By Sanjeev Sharma on Dec 22, 2011
Payments processing is a central activity for financial institutions,
especially retail banks, and intermediaries that provided clearing and
settlement services. Visibility of payments processing is essentially
about the ability to track payments and handle payments exceptions as
payments flow from initiation to settlement.
You can find more details in the following posts:
- Improving Visibility of Payments Value-chain - (1/2)
[Summary]: The business imperative for financial institutions, especially retail banks, for improving visibility of their payments processes stems largely from the following:
- Lowering time and cost of fraud detection, risk management and compliance by applying these efforts in a centralized manner across lines of businesses, payment types and payment channels
- Gaining real-time visibility of their cash-flows to optimize working capital by improving effeciency in borrowing and lending and negotiating appropriate SLAs with intermediaries such as clearing houses and payment channel providers such as credit card providers
While automation has improved capacity of existing payments systems to cope with ever-increasing volume of payments traffic, there remain several hurdles to improving visibility of payments processes. This post looks into the factors (demand, organizational and technology) creating impedance in realizing the vision of Straight-Through-Processing.
- Improving Visibility of Payments Value-chain - (2/2)
[Summary]: Visibility in payments processing is fundamentally about knowing the status of payments as they flow from front-office initiation channels, across mid-office fraud, risk and compliance systems , through the payments application i.e. AR,AP and finally through external interfaces with clearing providers and financial network providers e.g. SWIFT, ACH etc. From a technology standpoint, payments straight-through-processing requires streamlining the integration across all these inbound channels, outbound interfaces and ancillary systems.
This post outlines different approaches to achieving STP including application consolidation, interface consolidation and hybrid (with end-to-end abstract processes).