New European regulations to reduce the cost of transferring money
across international borders could have major implications for IT
departments at UK banks, analysts warned this week.
The European Commission regulations will require bank charges for
cross-border payments in the euro zone to be the same as those for
similar domestic transactions.
The regulations, which were adopted by the European Parliament in
December, are due to come into force in July.
Banking bodies believe the rules could lead to banks having to
develop a new clearing house or link existing clearing systems to
create a European-wide payment infrastructure.
According to the European Central Bank, a technology infrastructure
to support cheaper cross-border money transfers could be
implemented two years after consensus is reached within the banking
industry.
Analysts have advised IT managers at UK banks to become involved
now in discussions to shape the new cross-border infrastructure
that the regulations will require, rather that having systems in
which they had no input forced upon them at a later date.
Many banks still have largely manual systems for processing
lower-value, cross-border payments.
"The concern now [for IT directors] is that a lot of cross-border
transfers are still done fairly manually," said Daniel Mayo, lead
analyst at Datamonitor. "Costs for this are typically high."
If European banks decide to link their domestic clearing houses,
they will require some standardisation of message protocols, said
Mayo. Target, an existing real-time payment service, could be used
to help link systems in different countries.
The more radical option of developing a single European clearing
house for cross-border payments would be an a massive IT project,
and is less likely, said Mayo. "It would be the equivalent of all
the major stock exchanges merging into one," he explained.
- Meanwhile, Visa International this week revealed plans to allow
European customers to transfer money directly between their Visa
credit and debit cards by the autumn.