Digital payments, instant payments: payment traffic, - long the "plain jane" of banking services - has been changing at an increasing pace for some time. The result will be a new generation of payment processes. On the way there, credit institutions and financial service providers will have to face a multitude of challenges. The serious changes affect the interface between banks and customers (retail customers or corporate treasurers) on the one hand, and the payment flows between banks on the other.
New interfaces, new formats, new technologies the banks must prepare themselves for the massive changes they will be confronted with. The content and dimension of the projects will put a strain on the resources of every bank - both technically and quantitatively. This is especially true under the pressure of ambitious schedules and growing regulatory requirements.
After Instant Payments, preparations are now underway for the consolidation of the TARGET2 and TARGET2Securities platforms. This will be accompanied by a full migration to ISO 20022. (A migration to ISO 20022 is also expected for the EBA.)
Read our blog post: TARGET2 - TARGET2/T2S Consolidation
SWIFT has also announced a changeover of foreign payment traffic from today's formats to ISO 20022 as of November 21, 2021. From that date, every bank should send its messages ISO 20022 compliant to every SWIFT participant.
Please also read our blog post: Conversion to ISO 20022
The current development of the payment landscape opens up many opportunities for banks. New systems and technologies need to be introduced, architectures need to be revised, business processes in payment processing need to be improved and, in particular, payment transactions and treasury management need to be better linked.
TARGET2 already offers a range of tools that can be used to manage liquidity flows more precisely. The introduction of centralized liquidity management (CLM) on the consolidated TARGET2-TARGET2Securities platform will result in further optimization potential.
Please also read our blog post on this topic: CENTRAL LIQUIDITY MANAGEMENT
Realizing this is not only necessary - in order to meet the increased regulatory requirements for banks' liquidity management. In view of the foreseeable end of the low-interest phase, now is the right time to lay the foundation for cost and earnings potential in liquidity management.
On their way into the modern era of payments and liquidity management, financial institutions face both opportunities and risks. Our Payments & Treasury consultants help you minimize the risks and seize the opportunities.
We support you in preparing, implementing and managing your payments and treasury projects. Contact us.
Regulation and innovation continue to shape the development of payments. With PSD II and instant payments, discussions about FinTechs have faded into the background. With T2/T2S Consolidation, the banks are confronted with a really "thick board". The new development of the TARGET system, which is being driven by the ECB, is tying up enormous resources: the software readiness for the go-live in November 2021 must already be reported to the Deutsche Bundesbank by October 2020. Changed account structures and modified procedures for the management of intraday liquidity in the Eurosystem are additional challenges.
In addition, SWIFT is starting the migration of payment formats to ISO 20022 at the same time - but (unfortunately) not with identical allocation rules. These are all projects that require a solid wealth of experience. And employees with just this wealth of experience are practically impossible to find on the job market. This applies equally to banks, consulting firms and payment software manufacturers.
In addition to these major projects, banks are being asked to do a lot in the regulatory environment. And in all this, they must not lose sight of the needs of their customers. Consumers expect innovative products and services - be it for money transfers or credit card payments.
In order to withstand this development, business processes must be designed for the future and, among other things, the right software solutions must be constantly adapted and further developed.
Whether complex market infrastructure projects or the migration to ISO 20022: syracom experts support you in the realization. In addition, we develop the right strategy for your payment transactions with you and support the implementation of innovative solutions such as instant payments.
Get an overview of our range of services and contact our payment transaction specialists.
Further harmonization and efficiency enhancements in the Eurosystem are important goals of the ECB. In addition to initiatives such as TARGET2-Securities (T2S) and TARGET Instant Payment Settlement (TIPS), the topic of TARGET2/TARGET2-Securities consolidation is currently high on the ECB's agenda. The ECB has defined a tight schedule for T2/T2S consolidation (including the migration to the ISO 20022 standard) with a go-live in November 2021. For banks and financial institutions, this means that they must start now to initiate the necessary conversions.
Innovative payment systems as a challenge: Innovative payment services make it easy for Internet-savvy users in particular to shop online - whether by smartphone, tablet or notebook. PayPal, paydirekt or Amazon Payments are at the same time a challenge for all companies in Germany. To maintain their ability to act, they must adapt their IT strategy to the changed business models. This includes sustainable process optimization as well as the development of new target architectures for payment transactions, always taking into account the business requirements of the company. Together, we formulate requirements and solution approaches and coordinate them with your specialist departments of external partners.
Transferring money in a maximum of 10 seconds (from the payer to the beneficiary) 365 days a year - that's Instant Payments. Based on the EPC scheme SCT Inst, it should be available throughout Europe by the end of 2018 at the latest. There are already functioning national solutions in the UK and Sweden. In addition to other national providers, both EBA Clearing (from November 2017 with its RT1 offering) and the Eurosystem of the European Central Bank (go live in November 2018 with its TIPS offering) are currently working on clearing and settlement solutions for fast payment transactions.
Head of subject area
Payment Transactions and Treasury