Cash & Liquidity ManagementPaymentsSTP & StandardsFinding The Right Option for File Transfer in The Financial Sector

Finding The Right Option for File Transfer in The Financial Sector

In today’s increasingly diverse business environment, communicating with customers and suppliers has taken on great significance for the global treasury and finance industry. Given its often sensitive nature, this communication must be done securely, reliably and cost-effectively – a challenge that becomes more difficult in the wake of new regulations and confusing technology choices.

Customers are increasingly viewing the communication options available to them as a key factor when selecting to work with a particular financial services company. This trend is being reinforced as customers are working with suppliers in industries outside of financial services and becoming more aware of the communications solutions that are available to them.

External communications are nothing new to the global treasury and finance industry. Dial-up, VPNs, clearing houses and legacy mainframe systems have been legitimate choices for some time now. Many organisations are however beginning to struggle to support their file transfer needs as they attempt to consolidate and update homegrown file transfer solutions. In particular, sustaining legacy data communications infrastructure often requires organisations to manage expensive leased telephone lines, modem banks, or Value-Added-Networks (VANs). IT Administrators need to gain control of multiple and diverse departmental file transfer solutions, whilst ensuring application reliability, maintaining end-to-end security, and keeping costs in check.

External communications programs should include secure, open standards-based multi-protocol and multi-client data transfer services, certified encryption, guaranteed delivery, and powerful automation. These features will allow smaller and medium-sized financial institutions to use the Internet as a secure, compliant, and fast file transfer gateway.

Security Considerations

The Internet is capable of transporting huge file sizes, and some larger banks have already gone down this route. However, Internet connections run over public networks, so financial organisations must cost-effectively ensure high security and reliability. Without secure and compliant procedures, banks flirt with disastrous consequences. External communications programs must also be cost-effective, offering good ROI for ease of use, automation and decreased administration time.

While many sectors have been quick to take advantage of Internet or IP based communication channels, the financial services sector has been slower to adapt and adopt these new and proven technologies. Many global financial players continue to use out-dated, complicated and costly services such as leased-lines, VPNs or private networks such as the likes of SWIFT and others.

However, some forward looking institutions such as ABN AMRO and Clearstream have taken a lead in offering clients the option of taking advantage of secure IP transfer systems for a range of transactions from wire transfers to treasury and cash management. These new systems work on the same principal as email and crucially do not require banks to impose costly and complex technology changes on the end user. The file transfer can be from server to server or from server to client, either within a LAN or across a WAN or the Internet. As a result, financial institutions can now quickly and cheaply extend the range of electronic services they offer to a wider range of customers.

IP Transfer Systems

Clearstream currently uses secure file transfer to support its CreationDirect via Internet service, a data file transfer service which links straight to the customer’s desktop. As a result, customers have real-time IP access to enhanced clearing and settlement information, instruction input and transaction and position reporting. As well as addressing issues around the support of VPN connectivity, Clearstream has greater flexibility to cost-effectively add more channels in the future.

Since the introduction of this solution, Clearstream has been able to offer its customers access to enhanced clearing and settlement information, instruction input and transaction and position reporting. The system is very secure, and all users are authenticated via a Clearstream certificate before gaining access.

Clearstream is not alone in the effective deployment of secure file transfer methods, but is one of only an exclusive number of financial organisations to have identified and acted on the requirement. As Europe continues to lag behind the US, a desire to catch up looks set to increase the number of companies with safe and secure solutions that allow them to securely communicate data across the Internet.

In conclusion, financial institutions need to break free from old, existing infrastructures and start seriously examining new solutions that offer the twin benefits of extending services to new customers while at the same time reducing the cost of communicating to existing ones. Maintaining high levels of security, despite increased pressure to adopt new transport methods, is an achievable ambition.

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