Including the recent addition of Bank of America, Cable & Wireless now has 14 participating banks on its Real-Time Nostro (RTN) data feed, with more announcements on the way at the Sibos conference. "We've seen a surge in the U.S., and we're seeing a lot of people on the U.S. side saying, 'I don't want to be the odd man out,'" says Gerard Hamerlind, global head of sales, Cable & Wireless RTN (London).
A similar dynamic is afoot outside of the Americas, according to Hamerlind. "Now that we do have a lot of the big players - Citi, Chase, BofA and RBC - all [submitting] their information, a lot of the institutions in Asia and Europe are seeing what's considered to be critical mass," he says.
The RTN service depends upon data feeds from providers, which are typically correspondent banks. A correspondent bank provides another financial institution access to a market in which it does not have a direct presence. Thus, a bank from one country may maintain correspondent accounts in several other countries. At the same time, it may also act as a correspondent bank for those institutions that want to do business in that bank's home country.
RTN aggregates data feeds from participating providers and then disperses it to the users. The users, which are typically other financial institutions, are seeking information about the cash positions in their various correspondent accounts held elsewhere, known as "nostro" accounts.
The nostro account data is provided in real time using XML-based SWIFT cash reporting standards. From there, the data flows into the users' back-office systems. "The users are pulling the information and either looking at it from a browser, or actually pulling it into their back-office reconciliation engines and doing online real-time reconciliation," explains Hamerlind.
The data helps RTN users gain a consistent view of their cash positions across a wide network of correspondent relationships. Indeed, the availability of the delivery channel for the nostro account data has created market pressure upon the larger correspondent bankers to become providers of information to the RTN service. "The users are moving the providers, and they're working very hard and diligently to get more providers on board," notes Hamerlind.
Although the RTN system primarily is used to perform internal reconciliation, many firms have recognized the potential of moving this functionality out to their clients. "They can take this information, package it and send it off," says Hamerlind.
The ability to provide real-time data about global cash positions can make for a compelling sale to another financial institution or to a corporation. "The product strategy [about which] people ask is, 'How do we package this and pass it on to our downstream correspondents?'" observes Hamerlind. "But most banks are looking at it first internally," he acknowledges.
Adding Links to the Chain
Looking ahead, it's conceivable that the real-time data can make its way throughout the informational supply chain of a bank, such as into its general ledger. "There are a lot of different options on where real-time information can move into an organization," suggests Hamerlind. "Once [bankers] see what they can do and how they can manage their liquidity better, manage their exception handling better and start doing white labeling, you see the lightbulbs go on."
In this way, Cable & Wireless has carved out a nice niche for itself in the payments landscape. Collecting and collating real-time nostro data requires an infrastructure that an individual bank wouldn't necessarily want to build itself, according to Hamerlind. "We're very solid at being able to host these types of applications," he says.
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