International Expansion: Overcoming Geographic Differences

I recently published a blog post titled “International Expansion in Financial Services” discussing how banks are supporting the needs of multi-national companies through expansion into new geographies. Meeting the needs of demanding corporate clients in remote geographies can be challenging for global, national and regional banks.

As banks follow their corporates into new geographies, they are faced with foreign languages, unique file formats and communications protocols. Here are some examples of unique client requirements banks need to overcome in support of their international expansion efforts.   

Europe:

EBICS -- The Electronic Banking Internet Communications Standard (EBICS) is a communications protocol developed by the ZKA (German joint banking authority) and first implemented in Germany and France to replace the aging FTAM and ETEBAC X.25 protocols retired on June 30, 2012. The protocol is used to transfer data from a customer’s treasury management systems and the bank’s processing systems. EBICS is just one of several host-to-host connectivity methods that a bank’s clients may use to transmit payments and receive transaction data. Another factor driving adoption of EBICS is that it is a SEPA-compliant protocol, a payment scheme being rolled out across the euro zone. For financial institutions that do not want to invest in building an internal EBICS technology infrastructure and client delivery organization, EBICS connectivity is available as an outsourced, SaaS offering.

SEPA—For any payments professional that has been locked in a cave for the past several years, the Single Euro Payments Area (SEPA) stands for the European Union (EU) payments integration initiative. SEPA provides a set of harmonized payment schemes and frameworks for electronic euro-denominated payments. Facing an implementation deadline of February 2014, both banks and their corporate customers must migrate euro-denominated credit transfers and direct debits into SEPA-compliant formats. This migration is being discussed in many forums across the industry and banks continue to struggle to support both legacy and SEPA formats as their corporate clients slowly implement SEPA.  Corporates have been slow to modify their back office ERP payables applications and other treasury systems to produce the SEPA required ISO 20022 XML formats. Many banks and corporates are looking to third-party providers to route and transmit payment files for IBAN enrichment, SEPA direct debit mandate management, and SEPA payment factory applications.    

South America:

FEBRABAN CNAB – For Brazilian low volume domestic payments, banks use the FEBRABAN (Federação Brasileira de Bancos) CNAB (Centro Nacional de Automação Bancária) 240 file format to digitally exchange information with their clients for a variety of products and services including payments, collections and account statements. As financial services firms such as Bank of America and U.S. Bancorp’s Elavon expand into Brazil, they must deal with both domestic payment formats as well as the official Brazilian language, Portuguese.  It is often beneficial to work with local financial services experts to facilitate client connectivity and deliver customized solutions for the Brazilian market.   

Asia-Pacific:

ZENGIN – The Zengin Data Telecommunication System is a nationwide electronic interbank system developed by the ZENGINKYO (Japanese Bankers Association) that processes domestic banking transactions, such as remittances and transfers, from Japanese financial institutions. In order to connect to the Zengin system, many banks and corporates need to use a Zengin TCP/IP adapter. Service providers have provided Zengin connectivity for clients for several years and continue to see demand for the Zengin protocol from banks and corporates expanding into Japan.

AS4 – Although AS4 (Applicability Standard 4) is a global B2B messaging specification, its adoption is receiving a boost from an Australian initiative called “SuperStream.” In July 2011, the Australian Government began its implementation of SuperStream, designed to improve back office processing for government retirement benefits. The new data and e-commerce standard underlying the initiative establishes certain technology requirements including the use of ebXML3/AS4 (electronic business XML version 3.0) and AS4. Third-party technology firms are working with their clients in Australia during the phased implementation of SuperStream.