Here is another excerpt from our white paper series that we are currently working on. Here we are talking about Bank Independent Payment Solutions and benefits of using such systems.
By moving payment initiation to the Treasury Management System, a standardized payment file, executable at any bank or at multiple banks, can be achieved. This allows the payment initiation process to become bank independent. De-linking payment initiation from a particular bank provides the flexibility to change banks seamlessly or use best of breed payment services from multiple banks (one bank for domestic wires or one-off ACH another for foreign currency payments). A bank independent solution also ensures that your users only have to learn one system for all electronic payments even though the payments are delivered through multiple banks. Bank idiosyncrasies are eliminated and forms to complete payments are all similar regardless of payment type or bank used for execution. There’s less chance of error and better leverage for pricing and you are free to move your payment execution to a new bank.
A key factor that facilitates bank independence is to build or use a payment engine using a standardized payment protocol such as the ISO 20022 payment standard. The ISO standard is a universal standard for payments which supports ACH’s, Wires and Drafts. Several major banks either support the standard or are in the process of supporting it. The ISO 20022 standard can also be used to submit SWIFT payments without requiring the use of a proprietary SWIFT payment format. In addition, the US Fed Wire system has announced that ISO 20022 will be used as a basis for its announced expanded payment format.