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TRANSCRIPT
2005-10-24
BGC – BankgirocentralenImpact from SEPA on BGC
Presentation, by Mats Wallén
”Domestic ACHs in SEPA”at Magyar Nemzeti Bank conference
2005-10-21
Agenda1. Introduction
BGC company informationThe Bankgiro system and products
2. Other considerationsEuro referendumBankgiro euro functionality
3. Trends that influence SwedenA changing European payments market
4. BGCs strategy
5. Summary
2005-10-24
BGC - The Swedish AutomatedClearing House
Key factsKey factsEstablished 1959BGC is owned by SEB, SHB, FSB, Nordea, Danske Bank, SkandiaBanken, LF Bank and Kaupthing BankApprox. 435 employees at the Stockholm office.Turnover of MSEK 850 in 2004 (approx. 92 MEUR)
Established 1959BGC is owned by SEB, SHB, FSB, Nordea, Danske Bank, SkandiaBanken, LF Bank and Kaupthing BankApprox. 435 employees at the Stockholm office.Turnover of MSEK 850 in 2004 (approx. 92 MEUR)
2005-10-24
BGC - The Swedish AutomatedClearing House
Products and service offeringProducts and service offering
Main business, Bankgiro system a scheme for processing payments 18 participating banks
BGC offers payment and business transaction information servicessolutions for secure digital identificationelectronic invoice
Our products enablesecure 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 servicessolutions for secure digital identificationelectronic invoice
Our products enablesecure and efficient business transactions;for our clients Swedish banks, enterprises and public institutions
2005-10-24
Transaction flow in Bankgirot
SupplierCustomerBankgirot
Payer’s (customer’s) bank
Central bank
Invoice
Receiver’s (supplier’s) bank
7. Details for credit book entry6. Clearing position
and settlement details
2/4. Processing
3. Debetauthorisation 6b
Settlement
1. Payment initiation, B2B
8. Remittance
advice
(1. Altenativepayment
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 payeesHigh 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 relationshipSeveral giro numbers can be linked to one bank account. Simplifies liquidity planningBGC is compliant with the SIPS 10 Core principlesPayment 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 settlements14 related to the Bankgiro system4 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
08.20SEK
08.21SEK
09.05SEK
11.26SEK
11.27EUR
12.00SEK
12.30EUR
13.00SEK
2005-10-24
13.26EUR
13.25SEK
15.20SEK
15.26SEK
15.27EUR
13.05SEK
07.30SEK
09.06EUR
10.30SEK
16.20SEK
08.31SEK
11.00SEK
07.15SEK
11.25SEK
15.30SEK
16.00SEK
Other BGC products
B2C Electronic invoicingB2B Electronic invoicingPKI Services (not only for financial services)Service bureau for SWIFTNet
BGC also use SWIFTNet FileAct in the interaction with participating banks
2005-10-24
Agenda1. Introduction
BGC company information and general introductionto The Swedish payments marketThe Bankgiro system and products
2. Other background informationEuro referendumBankgiro euro functionality
3. Trends that influence SwedenA changing European payments market
4. BGCs strategy
5. Summary
2005-10-24
Other background information
Majority voted against the introduction of euroGreat skepticism among the man on the street to EU and the CommissionOn the other hand try to best in class to implement directives
2005-10-24
Agenda1. Introduction
BGC company information and general introductionto The Swedish payments marketThe Bankgiro system and products
2. Other background informationEuro referendumBankgiro euro funtionality
3. Trends that influence SwedenA 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 schemesNew Legal Framework create one harmonized framework for the European payment market
1.Harmonizing of schemesNew Legal Framework create one harmonized framework for the European payment market
Marketpressure
Govenmentpressure
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. StandardsNeed for standardization of formats and products
2. StandardsNeed for standardization of formats and products
3. Consistent infrastructurePressure to reduce the number of infrastructure for transaction processing.
3. Consistent infrastructurePressure 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 circuitBanks see increased use of IBAN in cross-border transactionsNo 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
0
50
100
150
200
250
300
350
400
450
500
1996 1997 1998 1999 2000 2001 2002 2003 2004
Mill
ion
Form payments Electronic payments
Source: BGC's statistics
2005-10-24
Agenda1. Introduction
BGC company information and general introductionto The Swedish payments marketThe Bankgiro system and products
2. Other background informationEuro referendumBankgiro euro functionality
3. Trends that influence SwedenA changing European payments market
4. BGCs strategy
5. Summary
2005-10-24
Challenges on BGCTransactions cost will be lower in Euro-area
Average cost perBg-transaction(SEK)
0
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 developmentFocused business development
Increase productivity and quality in the deliveryIncrease productivity and quality in the delivery
Use partners to achieve flexibility and efficiency
Adapt knowledge and culture
BGC vision
2005-10-24
Agenda
IntroductionBGC company information and general introductionto The Swedish payments marketThe Bankgiro system and products
Other background informationEuro referendumBankgiro euro functionality
Trends that influence SwedenA changing European payments market
BGCs strategySummary
2005-10-24
Impact from SEPA on the Swedish market 2008
2005-10-24
20102008
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 currencyThe impact will be low as Euro is not the domestic currency
Summary
Reduce the gapFocus on business developmentIncrease productivity and qualityDirect impact from SEPA will initially be lowBe the market leader for electronic invoicing in Sweden
2005-10-24
