New international remittance service launched in Ghana

MTN Ghana and the Belgian carrier BICS are set to launch international remittances services. MTN Ghana will use “HomeSend”, a mobile centric remittance hub operated by BICS and powered by its technology partner eServGlobal. The new service will enable Ghanaians living in the UK and Belgium to send funds directly to their relatives’ mobile money accounts in Ghana. MTN Ghana had 760,000 mobile money registered accounts in mid-2010.

Coming to a New York City movie theater near you … financial awareness!

Select movie theaters in New York City are currently showing a new college student-produced 30-second public service announcement (PSA) sponsored by the Federal Reserve Bank of New York, in conjunction with the Manhattan Borough President's Office. Aimed at promoting financial awareness and wise financial decision-making among young adults, the PSA will be shown for two weeks in three cinemas in Manhattan, Harlem and Long Island City.

The PSA features the winning video submission from the New York Fed's recent Financial Awareness Video Competition. The video, entitled “Think Twice Before You Swipe”, warns viewers about the perils of careless credit card use. The video competition and PSA are part of the New York Fed's continued commitment to encouraging financial education in the community.

"Financial literacy is essential for individuals and communities to prosper," said Kausar Hamdani, senior vice president responsible for Regional and Community Outreach at the New York Fed. "The video competition and PSA are unique ways for the New York Fed to engage with young adults and promote the valuable lessons of financial awareness and responsibility."

The PSA will be shown before films from February 11 through February 25.

The winning video was submitted by students from LaGuardia Community College. Students from Brooklyn College and the City College of New York also participated in the competition. The winning video, along with the two other top submissions, will be posted on the New York Fed's website and distributed to schools, nonprofits and other organizations working on promoting financial awareness. The three videos will also be posted on the New York Fed's YouTube channel.

The video competition is an example of the New York Fed's efforts to foster sound financial decision-making through economic education. The competition was held for the first time in New York City this year. Students from three local colleges were asked to produce a 30-second video to educate their peers about the importance of using credit wisely. Submitted videos were screened and judged by a panel of film industry experts during an event with the participating students at the New York Fed in the fall of 2010.

The competition was based on a similar contest held for the past two years in Puerto Rico, in partnership with the Puerto Rico Bankers Association. The New York Fed expects to hold an expanded competition later this year for colleges across the Second Federal Reserve District.

Well you don’t need to go to New York to watch it. You can view it right here.

The mobile cheque deposit – Is this progress or a retrograde step?

Spain's Banco Sabadell has added remote deposit cheque capture functionality to its mobile platforms in what appears to be a new trend in mobile (electronic) banking applications. In Denmark, Danske Bank recently launched a similar app for giro (postal cheque) scanning via mobile phones.

Banco Sabadell’s Instant Check feature, already available for iPhone and Android apps, enables users to take a photo of their cheque with a smartphone camera to make deposits without having to visit a branch.

The technology has already been introduced by some American institutions, including Chase.

Banco Sabadell's new Android app also displays account information in graphic form, lets users access favorite operations and find branches and ATMs through geographical location, displaying the information on Google Maps or Street View.

It beats me why a bank would want to perpetuate an archaic payment system. Isn't it is about time that the cheque is finally put out of its misery?

You can watch Banco Sabadell's new app in operation in the following video – with Spanish commentary (but not a problem to follow).

SWIFT tackles standing settlement instructions errors

Financial messaging body SWIFT is introducing a suite of services it claims will improve automation and reduce errors in standing settlement instructions (SSIs).

SSIs are agreements between two financial institutions that establish the receiving agents of each counterparty. Although they make for speedy payment and settlement, SSIs are frequently changed, which results in settlement errors and payment rejections.

SWIFT says research it has carried out with 12 customer banks suggests there are about 40 million such payment errors every year, costing the financial industry an estimated $700 million.

It aims to cut this with the launch of a global SSI repository, using multiple sources and sophisticated selection strategies to ensure that an institution's SSIs are complete, accurate and able to be replicated with ease.

An SSI directory for retail payments based on the repository will be updated and published on a monthly basis with a similar offering for treasury in the FX and money markets sectors to follow.

In addition, SWIFT plans the creation of a standard messaging format for distribution of cash SSI updates, which will be available from November this year. The message format will be structured, validated and authenticated, and allow senders to either specify a list of recipients for the notification, or to inform the broader SWIFT community.

SWIFT is also offering a diagnostics service that informs customers when counterparty SSIs held in their payment applications are incorrect and details corrective measures. The service, which was unveiled at Sibos, validates a customer's current list of counterparty SSIs against multiple information sources to provide a reliable picture of their accuracy.

Patrik Neutjens, head, reference data, SWIFT, says: "The lack of a single source for SSI information has led to payment failures, costing banks considerable time and money. In the age of automation and real-time reporting, it is crucial that this situation improves. These three initiatives will provide a comprehensive solution to some of the problems with changing SSIs."

Banks need to reinvent their payments business if they want sustainable growth - Boston Consulting Group

Major banks must adapt to sweeping changes in the payments industry in order to reverse revenue and profit declines and chart a course to sustainable growth, according to a new report by The Boston Consulting Group (BCG). The report, “Global Payments 2011: Winning After the Storm”, was released last week.

Government regulation, tighter competition, and shifting customer demands have taken a toll on revenues and profits; forging optimal business and operating models is key to success, according to BCG.

Traditionally strong payments businesses have shown severe weakness in recent years, the report says. Although many of these businesses are beginning to recover, banks must determine whether current business models (target customer segments, product portfolios, regions, and channels) and operating models (target processes, IT, sourcing, and organization) are well suited for shifting industry dynamics. Winning strategies will vary, depending partly on whether target markets are mature in terms of overall payments infrastructure and sophistication, or still developing, because the two types of markets will evolve differently going forward. In either case, banks seeking to expand their payments businesses must strive to minimize organizational complexity.

“The size of the prize is too large not to take action,” said Niclas Storz, a BCG partner and a coauthor of the report. “We estimate that by 2020, the global payments market will be worth $782 trillion in noncash transaction values and $492 billion in transaction revenues.”

Global payments revenues, which typically constitute one-third to one-half of most banks’ total revenues, fell at a compound annual rate of 7 percent from the end of 2008 through 2010, according to the report. BCG defines payments revenues as direct and indirect income generated by any payment service, including transaction-specific revenues as well as card and account maintenance fees and spread income generated from current accounts (also known as checking or demand-deposit accounts). Fees for overdrafts and nonsufficient funds are considered transaction-specific revenue.

The report examines global retail-payments markets on a regional basis, while exploring the wholesale transaction-banking market through a single, global lens.

Retail Payments in Europe

European retail-payments revenues fell from $173 billion in 2008 to $136 billion in 2010, according to the report. To help foster a rebound, banks must exploit the structural differences in payments markets throughout Europe. In Western Europe, given its highly evolved payments infrastructure, the focus will be on refining operating models. By contrast, in Central and Eastern Europe, the key will be forging winning business models.

Retail Payments in the Americas

In the United States, the payments industry has undergone considerable disruption, the report says. From the end of 2008 through 2010, total payments revenues fell at a compound annual rate of 4 percent, despite steady payments values and a 3 percent annual rise in volumes. Total revenues are expected to grow in 2011 but will remain about 6 percent below the 2007 peak level of $162 billion—a level not likely to be surpassed for another few years given the adverse effect of regulatory changes on payments revenues (such as debit card revenues).

Moreover, new financial regulations such as the Credit Card Accountability, Responsibility, and Disclosure (CARD) Act of 2009, modifications to Regulation E, and the Durbin Amendment (within the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010) will have a dramatic effect on U.S. payments businesses for years to come. Banks in the U.S. will have to rethink their business models and develop new value propositions, the report says.

“As much as $25 billion in annual retail-transaction revenues will be regulated away from U.S. financial institutions as the new guidelines take effect,” said Carl Rutstein, a BCG senior partner and a coauthor of the report. “To get back on track, banks in the U.S. need to transform their credit-card businesses, move beyond the checking account to deepen client relationships, and make sure they stay smart and nimble in the digital financial-services game.”

Retail Payments in Asia-Pacific

In Asia-Pacific, retail payments are primed for growth, the report says. But banks will have to tailor their business and operating models in order to balance growth aspirations with efficiency goals. In the mature Asia-Pacific countries, growth discussions must focus on existing customers and opportunities to increase share of wallet by improving the convenience of payment solutions for consumers and merchants. Yet the picture is different in emerging markets.

“Growth in emerging Asia-Pacific markets will be generated by the gradual financial inclusion of unbanked consumers and the rapidly expanding footprint of the electronic-payments infrastructure,” said Stefan Mohr, a BCG partner and a coauthor of the report. “Shifts in spending behavior and payment preferences, especially on the part of the emerging digital generation and those consumers moving from rural to urban areas, will also be a prime factor.”

Global Wholesale Transaction Banking

In the post crisis era, transaction banking will remain a significant opportunity for financial institutions, according to the report. Wholesale payments volume is expected to grow at a compound annual rate of 9 percent globally from year-end 2010 through 2020, and total wholesale transaction revenues are expected to increase from $64 billion to $119 billion. But despite the strengths of transaction-banking businesses, there are hurdles to overcome. Getting different silos within the bank—such as the corporate-banking sales force, cash-management and trade-service specialists, and operations and IT groups—to align around making transaction banking a top priority can be a tall order. Banks need to better define their core target markets (from both a segment and a regional perspective) and smooth out uneven customer experiences across channels and regions.

Operational Risk - Securities and Exchange Commission charges hedge fund managers and traders in $30 million expert network insider trading scheme

The Securities and Exchange Commission (SEC) has charged a New York-based hedge fund and four hedge fund portfolio managers and analysts who illegally traded on confidential information obtained from technology company employees moonlighting as expert network consultants. The scheme netted more than $30 million from trades based on material, nonpublic information about such companies as AMD, Seagate Technology, Western Digital, Fairchild Semiconductor, and Marvell.

The charges are the first against traders in the SEC’s ongoing investigation of insider trading involving expert networks. The SEC filed its initial charges in the case last week against technology company employees who illegally tipped hedge funds and other investors with material nonpublic information about their companies in return for hundreds of thousands of dollars in sham consulting fees.

In its amended complaint filed last week in federal court in Manhattan, the SEC alleges that four hedge fund portfolio managers and analysts received illegal tips from the expert network consultants and then caused their hedge funds to trade on the inside information.

“It is illegal for company insiders who moonlight as consultants to sell confidential information about their companies to traders, and it is equally illegal to buy that corruptly obtained information and trade on it,” said Robert Khuzami, Director of the SEC’s Division of Enforcement. “Instead of competing on a level playing field with other investors, these hedge fund managers sought to illegally trade today on what others would not learn until tomorrow.”

The SEC’s ongoing investigation is focusing on the activities of expert networks that purportedly provide professional investment research to their clients. While it is legal to obtain expert advice and analysis through expert networking arrangements, it is illegal to trade on material nonpublic information obtained in violation of a duty to keep that information confidential.

The technology company insiders who tipped the confidential information were expert network consultants to the firm Primary Global Research LLC (PGR).

Reserve Bank of India wants banking access to all villages with more than 2,000 people

The Reserve Bank of India (RBI) wants to make banking accessible to all villages with population more than 2,000 by March 2012, bank governor D. Subbarao said this past week.

"RBI has planned that all villages with population more than 2,000 must have access to banking such as through ATMs, business correspondents and rural mobile banking”, Subbarao told students of the Indian Institute of Management-Raipur (IIM-Raipur) during a presentation on the workings of RBI.

"It is a challenge before the RBI to maintain growth and control inflation," he said.

He explained in detail about several functions of the RBI - from printing and distributing currency to acting as monetary authority, regulatory and supervisory body for banks.