Automating beneficiary account validation with Wärtsilä

Headquartered in Helsinki, Wärtsilä is a global leader in smart technologies and complete lifecycle solutions for the marine and energy sectors. With approximately 18,000 employees, Wärtsilä operates in over 200 locations in more than 70 countries around the world.  Since the introduction of Robotic Process Automation (RPA) into areas of their treasury and shared service centre in 2016, Wärtsilä has been on a journey to further digitalise processes in areas where technology is able to improve efficiency and support workflows. As part of their digitalisation efforts, Wärtsilä explored ways of automating the bank account validation process that occurs before invoices are paid to their network of global suppliers.

Jarmo Nurmi, Corporate Treasurer at Wärtsilä, says: “A global corporation present in so many different places across the world is vulnerable in many ways. We want to increase the possibilities of preventing any frauds in our environment. We are constantly exploring how we can utilise advanced technologies to help build shields and protective layers around us. We already have a centralised treasury, structured cash management set up and one core SAP, which helps us to build robust workflows and a number of fraud prevention principles into our processes.”

“One of the biggest vulnerabilities we face is if somebody could fool us into changing the payment instructions in our system for any of our largest vendors. That would be a huge problem as we pay numerous invoices of sizeable amounts on a weekly basis to the same suppliers and it might take a few days until the fraud is discovered. By then we would obviously have lost a large amount of money. That was the starting point for investigating how we could find new ways for validating supplier accounts,” adds Jarmo.

Connecting via an API

APIs (Application Programming Interfaces) enable two applications to directly communicate with each other and exchange data. Nordea’s new Beneficiary Account Validation service works by connecting Wärtsilä’s system directly with Nordea’s, enabling the two to talk via an API and share data related to bank account validation. The content of the API query is automatically transferred by Nordea into a SWIFT message, which is then delivered to the beneficiary’s (i.e. the supplier’s) bank.

Jarmo says: “A few years ago, we tested the idea of asking our suppliers to send their bank account details to us themselves through a SWIFT message from their bank to our bank.  That idea did not work out so this time we turned it around with the Beneficiary Account Validation approach and embarked on a co-creation process with Nordea instead. This time the idea involved sending a verification message via Nordea to the account holding bank with a message that says ‘these are the identification details of the company legal entity’ and then asking ‘does this bank account number belong to that company entity?’ ‘Please answer yes or no’. If the answer is ‘no’ then we would suspend the supplier account for any new payment and investigate further.”

The Beneficiary Account Validation service is now available to use for selected queries and in particular in the case of suppliers changing payment instructions or when a new supplier is added.   Wärtsilä now sends a query to Nordea to validate information regarding the account the counterparty is indicating to use to receive the payment. Nordea then passes on the query to the supplier’s account holding bank via SWIFT messaging to request verification and confirmation that the account number is correct and genuine.

Jarmo adds: “APIs are not something new for us as we have been using them in other areas of our business. However, this possibility opened up as Nordea was at the same time thinking of other kinds of API digital services they could provide for corporates. Then we started to co-create to think together about how to address this problem. We have a digital workflow that automatically sends a message via the API to Nordea and they then pick up the request and start processing it. Of course this service is not relevant everywhere, but it offers us a very strong robust option for double checking information.”

Co-creation and knowledge sharing key

Development of the new Beneficiary Account Validation API service took around one year and involved a close iterative collaboration between Nordea and Wärtsilä.

Liisa Kanniainen, Strategic Partner, Large Corporate Digital at Nordea, says: “This project is a great example of the way banks are finding new solutions by co-creating. It all started when during a strategic cash management meeting Wärtsilä explained to us examples of existing pain points in their payments related processes and ideas on how to solve them, asking our views on whether we could find a way to deliver a workable solution together. We picked it up at Nordea and started to innovate with an open mindset. We thought this might be a good case for leveraging our global connections to other banks through the SWIFT network, creating an opportunity to support companies in fraud prevention. We have already seen strong interest in the Beneficiary Account Validation API service from a number of other companies since the launch. Working with Wärtsilä has involved a lot of learning from our side. This was a very inspiring process and there was great excitement from the Nordea team as the service became a reality. Beneficiary Account Validation was concrete and something easy to understand in the way that it was all about combating fraud. It also brings a sustainability aspect as we are able to do good for society in terms of supporting companies in their efforts against fraud prevention.”

At Wärtsilä, digitalising processes to find ways of optimising overall workflows has been part of the company’s culture for a number of years.

Jarmo says: “We have been on a digitalisation journey for some years already. Of course, that extends our understanding of the possibilities of modern technologies instead of using normal office tools and standard solutions. Suddenly  there was a completely new world ahead of us. That helped us also to explore things that were not earlier available to us by thinking about all kinds of approaches when it comes to machine learning and artificial intelligence as well as automated reporting, API approaches and automated digital workflows, which is basically the area we have been working in here. With Nordea we have together been testing, trying, correcting and ultimately finding the right way forward. By co-creating around Beneficiary Account Validation, Nordea and Wärtsilä have managed to make a big breakthrough.”

Secure and efficient

By making it automated and efficient to check the validity of receiver accounts before payments, it is hoped that Beneficiary Account Validation will be a very effective solution in combatting fraud. As well as providing assurance for companies making payments to first time suppliers, the service also enables checks to be made when new or changed bank account numbers are received from an existing supplier.

Jarmo continues: “Beneficiary Account Validation is an ever evolving case in reality and we are constantly developing our processes in Wärtsilä to improve this and other services to make them more efficient and effective. Fraud attempts are becoming increasingly more sophisticated and intelligent all the time. We are trying of course to think of prevention measures in order to do whatever is necessary and within our reach to prevent fraud. It is fair to say that there is no easy way of stopping fraud in reality but our goal is to try to build all kinds of protective layers and shields around us just to mitigate the impact.”

“Beneficiary Account Validation really boils down to the capability of banks to handle these kinds of verification requests and their willingness to respond. I would say that if and when something like this becomes more widely known by the banks then the willingness to answer should definitely increase because this is a good way of preventing fraud and that’s to the benefit of both the corporates and the banks. I hope that this will gradually lead us into something which can be really helpful in terms of fighting cyber criminality in the future,” concludes Jarmo.

For more information on Beneficiary Account Validation please write to Liisa at liisa.kanniainen [at] nordea.com (liisa[dot]kanniainen[at]nordea[dot]com).

Find out more about Nordea Open Banking here: https://developer.nordeaopenbanking.com and read more about Wärtsilä here: https://www.wartsila.com/.