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Drivers for STP in Payments
Operational Efficiency
Achieving efficiencies in existing processes
like messaging and transaction processing has become the cornerstone
for success in today’s fiercely competitive environment. An effective
STP solution provides just the groundwork that a business needs
to improve its performance.
Reduce Risk
There is a dire need to reduce risk that permeates
almost message processing scenarios which increases the likelihood
that a given transaction may not be completed. This causes great
harm due to lost business and reputation. The delays in routine
transactions are caused by an inability to handle different forms
of messages and an absence of a facility for automated repair
for errors.
Minimize Costs
Competitive markets are putting pressures to
cut costs at every possible turn and stay lean. In response, companies
are constantly on the look-out for a way to automate expensive
manual processes.
Handle Exploding Volumes
and Formats
STP is now increasingly synonymous with surviving
the impending processing disaster. The expected market growth
of 300% over the next few years, particularly in cross-border
business, cannot be handled with the existing business and communication
processes.
There is in fact a massive format translation
problem. This problem is exacerbated by the continual introduction
of new formats, systems, technology and industry consolidation.
Comply with Regulations
There are new regulations in the EU that mandates
that price charged for cross-border payments must be equivalent
to that charged to domestic transactions. This has made the drive
to STP even more urgent with companies looking to automate processes
to rid themselves of expensive manual processing.
Price Cap for Cross-border
Trades
Banks in Europe will have to resort to drastic
cost-cutting strategies to work within the regulatory guidelines
of price cap for cross-border credit transfers . The foremost
among these strategies would be to escalate existing manual practices
to automated systems to help foster efficiency, higher capacity
to handle high message volumes and lowered costs of processing.
Cost Reduction Pressures
The global transactions with customers have brought
attendant global competition. The need to drive down costs has
never been greater. The rise of new-age technologies is creating
new competitors for traditional banking entities with far more
efficiencies and lower cost base. This is leading to intense price
competition among banking entities, old and new.
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