Introduction
Many corporates are working with various bank sponsored electronic banking solutions which lead to high administration costs, in-transparent cash positions and restrictions to fulfill internal compliance. An alternative solution could be to connect your banks via a single, bank-independent payment factory solution, supporting straight through processing. Since a variety of digital bank services are available to integrate all banks by a single payment hub, it makes sense to understand what could work best for you.
Payment channels, the alternatives:
Access to the ebics/mcft channel
The ebics communication channel, already supported by many international transaction banks is an internet communication standard especially designed for electronic banking purposes. The number of banks that offer this channel is growing fast.
The mcft (multicash file transfer) channel is product specific channel, developed by omikron and is provided by many banks and service providers as well (e.g. Uk bacs service bureau). Mcft will bring additional benefits to multicash users, as it is similar to ebics especially designed to use the internet channel.
Setting up a connection with banks that support ebics/mcft is a plug and play implementation.
H2H connections
This is an individual connection with a bank. H2h connections are bank specific and built to use secured file transfer protocols. Each h2h connection can be a bank specific project.
Access to the swift network (to be purchased from swift)
To access the swift network, there are two alternatives:
1. Via a swift al2 connection, direct linked to the swift network.
2. Via a swift service bureau, indirect link, via a third party.
Once the access to the swift network is in place, you need to implement and test connections per individual bank. As swift is using a private network for the data exchange, this will lead to additional costs because companies are also charged by the amount of traffic over the channel.
Independent of the (combination of) channel(s) you use, you still need payment software which allows you to read the incoming bank statements and create and send payment files in a secure way.
Payment file formats
Another important aspect of payments is the ‘payment file format’ question (mt101/xml/local standards/ bank-specific standards). Which formats are currently used by the corporate systems and will their bank accept them in the new standardized set up, or does the client wish to harmonize formats and workflows? This discussion is important when replacing a variety of eb systems of a corporate with multiple international subsidiaries and bank connections.
Strategic considerations
The choice of payment channels depends on various factors. For instance, a client with 20 banks, of which 16 can be connected via ebics/mcft would probably connect the remaining 4 via separate h2h-connections because this is most efficient set-up. Alternatively, a client with 20 banks of which only 5 can be connected via ebics/mcft would connect the rest via swift.
In the end, it is the corporate who decides which channel is preferred and how channels can be combined efficiently. The payment factory must be as flexible as possible to support the corporate strategic goals, even with a change of banks and strategy.
Recommendation
Moving away from traditional electronic banking systems to a modern independent payment factory solution is a challenge. It starts with an analysis and leads to a strategy. Several operational and it-specific questions need to be answered: which new digital services, channels and formats are offered by the bank, and what is the best operational approach for my company?
Since most people in treasury prefer to outsource these analyzes to external experts, it makes sense to seek professional advice.