Electronic Banking. Electronic Banking Electronic Balance and Transaction Reporting (EBR) Usually provided by relationship bank(s) May be used to access

Electronic Banking

Electronic BankingElectronic Balance and Transaction

Reporting (EBR)

• Usually provided by relationship bank(s)• May be used to access accounts with single or

multiple banks• MT940 used for end of day balances - assist reconciliation to provide daily cash

position - may provide anticipated cleared balance

information• Some banks are able to provide intra day

reporting via MT942

Electronic BankingElectronic Funds Transfer (EFT)

• Offline batch or Browser based• Interface with TMS avoids re-keying• Templates - pre defined beneficiaries - sort code, IBANs etc• Will allow a wide range of different payment

types - primary payment types are MT102 (mass

payments) and 103 (single customer credit transfer)

- MT101 Multi-bank payments

Electronic BankingE-Commerce: Portals and Exchanges

Companies may use single bank dealing portal because

• Independent verification of the rates

• May be incentive to deal on-line (rate)

• Small exposures may be hedged automatically if linked to TMS

Simplify the audit trail

Electronic BankingMulti-bank Portal

Co A

Co B

Co C

Hub

Bank A

Bank B

Bank C


• Input deal, dates- currencies- amounts

• Banks to be approached

• Bid transmitted

• Banks ‘auto bid’ direct from their system

• Dealer has short time to accept

• Deal accepted and other bids discarded

• If linked, TMS produces confirmation


Advantages to:

• Corporate– Well documented competitive quotes– Transparency or ‘price discovery’– Can spread business– If well integrated leads to STP


• Bank– High volume, low margin business may be

done more cost effectively– Greater chance of winning some business– Access to a wider range of customers– Small value, exotics

• Exchanges• A messaging service

Electronic BankingExchanges

• A messaging service

• Different types of financial messages

• Expands services available

Electronic BankingE-Commerce: Working Capital

• Invoicing or einvoicing ‘the substitution of inbound/outbound paper invoices with an electronic file’– EBPP, Electronic Bill Presentment and

Payment– EIPP, Electronic Invoice P & P– ERS, Evaluated Receipts Settlement– POP, Paid on ProductionNB in EU directive 2001/115/EC, into effect in

2004, member states must accept einvoices.


• Desktop capture

• Letters of Credit

• Reconciliation

• Interest apportionment


• Why is Security important?

• Fraud

• Theft

• Contamination

• Data security

• Error

• Non repudiation

Electronic BankingSecurity

So how do we attain security and have a system that works?

• Authorisation for payments/deals

• Segregation of duties (back office/dealer)

• Physical security– Dedicated computers for payments– Separate room– Password protected


• Different levels of authorisation/activity– Input– Second input– Verification– Authorisation and release

• Free format

• Pre-format


• Encryption or cyphertext– Private key or symmetric– Public key or asymmetric (public key

infrastructure, PKI)

not only ensures confidentiality but also provides authentication of the sender thus preventing repudiation

– SSL, Secure Sockets Layer– HTTPS, Hypertext Transfer Protocol, Secure


• Digital Signature• Uses the asymetric method to perform two

functions– Authentication– Integrity

public key encryption does not identify the sender. Digital signatures fill this gap.

• Digital certificates

Electronic BankingIntegration and Standards

• Extensible Mark-up Language, XML

• Some standards groups:– Rosettanet– TWIST or Treasury Workstation Integration

Standards Team

Documents

Electronic Banking. Electronic Banking Electronic Balance and Transaction Reporting (EBR) Usually provided by relationship bank(s) May be used to access