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Interesting research

SIBOS and most conferences are always a good moment to release research.

We released ours last week, but there are several reports that stand out.

For example, Barclays Commercial Banking polled 160 people across financial institutions in London, Dubai, Frankfurt and Singapore, to find out what they looked for in their selection of a transaction banking partner.

The key findings of their survey were that customers look for services and processing standards first (43%), the general performance of the bank second (33%), the product suite next (15%) and the concentration of banking risk last (11%).  Surprisingly, three-quarters of those polled are looking to establish new transactional banking relationships over the next year.

In another research note, Sterling Commerce identified that most core systems renewals are not performed with any strategy in mind: 56% of respondents to their survey claim that they have an enterprise integration strategy, but 40% apply one-off tactical integration solutions for their core systems change projects and 92% believe they are building issues in the future for themselves as  a result.

Nothing like implementing rubbish today to build rubbish tomorrow.

But the most interesting survey for me has just been released by Finanser sponsor VocaLink about the UK Faster Payments Services (FPS).

FPS was ordered by the Office of Fair Trading to remove the float from the UK payments industry on standing orders and telephone and internet payments. Becoming law in May 2008, it’s now been running over a year and processes £70 billion ($100 billion) a year through over 180 million transactions.

VocaLink runs the service 24 by 7 in real-time and determined to get an evaluation of how well it is running in the report, produced in association with Pricewaterhouse Coopers.

Here are a few key highlights:

Faster Payments are expected to exceed 2.5 billion transactions per annum by 2018. Volume will come from a variety of sources, both retail and corporate. The market is also likely to see significant migration from other instruments, as the capabilities of the Faster Payments Service are leveraged and further innovated.

100% of interviewed participants reported no issues with the Faster Payments Service itself. One bank had no customer complaints and most reported remarkably few. Overall we found that the complaints that had been received were either:

  • Questions about the proposition itself. In particular, why a particular beneficiary was not reachable by the service.
  • Dissatisfaction with the differences between the system and their expectations based on previous systems. For example, some customers that were unaware of the irrevocable nature of the proposition had addressed payments incorrectly, but to a valid account, and found that the bank was unable to stop the payment or recover funds for them from the beneficiary.
  • An issue that is associated with the Faster Payments Service but is actually pertaining to another of the bank’s processing systems. This occurs where the underlying incident is experienced, highlighted or exacerbated by the use of the Faster Payments Service, e.g. the unavailability of online banking.

Two-thirds of banks interviewed were very positive that Faster Payments could deliver new revenue streams, with potential revenues identified in the business-to-consumer segment reaching £2.9 billion by 2018 and £1.9 billion in the business-to-business space.

Some banks have been much less willing to operate a real-time payments service than others because of the scope of the necessary changes

Banks that had invested in modern real-time accounting systems were therefore much more able to implement and operate Faster Payments than their counterparts, particularly where these were still relying on legacy and batch-based systems.

An unintended benefit of Faster Payments has therefore been to up the ante for banks, helping them into the 21st century and providing the incentive for them to ‘re-architect’ their transaction banking platforms. The scale of the cost of compliance has consequently differed dramatically between the leaders and the laggers: in some cases by nearly 100 times.

67% of consumers are unaware of the Faster Payments Service, and some of those that are aware are either confused by what they know or have an incomplete knowledge about it

You can get a copy of the full report by asking VocaLink.

The Finanser is sponsored by VocaLink and Cisco:
For details of sponsorship email us.

About Chris M Skinner

Chris M Skinner
Chris Skinner is best known as an independent commentator on the financial markets through his blog, the Finanser.com, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal’s Financial News. To learn more click here...

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