A UK clearing company promises to slash charges for member banks by overhauling its IT systems.
In an ambitious IT shake-up to revamp its sterling and euro settlement services, Clearing House Automated Payment System (Chaps) is replacing its proprietary payments network and enquiry link infrastructure in a wide-ranging contract with Swift, the financial communications infrastructure provider.
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Fees to use the Chaps clearing services are expected to fall from about £900,000 to £100,000 for both sterling and euro.
Users of the service - such as Barclays and HSBC - are also set to save hundreds of thousands of pounds by not having to buy extra hardware and software bundled with the Chaps service.
The new service for sterling and euro clearing, New Chaps, will be up and running by the third quarter of next year, according to Chaps.
The first part of the project will see the clearing giant scrap its proprietary network from BT, a closed user group, and migrate to the Swift Fin network, which will handle payment messaging applications.
Under the second part of the overhaul, Chaps is also scrapping a member's enquiry link from BT.
The current enquiry link allows members to track payments in real time, which are settled by the Bank of England. But first users have to buy proprietary Tandem hardware and Logica software to use the current service.
The new replacement Swift product, Swift Alliance Webstation, is a Java-based system that allows its users to view real-time financial information through an Internet browser.
David Mcfarlene, deputy company manager for Chaps, said, "IT is a key way of cutting costs, especially with generic solutions. Companies no longer have to invest in mandatory hardware and software."
Those companies that use Swift Alliance Webstation could also cut PC costs by using one PC to access a handful of different payment infrastructures, which are planning to use the Swift network, added Mcfarlene.
The Chaps settlement services are being developed by Chaps and the Bank of England. A testing programme has also been agreed by Chaps' 21 members.
Swift will be responsible for managing encryption, as well as installing and maintaining the network.