EBICS in “private banking” – use cases beyond payments

Closeup view of finance market analyst in eyeglasses working at sunny office on laptop while sitting at wooden table.Businessman analyze stock report on notebook screen.Blurred background,horizontal.EBICS is widely regarded as secure transfer protocol for the exchange of payment files (orders and statements). For corporate customers in particular, it is certainly the most commonly used protocol. At this point I would like to present a different use case that is very relevant in Switzerland: EBICS in the private banking sector.

The private banks here are currently going through an even rougher patch than before and are under a lot of pressure from various sources. Regulations, margin pressure, better informed customers, breaking up the value chain, and the digitalisation process are only some of the many topics currently found on the agenda of private banks’ boards. In the area of automation, we are observing a noteworthy initiative in Switzerland – the use of EBICS as an interface for stock market transactions.

At the suggestion of big institutional investors and professional asset managers, who, for their part, also have an interest in higher automation, more and more EBICS transaction types from the order business are being offered recently. Typically, these are order types for submitting and processing stock market orders (upload) and for order confirmations, invoices and deposit statements (download). The formats used are SWIFT (MT5xx) and PDF. They are implemented as institution-specific order types (XYZ).

Now, if we take a look at the entire value chain of a stock market transaction, it can ideally be performed in a fully automated manner. The portfolio management system of an asset manager detects an imbalance between the investment strategy and the customer’s portfolio, and generates the stock market order for a reallocation. By means of the standards EBICS and SWIFT (for example, MT502), the order is triggered automatically at the institution, and the confirmation is reported back via EBICS, as well (for example, MT509). The automation substantially reduces the processing work on all sides. Additionally, the error quota is lowered significantly compared with the manual processes that are still widely used to this day.

In summary, innovative private banks are already offering EBICS or planning to join the market with their respective offers shortly. As, traditionally, payments take a less dominant role in the private banking business than in universal banks, the focus of EBICS shifts to stock market transactions and asset reporting. As asset managers and institutional investors also strive for higher automation, it’s a win-win situation. It would be ideal if the standardisation bodies agreed on universal and uniform order types (or, as of EBICS 3.0, the so-called BTF specifications) and defined formats as soon as possible.

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