More than US$328m is being borne each year by the banking industry in waste from inefficient straight-through processing (STP) rates, according to Temenos, a provider of banking software.
Over the past five years banks have begun to feel the regulatory strings tighten and there is no question that this is also contributing to the increased cost of payments. New and emerging trends will also call for banks to implement lean, automated processes. Mobile phone providers, internet-only financial services firms and retailers are all bringing a new competitive dimension to the banking world which further highlights the need for banks to increase their profit margins in respect of payments. Technological investment is forecast as a key enabler to not only improve processes, but also accelerate time to market to provide the levels of convenience customers expect in a market where choice and demand has never been higher.
Amanda Gilmour, product director, Temenos anti-money laundering (AML) and STP, said: “This figure shows that banks need automation, in conjunction with solid business processes, to deliver a repeatable, auditable procedure which not only significantly reduces costs but also the potential for error. The market is a very different place compared to five years ago; technology will be the absolute differentiator for banks moving forward in reducing costs and increasing the return on payments.”
Rachel Hunt, Europe, Middle East and Africa (EMEA) banking research director, IDC Financial Insights, added: “With 25% of IT budgets now diverted towards compliance requirements, banks are having to focus on operational efficiencies to reduce ‘run the bank’ type of expenditure. This is particularly true in the commoditised business area of payment processing, where institutions compete to provide innovative value added services such as mobile payment authorisation.”
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