While banks have capitalized on the lack of standards, they nevertheless have established common platforms. Eleanor — led by 15 banks in the Identrus consortium such as ABN Amro, Wells Fargo, Barclays Bank, HSBC, and Industrial Bank of Japan — and ePaymentPlus (ePP) of SWIFT, another bank-led initiative, are able to carry data along with the payments in much the same way RosettaNet does. “Identrus will provide the verification, and ePP might also use Identrus as its certificate of authority,” says Blair. “Both of them are XML standards to describe payments that can be accepted by multiple banks,” he says.
“Both Eleanor and ePP are languishing with some small-scale trials because the banks are not getting sufficient pull for the technology,” the Nokia paper adds. “This makes sense because most corporates still seem to be working on upstream processes. The problem is that when we do finally get excited about cleaning up the inefficiencies in settlements, the banks will not be ready.”
Currently, one of these inefficiencies is that payment technologies such as Swift are only able to handle two lines of 35 characters of seven-bit user data, whereas RosettaNet can handle 500 attributes per message.
Nokia estimates that at least 20 global banks are needed for Eleanor and ePP to become the standard in at least one industry. However, it also questions the banks’ commitment to providing such standards. “Banks, facing shareholder pressure and a weak economy, are loath to invest in an untried technology with unproven demand, especially having sunk hundreds of millions into supporting the exchange concept at the end of the 90s,” the paper says. “Also, banks are very ambivalent about the technology which will further erode the easy money they make from customer ignorance and inefficiency.”
Nokia has not identified a solution to the problem other than to open a dialogue between RosettaNet users and banks. “Essentially, this is a system that commoditizes [bank services]. In a world where the basic products are already commodities and spreads are very thin, [banks] can be expected not to be delighted with these changes,” says Nick Franck, director at Singapore-based consulting firm CFO Solutions. “The banks have to change, they know that, and the corporates can get what they want from the banks by assisting them to change successfully.”
Nokia’s proposed dialogue would focus on easing exactly the banks’ insecurities. “One way out of this catch-22 might be…to get RosettaNet to specify a settlement process that would provide a viable potential market to the banks — the RosettaNet community,” it says, in no specific terms.
Franck adds: “Good companies will give the banks something in return for making this concession, and it therefore becomes a duty of the corporates to see what they can give of value to the bank in return for these better systems. That ‘something’ would be case by case, but one example is better concentration of business with key banks. Alternatively, it could be other types of business.”
But just like the adoption of new standards like RosettaNet itself, this task is easier said than done. Until then, any E-settlement standard can still go the way of the Betamax.