ABN AMRO Centralizes The Funds Transfer Process

Dutch banking giant ABN AMRO's North American operation is centralizing its payment systems for wire transfers, both domestically and internationally, utilizing the Mercator Integration Broker and Mercator InsidePayments applications from Mercator Software, a Wilton, Conn.-based provider of enterprise application integration software.

"In the funds-transfer world, every department has to have a separate connection. Today we do not leverage any synergies within the bank," said Mary Miles-Carlson, senior vice president of electronic transactions processing at ABN AMRO. "It is a very costly, time-consuming process."

Mercator doesn't replace the wire system, but instead acts as the access gateway to the processing systems like wire and ACH. The shift in ABN AMRO's wire-transfers setup is the first step in a rebuilding of its payment system around a hub-and-spoke architecture.

The previous system, ACI Worldwide's MoneyNet platform, required separate connections to each division within the North American organization, said Colin Kerr, vice president of electronic payment systems at ABN AMRO. "Everybody had to build their own point-to-point system. They had to build their own interfaces according to the old wire-system standards. All were custom-coded over a 10-year period."

Two years ago, when ACI announced plans to retire the application, the bank decided to take a fresh look at how it wanted its funds-transfer system to operate. "We did not want to just look at it as replacing the funds-transfer system with the same functionality," said Miles-Carlson.

An internal team studied the company's options from fall 2001 until summer 2002. "The primary goal of the internal study was to find a replacement for the funds-transfer system," Miles-Carlson said. "As we got into it, we determined that to replace all the interfaces did not make sense. It made sense to build middleware."

Added Kerr, "Rather than force everybody to change to a new system, the middleware can adapt to their data structures and requirements. The idea of middleware is that we would have a tool that allows us to rebuild interfaces fairly rapidly and provide centralized operational management of transactions."

The team spent a year picking the funds-transfer platform and going through a strenuous requirements phase, Miles-Carlson said. Team members narrowed the choice to two software makers and then picked Mercator, whose software the company already uses in other areas. "Mercator has a very strong history of financial-services integration," Kerr said.

He declined to discuss the new software's cost, but said that it's covered under a broader global licensing agreement the bank has with Mercator.

Over a two-month period earlier this year, an ABN AMRO team put together a prototype with sample interfaces to show to its internal clients. "It was just to verify the high-level design and stimulate discussion on other features that we should add," Kerr said. Plans call for the Mercator middleware to go live in December.

The new Mercator software "will save us money over time," Miles-Carlson said, as divisions of the bank have to buy and customize fewer applications. And it will save time, cutting by 60 percent the time to connect a new division to the payments gateway.

"It should be a much more simple hookup to the hub," said Kerr. "We view the addition of new departments as the setup of customers on the gateway rather than as traditional interface-development projects."

But the project has not been without challenges. "One of the biggest things has been getting our arms around how 55 different interfaces work-just the nuances, because they have been in there for 10 or 12 years," Kerr said.

For example, end-of-day processing is handled differently in each division. From an IT perspective, Kerr said, fully understanding the different interfaces "is the single biggest thing. Some of it we are still doing."

The implementation's initial focus is developing a hub with a view to wire interfaces, and with broad foundational architecture. In the future the company plans to expand the hub-and-spoke architecture to encompass interfaces to other payment processes like ACH.

Said Miles-Carlson, "It will be an evolutionary process."

Fast Facts

INSTITUTION: ABN AMRO North America

ASSETS: $90 billion

BUSINESS CHALLENGE: Develop a centralized high-value payments system

SOLUTION: Mercator Software's Integration Broker and InsidePayments

KEY QUOTE: "We have so many silos we process in today that it made a lot of sense to consolidate them."