How Bank Connectivity Can Throw a Wrench in Your ERP Migration

Bank integrations are one of the riskiest components of ERP migration projects. Connecting treasury and payment systems to banks is a daunting task for organizations, especially when internal IT resources are stretched thin at the start of a cloud ERP integration project. 

ERP bank integration complexity emerges as a critical challenge for organizations working to connect treasury and other payment systems to banks. Each bank requires its own unique formats for both establishing connections and pushing approved payment formats to multiple banks. In order to go live with just one bank for connectivity, organizations typically need up to 10 formats. For international bank connectivity projects, that number balloons to ~500 variants, meaning one organization can have hundreds of formats to develop, test and deliver. The sheer complexity of cloud ERP bank integration is apparent as we explore the steps required to connect a single bank to an ERP as well as the internal, external and technical challenges involved with ERP bank connectivity.

One Bank, Many Steps

The procedure to connect even one bank to an ERP is extensive and time-consuming. Below are the simplified steps IT must take to connect a single bank to an ERP for a straightforward use case of bank connectivity:

As a result of this ERP bank integration complexity, it typically takes six to 12 months to add a new bank, and some international banks can take more than one year to get into production. A scope of even five or 10 banks can compromise the success of a cloud ERP bank integration. 

Multiple Formats, Multiple Challenges

ERP bank integration complexity brings many internal, external and technical challenges. The magnitude of formats and scenarios that must be built and tested can be enormous and overwhelming. All format scenarios need individual verification with each bank, and some businesses can have hundreds of required formats for all the various banks, currencies, countries, etc. 

Internal Challenges

Organizations often underestimate the resources, time and complexity involved in developing and testing multiple bank formats and connections:

• Typically, it takes 6-12 months to add a new bank.
• Finance and treasury have to manage several, if not dozens, of banking relationships.
• Dedicated, knowledgeable IT resources are a must when building and validating payment formats and flows to banks.

External Challenges

Being able to effectively manage multiple banks is critical. In some cases companies have to manage up to 100 banks during cloud ERP bank integration. There are always challenges posed when working with large, outside organizations, and banks are no different:

• Each bank has its own standards for communications and connectivity.
• Banks are very process-oriented, due to compliance and security requirements.
• Organizations must follow banks’ strict controls, which prolongs the process.
• Banks often become bottlenecks for connectivity projects because they may not prioritize other organization’s connectivity demands.
• Organizations must “get in line” along with all the other entities connecting to banks.
• International banks may operate in different time zones and speak different languages than IT teams, presenting challenges for technical work.
• Even when an organization’s IT team speaks the same native language as the bank’s team, banks use their own terminology and domain expertise, which may be unfamiliar to IT departments.

Technical Challenges

IT teams face a multitude of technical challenges when building and testing formats and flows to navigate ERP bank integration complexity:

• Bank formats, even for the same clearing system, will vary across banks.
• Each bank payment format is complex, with customizations including the bank, initiating branch, receiving branch, payment type, possible FX conversation, urgent or non-urgent payment, the currency and other regional or bank-specific fields.
• The number of payment formats means there are hundreds of format customizations to modify and verify in each environment. Each scenario changes the data that must be sent, and a single missing field or incorrect format means failure for that test.
• Rigorous testing is required, as a failed payment scenario means a failed payment.
• Payment formats testing takes time. A test usually fails the first time, and it often takes numerous rounds of testing for a successful payment.
• IT teams have to work through regional differences in the banks. For instance, CITI is not a single bank; they may be under the same banner, but CITI is made up of 1,000s of banks globally with many regions, and even branches, each with their own unique requirements.
• IT resources will be overextended as they test, fix errors, document and re-test each payment format for each bank.

Service Providers Simplify Cloud ERP Integration 

To mitigate these challenges, many organizations take advantage of connectivity-as-a-service solutions to reduce time and costs, capitalize on the latest connectivity options, improve quality of data and allow IT staff to productively focus on initiatives that drive business growth, fully realizing the benefits of ERP migrations. 

Rather than having the IT department pick up another area of development and maintenance, we encourage corporate IT departments to look to Kyriba for ERP bank connectivity projects. With over 20 years of experience, Kyriba fast-tracks cloud ERP integration with out-of-the-box, bolt-on bank connectivity, supported by an extensive payment format library of more than 50,000 pre-developed and tested global payment scenarios. 

To learn more about our bank connectivity services and how you can accelerate your ERP migration project, request a demo today.