Norkom Technologies, a provider of financial crime and compliance software for the global financial services industry, has completed the first roll out of its SEPA-ready crime and compliance software.
The deployment, for a world top-ten bank, was completed in time for theformal launch of the SEPA for credit transfers on 28 January.
The launch of SEPA, which now applies to credit transfers, will shortly be applied to direct debits and, later, card transactions, is set to change the face of payments processing between the initial thirty-onecountries affected, creating a standard process for cross border financialtransactions. For consumers it will mean faster, simplified cashless transactions. For the banks it bring improved access to competing clearing and settlement mechanisms (CSMs), improved routing and better information.
However, it will also mean fresh investment in new technologies, principally in payment processing.
“Financial firms have a clear target to abandon today’s processes and to adopt the SEPA standards in full by the close of 2010. But, in order to minimise the costs associated with the change over and to reap theefficiency gains associated with a common process, they need to act quickly,” says Edward Doyle, Norkom’s product manager for SEPA.
Capgemini estimates that SEPA could save financial firms 123 billion over the next six years; but research by the Central European Bank (ECB) confirms that these savings will be deferred and inflated operating costs incurred as long as firms are operating two systems. The ECB urges firms to implement SEPA quickly to achieve economies of scale as payment revenues drop in the face of competitive market pressure.
“It is important to recognise that SEPA is also a bridgehead for the introduction the ISO20022 global payments standard, better known as UNIFI (Universal Financial Industry Message Scheme), which will transform payment processing on a global basis. We expect UNIFI to generate more than 300 individual message types over the next six years for a range of transaction types; we have designed our software so that it will immediately recognise each new message as it occurs and adapt its transaction monitoring processes automatically. This will dramatically reduce implementation time and the cost of change firms must incur,” says Doyle.
The changes to messaging involved in the introduction of SEPA and other UNIFI related processes will force financial firms to re-addressthe disciplines used to monitor for financial crime; both AML and fraud.
“The new messages carry far more information about each transaction and the parties involved in it, which help increase firms’ ability to detect and intercept crime. However, because current crime preventionand compliance technologies cannot accommodate these new message types, firms are likely to find that their monitoring effectiveness is compromised, exposing them to possible criminal attack and regulatory failure. This means that introducing SEPA compliant crime and compliance technologies, such as those offered by Norkom, is an absolute pre-requisite moving forward,” adds Doyle.
Norkom’s new SEPA-ready software includes an enhanced visual front-end, making it easier to use the additional functionality offered by SEPA’s information rich messaging protocols. It also interfaces directly withSWIFT and other international payment networks. Current Norkom clients, which include four of the world’s top seven financial services providers and more than 50 institutions in total, will be invited to upgrade to the SEPA-ready version at their earliest convenience.