Treasury Today Country Profiles in association with Citi

Transforming payments: remember the days of telex?

The effective use of technology has become increasingly important to the financial industry over the four decades that Des Twort, Treasury Specialist, EMEA Strategic Solutions Delivery for GTS, has spent with Bank of America Merrill Lynch. There have been radical developments on the road of technological change and the payments landscape has never looked better.

Hello efficiency…

Prior to the 1990s, time and resources – and the environment – were being drained through the arduous task of long-distance communication. The original process of sending telex payment instructions was painstakingly slow and expensive, according to Twort. “Business banking communications did not follow a standard format so were individually drafted and it took around five minutes to send a one page document. As a consequence, our company’s telex room was staffed 24/7,” he says.

The advent and widespread acceptance of email dramatically reduced the costs associated with these payments orders and paved the way for a more streamlined paperless office. However, it was the introduction of SWIFT in the late 1970s that Twort believes “was the first stake in the ground towards implementing both a single delivery process across the banking community and, more importantly, standards around payment messages”. And by the beginning of 2000, corporate clients were starting to move payments, either in files or messages, through the e-banking system.

…goodbye manual processing

With the arrival of new technology and the internet revolution, the ‘IT literate’ generation flourished. There was greater focus on how treasuries could deliver same-day service and this saw the development of software packages which could be accessed via the internet. New roles were also created so banks could fully leverage the modern tools. At the same time, people like Twort with longevity in the payments market were invaluable as they could utilise their experience to advise on the processes behind the technology.

In today’s heightened risk environment, treasurers are now focusing on liquidity more than ever. With regular assessments of their company’s liabilities and cash flow to avoid supply chain interruptions, intraday liquidity is fast becoming a requirement. Today, treasurers are able to view, release and approve payments through their Androids, BlackBerrys, and iPhones. “In the early days treasurers only had visibility of their cash position on a weekly or monthly basis, now it’s instantaneous. In today’s fast-paced world of the web and mobile phones where instant replies are expected, it’s hard to imagine life without all the ‘mod-cons’ we now take for granted,” says Twort.

Technology rules

But there is no room for sentiment in today’s dynamic environment. Twort reveals that his biggest challenge over the years has been to adjust to the varying roles he’s held throughout this constant evolution. But focusing on the needs of the clients and moving with the times (and tech advances) has allowed him to achieve and continue to add value. Over the last decade in particular, the payments industry had made considerable advancements in addressing the need for fast movement of electronic funds and supporting adequate reference data requirements, according to Twort. “Enabling the corporate client to easily identify and reconcile transactions is an example of this client focus and added value,” he says.

More recently, legislative reforms such as the Payments Service Directive (PSD) and SEPA are aiming to address clients’ needs across the European payments landscape. “The financial industry realised that it needed to provide an effective and competitive service to drive the underlying economy,” says Twort.

“The introduction of these legislative schemes, in addition to modern technological advances, has created a banking industry that meets clients’ ever growing expectations. In light of the changes I’ve witnessed over the past four decades, it’s an encouraging sign that this will continue throughout 2012 and beyond.”