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Corporates crying out for remittance data - AFP

14 July 2009  |  4527 views  |  2 cash

US corporations are overwhelmingly supportive of bank moves to incorporate remittance information in wire transfers, according to a study by the Association for Financial Professionals.

Ninety-five percent of the 331 respondents to the AFP survey believe remittance information would be valuable to their organisations if it were made available in the wire transfer message.

The absence of supporting information in the past has hindered attempts to boost straight-through processing rates between bank cash management platforms and corporate treasury systems.

Both the public Fedwire Funds Service and privately-held Chips network have committed to expanding their messaging formats to provide remittance information with wire transfers by late 2010.

As the new format comes onstream, businesses will be able to accurately identify incoming payments and post them to the correct accounts without manual intervention and research.

The initiative is likely to boost wire transfer volumes, says AFP, steering companies away from alternative solutions and strengthening the ties between banks and their corporate customers.

The move is also expected to stimulate changes in corporate messaging flows. While 91% of wire transfer recipients - the main beneficiaries of remittance information - indicated they would use the new data to receive and post incoming wires, nearly two-thirds (61%) said they would include remittance information in outgoing wires, perhaps to reduce the number of inquiries from the receiver of the wire transfer.

Comments: (2)

Stanley Epstein
Stanley Epstein - Citadel Advantage Ltd - Modiin | 15 July, 2009, 08:41

The issue of client usable data linked to bank transfers has been a problem for decades. Initially it was a problem of space in severely restricted data files and this was perpetuated by the astounding longevity of many of the legacy systems that the older banks developed in the 1960s and 1970s. Surprisingly, many of these systems are still functional today. Of course many banks have missed out over the years on a fantastic marketing opportunity, by actually giving their clients what they really need (and being able to charge for the value added service along the way).

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Jeremy Kidd
Jeremy Kidd - Cargill, Incorporated - Minneapolis | 15 July, 2009, 13:13

I just hope the US wire clearing organizations embrace ISO20022 rather than creating another proprietary standard.

I understand the Fed is planning to use ISO20022 in the longer term but considering something different in the short-term to get something in place quickly. The short term solution will supposedly be ISO20022-compatible - I hope this holds true and enables transition later.

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