits. Not only is your business able to save its accounting team significant time and manual work, but direct bank communications can also help bolster data security and your ability to further automate.

However, setting up integrated communications with your banking service providers takes some time, consideration and planning. It's important to ensure that all the moving parts are in place and that configurations are completely accurate.

Why integrate with your bank?

Before we examine what businesses need to ask their banking partners, it's important to understand the advantages of supporting direct communication of this nature.

In the past — and still today — many enterprises used manual processes to transfer data to and from their bank. This includes manual uploads and downloads of critical files containing sensitive data, being passed back and forth between the company and the bank. And while this strategy may have sufficed in the past, it can open enterprises up to considerable security risks.  What's more, the internal finance and accounting teams engaging in these manual processes waste significant time on these tasks which could be better spent on more valuable and strategic accounting work.

The solution here is to leverage technology like SK Global's Bank Communications Hub, which supports the kind of robust, uninterrupted integration between enterprise Dynamics ERP solutions and the bank. Additionally, this type of advanced technology can also support time and money-saving automation, including for the reconciliation process, transaction matching, mapping capabilities and more.

What do I need to ask my bank?

First and foremost, it's important that accounting and finance stakeholders spearheading the integration process understand how to guide the initiative and collaborate with their banking partners. To that end, there are some key questions to ask to help ensure a successful integration:

Who at the bank should we speak with?

In order to start the project off on the right foot, enterprise stakeholders should first connect with an account manager at their bank. This account manager can discuss the types of services the business will need in place with the bank in order to support direct communications. These might include bank services like eSettlement, direct debit capabilities or other functions.

Businesses will then connect with an onboarding or integration specialist at the bank, as well as a technology officer to help further their progress. These individuals can help the business work through the necessary technical and functional aspects required to support direct communications. And, once the integration is configured, the technical officer or onboarding specialist can help with testing to ensure that files are sent and received correctly.

What file formats will be required?

To make sure that files are transmitted correctly, it's key that the business uses the right file formats to support different payment or transaction types. This might include specific formats for:

  • Bank reconciliation: Many banks use a similar file format for reconciliation, but these might change according to where the bank is based. Domestic American banks often use the common BAI2 file format, but international banks will typically require a different format.
  • Outbound vendor payments: Configuring direct bank communication to support outbound vendor payments is typically the most complex part of the banking integration process. It's common for businesses and banks to use the U.S. ACH file format for these outbound vendor payments, but if these are wire transactions, they will require a different format. Again, the format will also depend on the destination country where the payment is being sent.
  • Inbound files: It's also key to leverage the correct format for files coming from the bank to the businesses Dynamics platform. Many of these will require the ISO PSR file type.

A partner like SK Global can support any file format required to enable direct bank communications. In addition to the more than 500 banking formats accessible through the SK Global Treasury Suite library, our developers can also build any new format, if needed.

What is the timing for communications?

It's also critical to ask banking partners about the type of timing the business can expect when it comes to integrated, direct communications. Timing of files — particularly inbound files — can have considerable impacts on the business's internal banking processes, especially when posting transactions to the company's payment journals. So it's key that stakeholders have an understanding of just how long it will take the bank to respond.

Partnering with an expert

Overall, the process to support direct communication with the bank can be complex. To reap the benefits that integration with the bank can provide, it's imperative that communications and the supporting technology are configured directly.

A partner like SK Global can help guide this process and speak to your banking partners to ensure a smooth integration. SK Global has the expertise and experience to ask the right questions and to streamline the process to ensure success.

To find out more, check out some details of our Bank Communications Hub, and reach out to us to discuss or schedule a demo today.