This document discusses various aspects of electronic banking including: 1) Electronic balance and transaction reporting (EBR) which provides daily cash positions and balances from banks. 2) Electronic funds transfer (EFT) which allows funds transfers between accounts through templates and standard payment formats. 3) E-commerce portals and exchanges which allow corporations to request quotes from multiple banks for currency trades on a centralized platform. 4) Security measures for electronic banking including authorization controls, encryption, digital signatures, and certificates to protect transactions and data.

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