BGC Bankgirocentralen Impact from SEPA on BGC Presentation, by - - PowerPoint PPT Presentation

2005-10-24

BGC – Bankgirocentralen

Impact from SEPA on BGC

Presentation, by Mats Wallén ”Domestic ACHs in SEPA” at Magyar Nemzeti Bank conference 2005-10-21

Agenda

1. Introduction

• BGC company information
• The Bankgiro system and products

2. Other considerations

• Euro referendum
• Bankgiro euro functionality

3. Trends that influence Sweden

• A changing European payments market

4. BGCs strategy 5. Summary

2005-10-24

BGC - The Swedish Automated Clearing House

Key facts Key facts

Established 1959 BGC is owned by SEB, SHB, FSB, Nordea, Danske Bank,

SkandiaBanken, LF Bank and Kaupthing Bank

• Approx. 435 employees at the Stockholm office.

Turnover of MSEK 850 in 2004 (approx. 92 MEUR) Established 1959 BGC is owned by SEB, SHB, FSB, Nordea, Danske Bank,

SkandiaBanken, LF Bank and Kaupthing Bank

• Approx. 435 employees at the Stockholm office.

Turnover of MSEK 850 in 2004 (approx. 92 MEUR)

2005-10-24

BGC - The Swedish Automated Clearing House

Products and service offering Products and service offering

• Main business, Bankgiro system
• a scheme for processing payments
• 18 participating banks
• BGC offers
• payment and business transaction information services
• solutions for secure digital identification
• electronic invoice
• Our products enable
• secure and efficient business transactions;
• for our clients Swedish banks, enterprises and public institutions
• Main business, Bankgiro system
• a scheme for processing payments
• 18 participating banks
• BGC offers
• payment and business transaction information services
• solutions for secure digital identification
• electronic invoice
• Our products enable
• secure and efficient business transactions;
• for our clients Swedish banks, enterprises and public institutions

2005-10-24

Transaction flow in Bankgirot

Supplier Customer

Bankgirot

Payer’s (customer’s) bank Central bank Invoice Receiver’s (supplier’s) bank

• 7. Details for

credit book entry

• 6. Clearing position

and settlement details 2/4. Processing

• 3. Debet

authorisation 6b Settlement

• 1. Payment

initiation, B2B 8. Remittance advice (1. Altenative payment initiation) C2B, SMEs

• 3b. Debit book

entry

• 5. Debit

advice + transaction report

• 7b. Credit book

entry 2005-10-24

Features of the Bankgirot system

• Supports direct submission from payers and BGC

submits electronic credit advices to the payees

• High level of automation for payers and payees and

the participating banks (End-to-End STP)

• Same day payments (main cycle over night)
• Supports portable accounts. Giro numbers can be

re-linked overnight to a bank account with a bank selected by the customer. Facilitates flexibility to change bank relationship

• Several giro numbers can be linked to one bank
• account. Simplifies liquidity planning
• BGC is compliant with the SIPS 10 Core principles
• Payment products in SEK and EUR (from 1999)

2005-10-24

Supports fast retail payments with settlement at the Central Bank

BGCs clearing and settlement system process 28 daily settlements

14 related to the Bankgiro system 4 related to DCL (account to account

transactions)

10 related to other transaction flows

ATM transactions, Cash handling (coins

and notes), Card transactions (Europay), National debt office payments, Dividend payments for Swedish shareholders through the national CSD (VPC)

Settlements both in SEK and EUR

08.20 SEK 08.21 SEK 09.05 SEK 11.26 SEK 11.27 EUR 12.00 SEK 12.30 EUR 13.00 SEK

2005-10-24

13.26 EUR 13.25 SEK 15.20 SEK 15.26 SEK 15.27 EUR 13.05 SEK 07.30 SEK 09.06 EUR 10.30 SEK 16.20 SEK 08.31 SEK 11.00 SEK 07.15 SEK 11.25 SEK 15.30 SEK 16.00 SEK

Other BGC products

B2C Electronic invoicing B2B Electronic invoicing PKI Services (not only for financial services) Service bureau for SWIFTNet

BGC also use SWIFTNet FileAct in the interaction

with participating banks

2005-10-24

Agenda

1. Introduction

• BGC company information and general introduction

to The Swedish payments market

• The Bankgiro system and products

2. Other background information

• Euro referendum
• Bankgiro euro functionality

3. Trends that influence Sweden

• A changing European payments market

4. BGCs strategy 5. Summary

2005-10-24

Other background information

Majority voted against the introduction of

euro

Great skepticism among the man on the

street to EU and the Commission

On the other hand try to best in class to

implement directives

2005-10-24

Agenda

1. Introduction

• BGC company information and general introduction

to The Swedish payments market

• The Bankgiro system and products

2. Other background information

• Euro referendum
• Bankgiro euro funtionality

3. Trends that influence Sweden

• A changing European payments market

4. BGCs strategy 5. Summary

2005-10-24

A changing European payments market

Over arching pressure Need for change

1.Harmonizing of schemes

New Legal Framework create one

harmonized framework for the European payment market 1.Harmonizing of schemes

New Legal Framework create one

harmonized framework for the European payment market

Market pressure Govenment pressure

Reduced costs

To establish the

vision of the internal market

Focus: one

market, price for the consumer

General business

economical motive to achieve efficiency by scale which will give lower costs

• 2. Standards

Need for standardization of formats

and products

• 2. Standards

Need for standardization of formats

and products

• 3. Consistent infrastructure

Pressure to reduce the number of

infrastructure for transaction processing.

• 3. Consistent infrastructure

Pressure to reduce the number of

infrastructure for transaction processing.

2005-10-24

Trends that influence Sweden

Harmonization and adaptation of

international standards in the domestic circuit

Banks see increased use of IBAN in

cross-border transactions

No decision to natively handle IBAN in

domestic systems (BG or DCL)

Discussions within the banks on impact

from PEDD. Some international customers are starting asking for it

2005-10-24

Electronic transactions continue to grow in Sweden

50 100 150 200 250 300 350 400 450 500 1996 1997 1998 1999 2000 2001 2002 2003 2004 Million

Form payments Electronic payments

Source: BGC's statistics

2005-10-24

Agenda

1. Introduction

• BGC company information and general introduction

to The Swedish payments market

• The Bankgiro system and products

2. Other background information

• Euro referendum
• Bankgiro euro functionality

3. Trends that influence Sweden

• A changing European payments market

4. BGCs strategy 5. Summary

2005-10-24

Challenges on BGC

Transactions cost will be lower in Euro-area

Average cost per Bg-transaction (SEK)

0,1 0,2 0,3 0,4 0,5 0,6 0,7 0,8 0,9 2004 2005 2006 2007 2008 2009 2010 2011 2012

År

Expected cost level for ACH with thin funtionality

Estimated processing cost within the Euro area (rich functionality)

Reduce gap !!

2005-10-24

How to reduce the gap?

Face challenges from the European market Face challenges from the European market Focused business development Focused business development Increase productivity and quality in the delivery Increase productivity and quality in the delivery Use partners to achieve flexibility and efficiency Adapt knowledge and culture BGC vision

2005-10-24

Agenda

• Introduction
• BGC company information and general introduction

to The Swedish payments market

• The Bankgiro system and products
• Other background information
• Euro referendum
• Bankgiro euro functionality
• Trends that influence Sweden
• A changing European payments market
• BGCs strategy
• Summary

2005-10-24

Impact from SEPA on the Swedish market 2008

2005-10-24

2010 2008

European products in domestic system

2003

European products

Domestic products

European products for cross- border payments The impact will be low as Euro is not the domestic currency The impact will be low as Euro is not the domestic currency

Summary

Reduce the gap Focus on business development Increase productivity and quality Direct impact from SEPA will initially be low Be the market leader for electronic invoicing in Sweden

2005-10-24

Q & A

Mats.wallen@bgc.se +46 8 725 66 45

2005-10-24