By Marc de Graaf, Managing Consultant.
Regulatory demands are set, adjusted, and changed all the time. As a result, banks and corporates constantly have to reconsider the requirements that they should meet. The question is: How can one go about it in a smart and constructive way?
Let’s have a look at what happened when SEPA was introduced to establish a new payment standard based on the ISO20022 XML format and the Payment Service Directive (PSD) regulation. Old payment transaction systems and their specific features became obsolete, but they were not replaced. Whereas processes were adjusted, the underlying systems were not optimized. Consequently, banks and corporates often implemented workarounds and help applications as quick-win solutions (around the old systems) –– to be able to process new formats. Long-term solutions, however, require a more radical and structural approach.
Today, we regularly observe that processes and work instructions have been adapted to the new SEPA situation, but core systems – including old applications – still exist. Now new standards for real-time payments enabling 24/7 payment transactions are being developed – for example on the ISO20022 format or even the blockchain technology. And it is time to stop expanding systems with limited capabilities. The restricted data model and infrastructure of former core systems pose a hurdle on the road to compliancy and limit innovation. Banks could (and should) be smarter in this regard!
Penny wise, pound foolish
Sometimes, you need a fundamental transformation to tackle the root of the problem. If you do it right the first time, you will enjoy long-term benefits. Quick-wins often turn out to be half-baked approaches and solutions – penny wise, pound foolish – as they don’t allow you to sufficiently optimize your process. You will constantly encounter hiccups, and maintenance costs will run high. In short: you need to focus on optimization.
Is the work completed?
We can be short on this one: no, it isn’t. In fact, the work is never done. After all, once you’ve completed the adjustment of your core system and all associated processes, legislators don’t suddenly stop setting requirements; they’re constantly adapting and changing them, which means you need to find a method to cope. Both banks and corporates face the challenge to adjust to this ever-changing regulatory landscape – after all, they need to guarantee that both they and their customers will stay compliant. Doing this in a smart way is no easy job, and you might want to call in some expert help to do so.
At Proferus, we’ve had our fair share of experience in the banking and corporate world, and we know our way around it. We like to adopt a structural approach, and we always put our clients first.
Are you interested in our cutting-edge solutions that can help you comply with regulatory requirements in a smart and structural way? Don’t hesitate to contact us. We will be happy to discuss your opportunities.