By Maria Bruno-Britz, Bank Systems & Technology
Standards and information have increasingly become the focus of the commercial payments world. Corporates desire a more uniform way of interacting with their banks. Further, as commercial payments become more commoditized, banks need to do much more than simply process payments. They need to provide rich information to accompany those transmissions. All parties know what needs to be done. The trick is actually getting there.According to William Barouski, SVP, customer relations and support with the Federal Reserve Bank of Chicago, it is for these reasons that the Fed found itself at Sibos yet another year. "Our customers are appealing to us for a national standard. This is fine, but it's not as relevant as an international standard. Much of our presence is felt internationally even though we provide domestic payments," he says.
As a result, it is important for the Fed to interact at a more global level. A show like Sibos is just the forum for doing so. In fact, the Fed held a special meeting while at the show to discuss the creation of a global standard for commerce. "This is a key message for us at this time," says Barouski.
The Fed and The Clearing House Payments Company (New York) are currently engaged in a project designed to create a standard for wire transfers that will allow the transmission of more information to accompany the actual payment. "The adage that the information is becoming as important as the payment is becoming true," Barouski comments.
Since companies of all sizes are increasingly doing business beyond the borders of the U.S., Barouski says it's important to expand the standards dialogue to help corporates deal with banks. However, there is a paradox when it comes to standards, he notes. Although standards are helpful in simplifying and streamlining the payments process, it increases the commoditization of payments. Therefore, banks will need to differentiate even more in a standards-based world. "Improving standards helps value to a point. Then you have to see how you can extract the value beyond the payments," he says.
According to Lauren Hargraves, SVP and wholesale product manager with the New York Fed, differentiation is not what's driving the organization's standards initiatives. "We're a utility. Differentiation is not the main driver here," Hargraves says. "It's clear our customers need interoperability. This isn't a tech play anymore. It's a business play so that banks will better understand their clients."The Federal Reserve discusses the need for more standards in the B2B payments space.