IT’s Most Common ERP Bank Connectivity Challenges

By Steven Otwell July 21, 2020

Bank connectivity is a major issue for ERP companies and often turns out to be far more challenging than IT departments realize when they engage in a bank connectivity project.

Homemade Bank Connectivity

Typically the request from the treasury group or finance will arrive at the doorstep of IT, with the teams requesting a new integration between the company’s ERP solution and the new bank. IT departments often consider bank connectivity to be similar to other ERP integrations they would have created in the past. And they begin building an adapter. However, bank connectivity is quite a bit more work than they realize.

Challenge #1: Assuming the Integration Will be Straightforward

Generally, the first step is investigating the connection method, which typically involves an analysis of FTP vs SWIFT.  Clients are encouraged to adapt Alliance Lite2 (AL2) where IT will be required to have SWIFT domain experience and manage the connection points.  However, oftentimes the IT department investigating bank connectivity will encounter several issues.

It is widely known by those that have participated in an ERP to bank integration using SWIFT that both establishing and maintaining the connectivity is a high-effort and error-prone endeavor.

The overall situation with bank connectivity can quickly become a major overhead item for unsuspecting IT departments and there are many hurdles along the way, including varying methods for which bank connectivity can be performed, including:

  • SWIFT Alliance Lite2
  • SWIFT Service Bureau
  • MT Concentrator using the Kyriba BIC11
  • Regional and Country Protocols
  • Host-to-Host Connections

Each of these connections can be the right method to use depending upon the bank, payment volume and a host of other factors. And most companies do not perform bank connectivity with just one method but lean on several methods. One of the things that the IT department learns is the tremendous variance of interactivity and connectivity between different banks.

Ordinarily, IT departments that develop their own homegrown bank connectivity have to matriculate through the various options on a trial and error basis.

Challenge #2: Underestimating the One-Off Nature of In House Developed Bank Connectivity Project

Frequently in technology, a term is developed without considering the importance of the words that make up the term. This most definitely applies to the term “multi-bank connectivity,” and the word not to underemphasize is the word “multi”. The reason for this is that when we say “multi-bank” we don’t mean connectivity to 1 or 2 banks. Many global firms work with dozens of banks and in many cases, companies have to manage hundreds — or in some cases even thousands — of bank accounts. In assisting many customers connecting a single bank to an ERP solution using a custom in-house solution, we have observed that it takes an average of six months to complete the integration, and at a cost of between $100,000 and $300,000.  Now, take this estimate and multiply it by the number of banks that you want to connect. It quickly becomes clear that this will be an enormous effort for any IT department when trying to do bank connectivity entirely as custom development. This development is, in effect, a duplication of the efforts that Kyriba has already completed, and which through our experience we have perfected.

An Experienced Solution for Bank Connectivity

Rather than having the IT department pick up another area of development and maintenance that is not their area of expertise, many are turning to Kyriba. With 20 years of experience in streamlining global bank connectivity, we can help de-risk any ERP project. Kyriba’s Connectivity as a Service (CaaS) application manages real-time bank connections for more than 2,500 global corporations across thousands of banks and our pre-built, pre-tested bank functionality can accelerate global banking connectivity projects by more than 80 percent.

To learn more about how you can simplify and accelerate your bank integrations, download our latest eBook.

 

 

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