CIBC introduces electronic cash management

CIBC Tuesday launched an integrated Web-based cash management service to meet the projected growing demand among Canadian business for online banking.

CIBC Business Banking offers balance and transaction reporting, the exchange of cash management files and electronic payment capability on a single Internet-based platform.

Don Rolfe, managing director at research firm Gomez Canada, said all the major banks in Canada have invested in Web-based cash management, but the integration inherent in CIBC Business Banking puts CIBC ahead of the Canadian competition in that department. He said he expects CIBC to eventually launch the service in the United States through its Amicus Financial subsidiary.

“They are definitely leading the pack,” Rolfe said of CIBC.

According to a survey by Gartner and Dallas-based consulting and software provider Carreker Corp., it’s a good time to be in the lead when it comes to Web-based cash management. Thirty-five per cent of the 550 small, medium and large North American corporate clients surveyed said they currently use Web-based cash management services and another 26 per cent plan to within the next two years.

Among 19 large corporations (having annual revenues 0f $400 million or more) in Canada surveyed, 29 per cent use Web-based cash management and 63 per cent plan to over the next 12 to 24 months.

“There is very strong sensitivity to those services, particularly in the segment of large corporations,” said Carreker Corp. managing director Pierre Giraudon. “Banks that will not be ready to address that demand will be at risk of losing their customers.”

According to the survey, mid-sized businesses, which stand to gain less of a cost advantage than their larger counterparts from a move to fully-electronic transactions, will adopt Web-based cash management at a slower pace. Giraudon said 17 per cent of Canadian and 21 per cent of American mid-sized businesses are expected to be using such services in the next two years. Overall, the desire is greater in Canada than in the United States, while demand is relatively consistent across segments across North America, Giraudon said.

Rolfe suggested this is because Canada’s banking oligopoly results in a much faster cheque-clearing process in this country than in the United States, where companies get use of a 10-14 day float before their cheques clear.

This means Canadian companies have less to lose and more to gain from embracing a fully-electronic transaction process. Steve Webster, CIBC vice-president of business deposits and payments, said companies would have gravitated to Web-based cash management sooner had a service like CIBC business banking been available. As well, he said investments by companies in often-archaic legacy systems have slowed the migration.

“Replacing those (legacy systems) with Web-based tech is expensive and complicated,” Webster said, noting that some Canadian companies still record financial transactions on mag tapes, which are then courierred to the bank.

But the savings from switching are large, Webster said. He said preparing one paper-based cheque costs a company between $10 and $15 by the time the payment is finally made. CIBC Business Banking, which CIBC developed in conjunction with Atlanta-based software provider S1 Corp., charges $2 per e-cheque. An integrated site also produces time savings as it does not require multiple sign-ins, Webster said.

Webster also touted the service’s ability to combat internal fraud through security controls that allow businesses to give employees access to only specific functions and enable multiple-authorizations of payments. The service is also designed to survive an emergency at the office. As it is Web-based, CIBC Business Banking is accessible through any computer with an Internet connection. As well, Webster said CIBC’s offsite redundancy is especially attractive to small and medium-sized companies not able to afford this backup functionality on their own.

“They now have their own built-in redundancy,” he said.

Webster said CIBC is currently implementing its business banking service in several medium and large corporate customers.

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