22 September 2014

Stanley Epstein

Stanley Epstein - Citadel Advantage Ltd

39 | posts 121,495 | views 34 | comments

Operational Risk Management

To share information, ideas and experience relating to all aspects of op-risk management and compliance with Basel II
A post relating to this item from Finextra:

Failed payments costing Europe's banks EUR21bn a year - Misys

03 September 2008  |  6815 views  |  0
Despite the introduction of the single euro payments area this year, failed cross border transactions are costing European banks EUR21 billion a year, according to Misys.

Is this a disaster in the making?

04 September 2008  |  3482 views  |  1

If the Misys data are correct we are sitting atop a volcano that is just about to blow! Firstly forty one percent of failed cross-border transactions is appalling! This means that almost every second cross-border transaction is not passing muster. This also raises two very clear and critical issues - transparency and operational risk.

On the transparency side my question is; "Is this failure rate deliberate on the part of the banks?" I assume that the EUR36 a time "cost" is not a real cost but what banks are charging for making the repair. I have enough experience in activity based costing in bank transaction processing to know that this number is certainly well padded. So, being the cynic that I am, it would make sense for a lot of banks to grow their revenues from these failures, however insignificant some of the faults might be. Also, once a payment has failed, how keen are banks on educating their customers to see that the failure does not recur?  

On the operational risk side the comment that these cross-border payment failures are "... caused by a number of factors including weak payment initiation controls, poor process monitoring and problems during clearing and settlement" has sent me to "Red-Alert". If this is true, and if this affects almost half of all European cross-border payments then we are sitting on an operational risk disaster of huge magnitude just waiting to happen.

Please someone .... tell me that I am dreaming.

TagsPaymentsRisk & regulation

Comments: (1)

A Finextra member | 04 September, 2008, 18:42

According to the survey this is based on, the average cost to banks across Europe is likely to be in the region of 6 euros, ranging from under 5 euros in Germany, Austria, Sweden and Greece and up to 10 euros in France, UK, Italy and Spain.

Comment on this story (membership required)
Log in to receive notifications when someone posts a comment

Latest posts from Stanley

Securitisation and Operational Risk

11 January 2014  |  1348 views  |  0  |  Recommends 0 TagsRisk & regulationInnovation

Operational risk management is NOT a joke

08 January 2014  |  2047 views  |  0  |  Recommends 1 TagsRisk & regulation

Why has SWIFT become so SLOW?

03 May 2012  |  3109 views  |  1  |  Recommends 1 TagsPayments

How do we put banking back into banks?

29 April 2012  |  2078 views  |  1  |  Recommends 0

Cutting costs. They just don't get it.

15 October 2011  |  2656 views  |  1  |  Recommends 1

Stanley Epstein

job title


company name

Citadel Advantage Ltd

member since




Summary profile See full profile »
Stanley is a Director and co-founder of Citadel Advantage Ltd., an international consultancy to t...

Stanley's expertise

What Stanley reads
Stanley writes about

Who is commenting on Stanley's posts