Payment Transactions

 

Payments & Treasury –
real-time into the future

Digital payments, instant payments: payments - for a long time the "grey mice" of banking services - have been changing with increasing speed for some time now. The result: a coming new generation of payment products. Travelling this road, banks and financial services providers must face a number of challenges. The substantial changes affect the interaction between banks and customers (retail customers or corporate treasuries) as well as the payment streams between banks.

New interfaces, new formats, new technologies... banks must prepare for the massive upcomming changes. For the majority of them content and dimension of the projects will likely result in  resource constraints – both from a technical and quantitative perspective. To make things worse, there are  quite ambitious timelines and, on top, growing regulatory requirements.

Instant Payments have just been digested, banks now need to prepare for ECB’s T2/T2S Consolidation, a project aiming at a harmonisation of all Eurosystem Services of ECB. And along with this the complete change to TARGET2 and at the same time EBA EURO1 convert completely to ISO20022.

Change brings opportunity

The current developments in the payments landscape open up many opportunities for banks. New systems must be rolled out, architectures revised, business processes for payment execution improved, and payments and treasury management better aligned.

Already now, TARGET2 provides a number of liquidity saving features. The introduction of centralized liquidity management (CLM) for the consolidated TARGET2 - TARGET2Securities platform provides further automation and optimization potential.

Optimising the use of Intraday Liquidity does not only addressregulatory requirements. It will become essential once + the low-interest phase comes to an end Now is the time to build the foundation for cost and yield potential in liquidity management.

The way to the future of payments and liquidity management holds both opportunities and risks for the banks. Our consultants for the topic of payments & treasury will help you minimize risk and exploit opportunities.

We will help you prepare, implement, and manage your payments and treasury projects. Get in touch with us!

  • Strategic questions
  • Euro System (TARGET2, T2S)
  • Architecture and integration
  • Instant Payments

Regulation and innovation continue to shape the development of payments. With PSD II and Instant Payments, the discussions about FinTechs have faded into the background. T2/T2S Consolidation is a really hefty obstacle confronting the banks. The new development of the TARGET system pushed by the ECB ties up enormous resources: software readiness for the go-live in November 2021 must be reported to the Deutsche Bundesbank no later than October 2020. Changed account structures and modified procedures for the management of intraday liquidity in the Euro system pose additional challenges. more on this less

In addition, SWIFT is starting the migration of payment traffic 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 labour market. This applies equally to banks, consultancies and manufacturers of payment transaction software.

In addition to these large 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 keep up with 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 realisation. In addition, we develop the right strategy for your payment transactions with you and support you in the implementation of innovative solutions such as instant payments.

Get an overview of our range of services and contact our payment transaction specialists.

Further harmonisation and efficiency improvements 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 the 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. More

 

Innovative payment services make it easier to shop online, especially for internet-affine users – whether per smartphone, tablet, or notebook. At the same time, PayPal, paydirekt, or Amazon Payments pose challenges for all businesses in Germany. . In order to maintain their ability to act, they must adopt their IT strategy to the changed business models. Thus includes sustainable process optimization as well as the development of new target architectures for payments, always taking into account the technical requirements of the businesses. Together we can formulate requirements and solutions and coordinate them with your departments of external partners. more on this less

Communication channel and protocols

The transmission protocols and communication channels used to clearing systems and correspondent banks such as SWIFT and EBICS are important components in the banks' payment transactions. These require the establishment of a suitable IT infrastructure or outsourcing of the respective connections. We will be happy to support you in the selection and implementation of suitable options. In this way, you will be able to process interbank payment transactions worldwide securely and quickly.

Manage and use information efficiently: Digitisation

Digitally archive documents in payment transactions and search for them at the click of a mouse. This is no longer just a revolution, but should be standard for all banks. Old documents in large archives are thus a thing of the past. Whether you want to use the service of a service provider or set up your own system - together with us we will integrate your desired archive model into your bank's IT system.

Money transfers in at most 10 seconds (from client to beneficiary), 365 days a year – that is Instant Payment. Based on the EPC Scheme SCT Inst, it is to be available everywhere in Europe at the latest by the end of 2018. Great Britain and Sweden already have functioning national solutions. In addition to other national providers, both EBA Clearing (from November 2017 with their offering RT1) and the Eurosystem of the ECB (Go live in November 2018 with their offering TIPS) are working on clearing and settlement solutions for Instant Payments. more on this less

The questions credit institutions have to ask themselves when implementing instant payments are manifold:

  • How can liquidity be ensured for the clearing of instant payments around the clock and on weekends in the
    systems around the clock and at weekends?
  • How is the creditworthiness of the payer checked?
  • To which clearing and settlement system does the connection make sense and is it possibly advisable to have several connections in parallel?
  • What should the product design look like for the company's own customers?

Because industry experts agree on one thing: instant payments will visibly change the payment transaction market in the coming years and at least partially replace various payment instruments. This also affects SEPA payment instruments to a large extent. For the banks, the question is therefore not whether, but only when and how they will offer instant payments products to their customers.

In this context, the white paper by EBA Clearing is also interesting: read Whitepaper

Due to our diverse contacts, we know the topic first-hand - we know how far the plans of the various providers are and which special features the different systems have. This is why syracom can advise its customers on the decision, calculate the economic efficiency of different scenarios and accompany the institutions during the implementation.

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Interested?

Call me or write me

Philipp Kramer

Head of Business Unit
Payments and Treasury

Phone: +49 6122 9176 0