With new rules coming into effect on Jan 1 2015, this is the fourth in a series of posts on how banks and FI’s might adapt.
Push versus Pull
Using SWIFT is a standard and for a good reason. Firstly it offers 1-to-many connectivity, simplifying communications links. Secondly, it allows the agent banks to push information to their clients in a standard format. The push part is important; all the security and control is very tight and easy to control; one highly secure, highly reliable link to SWIFT.
In late 2013 somebody described a highly innovative alternative approach to this data gathering to me. Clearly in the second decade of the 2000’s there have been significant advances in search capability and in use of the Internet.
The suggestion was that an FI could deploy advanced search tools to launch a secure query that would reach out and gather up the answer to the question “What is the balance on my account right now?” The technology sounds amazing, the theory is quite brilliant. Implementing such a system involves a lot of parties: the FI’s themselves have to add the technology to search, the agent banks have to add the technology to allow the queries to come into their ecosystem and ask the question.
If it happened, it would be great, because it certainly would answer the question and met the objective. Getting there is no easy matter though; it would require all parties to invest. For this investment, the reward would be measurement and a tick in the box.
Remember what we have said in earlier posts about too much transparency being a potentially dangerous thing. For all its smarts and use of bleeding edge tech, the solution requires a lot of investment, even when the current standard, pushing out thru SWIFT works, is not broken. Security is another issue; in layman’s terms a “pull” solution would allow numerous FI’s to proverbially knock on the agent bank’s IT door, negotiate permission to enter and then fire off a query against the production client account systems. That is a really big ask and would require a really extensive individual lobbying effort.
Lessons Learned: Too much innovation at once might be a dangers thing. The agent banks largely have the infrastructure in place to push messages out. The trick is to get them to do it, to have a clear standard and to then integrate it.
A personal request: A real book! I am putting the final touches to a book on Cash & Liquidity Management. Your support would be appreciated on two fronts:
Please subscribe to my newsletter, if you don’t already. The subscription thing is at the right of the Blog page.
Please share this with a friend or two and ask them to subscribe too.
If the comments are wide of the mark and not offering anything of use, please comment or make contact directly via E-Mail.
Share on:
