1. Electronic Banking

2. Electronic Banking
Electronic 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

3. Electronic Banking
Electronic 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

4. Electronic Banking
E-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

5. Electronic Banking
Multi-bank Portal
Co A
Co B
Co C
Hub
Bank A
Bank B
Bank C

6. Electronic Banking
Multi-bank Portal
• 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

7. Electronic Banking
Multi-bank Portal
Advantages to:
• Corporate
– Well documented competitive quotes
– Transparency or ‘price discovery’
– Can spread business
– If well integrated leads to STP

8. Electronic Banking
Multi-bank Portal
• 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

9. Electronic Banking
Exchanges
• A messaging service
• Different types of financial messages
• Expands services available

10. Electronic Banking
E-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 Production
NB in EU directive 2001/115/EC, into effect in
2004, member states must accept einvoices.

11. Electronic Banking
E-Commerce: Working Capital
• Desktop capture
• Letters of Credit
• Reconciliation
• Interest apportionment

12. Electronic Banking
E-Commerce: Working Capital
• Why is Security important?
• Fraud
• Theft
• Contamination
• Data security
• Error
• Non repudiation

13. Electronic Banking
Security
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

14. Electronic Banking
Security
• Different levels of authorisation/activity
– Input
– Second input
– Verification
– Authorisation and release
• Free format
• Pre-format

15. Electronic Banking
Security
• 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

16. Electronic Banking
Security
• 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

17. Electronic Banking
Integration and Standards
• Extensible Mark-up Language, XML
• Some standards groups:
– Rosettanet
– TWIST or Treasury Workstation Integration
Standards Team