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Federal Reserve Bank (FRB) Extends The Payment Mechanism to Internet
One of the most significant operational initiatives by the FRB is to extend its service to the member financial institutions on to the Internet through its efforts to replace the current Fedline Gateway (DOS-based store/forward) with an Internet based Gateway. The impact on small to medium institutions currently using the Fedline service (about 10,000) is tremendous for it opens up real-time collaboration not only among the member financial institutions and the FRB, but also their end customers. The efficiency that can be achieved through streamlined transaction processing and effective management of funds and related risk through real-time access to FRB’s settlement mechanism is significant.
The trend of financial institutions extending their payments/settlement services on to the Internet combined with the FRB’s Internet initiative will accelerate real-time collaboration between enterprises and their financial institutions to optimize the flow of funds and settlement processes and thus effective management of payments risk. This we believe will further accelerate growth in e-commerce. By automating payment initiation within and outside the organization’s firewalls, allows efficient collaboration and processing of these valued transactions on a real-time basis. The ability to correct errors real-time in an event driven workflow maximizes the efficiency of straight through processing (STP).
This trend in the banking industry to extend many of their FVC operations to their customers allow them to manage the flow of funds efficiently and provide effective customer service. This trend is being observed across all levels of the industry i.e. small-to-medium and large financial institutions.
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