Electronic banking is not limited to the retail side of the business. The introduction of the euro is likely to mean commercial customers will have more reason to move to electronic banking within the next year. The banks, in turn, will aim to increase their revenue by offering a range of electronic funds transfer products.
One of the major limitations in transferring money around Europe is that paper clearing systems will not be standardised, according to Mr Ken Slattery, director of electronic banking at Bank of Ireland.
Thus, when the euro is adopted, different countries will take different lengths of time to clear euro cheques. Mr Slattery expects this will lead commercial customers to consider electronic banking, with its promise of faster payments.
He says there are three ongoing major developments in commercial electronic banking in Europe. The first is called Target and involves all banks in same-day money transfer. This system is already used nationally and is due to be introduced in Europe on January 1st, 1999. There will be a 5 p.m. Central European Time cut-off for same-day transfers, according to Mr Slattery.
The second development is in payments via the European Bankers Association. Mr Slattery says this will involve transfers across Europe with different time scales, but faster than the current offerings. Also due to be introduced next January 1st, this service is intended for lower-value transfers than the Target service and will be cheaper.
The final development in European commercial electronic banking is the linking of the clearing houses, called Automated Clearing Houses. This is for what Mr Slattery calls "lower-value, less time value" transactions and is expected to be introduced sometime next year.
Another major direction of commercial electronic banking is the use of the Edifact standard, where a bank's customers can transmit remittance information to the bank when they want to pay suppliers. This means the bank can inform a company's suppliers not just of the payment but also of what the payment is for, enabling the suppliers to keep closer track of debts. This service has been available for about three years.
An Irish company, Software and Systems Engineering (SSE), has developed electronic payment systems for one Irish bank for its multinational corporate sector.
Mr John Noonan, business development manager in SSE, says electronic payment of invoices benefits the bank, its customer and the customer's suppliers. He says such systems are already popular in Scandinavia, Germany and Italy, and are "an example of banks moving up the value chain, out of simple funds transfer".
Eoin Licken is at eoin@stilet.to
