What Happens in Vegas ...

By Mark Brousseau

While what happens in Vegas is supposed to stay in Vegas, Nancy Atkinson (natkinson@aitegroup.com), senior analyst at Aite Group, shared her thoughts with me on the big stories at NACHA’s Payments 2008 conference held a few weeks ago in Sin City.

And, contrary to the city’s marketing slogan, Atkinson says many of these topics will continue well beyond Vegas.

... The introduction of the new standard entry class code, IAT (International ACH Transactions) in March 2009 makes international transactions easy to identify and automates compliance reviews, Atkinson said. Significant changes are being made to ACH systems for bank originators and receivers, she noted. Since these changes interface with anti-money laundering and Office of Foreign Assets Control’s (OFAC) specially designated nationals list, testing of the systems changes is particularly important. But banks need to test with their end users as well.

... Check imaging is maturing and reaching broad acceptance. The next frontier for check image clearing is to standardize the resolution of exception items to approach 100 percent automation for clearing and settlement, Atkinson said. The Federal Reserve is coordinating efforts with all key participants on this initiative, she noted.

... Remote deposit capture (RDC) for corporations, bank branches and ATMs is being embraced like few new products. Banks enhance their revenue generation and relationship building by offering RDC to commercial clients, Atkinson said. Considerable cost savings are realized by banks that implement RDC in their branch offices and through their ATMs, she noted. It’s for this reason, that Atkinson expects significant growth on both fronts will continue through the next few years.

... The concept of payments hubs is gaining traction with financial institutions. The hub provides common functionality, such as fraud prevention, regulatory compliance and capturing fundamental payments initiation data in a single system regardless of the ultimate payments system used. Atkinson said this approach streamlines processes, centralizes compliance and fraud prevention updates, and improves customer interfaces. Clarification of the benefits and iterative and flexible implementation options for a hub lead more financial institutions to consider adoption, she said.

... Remittance data remains an important concern. Financial institutions and their clients want more data that is actionable, Atkinson explained. Initiatives that address current shortcomings in the provision of remittance information with regard to their respective payments processes include full-page image capture in RDC and the Federal Reserve and CHIPS (The Clearing House Interbank Payments System) effort to standardize remittance information for wire transfers based on ISO 20022.

“Payments 2008 initiatives focus on more than operational efficiencies.” Atkinson concluded. “There is lots of momentum around the improvement of payments processing and that momentum carries far beyond the boundaries of Las Vegas.”