Blog: Can EBICS become a European-wide standard?


Joachim Blank
Product and Customer Manager at CoCoNet.

 

EBICS should become a European-wide standard – and here’s why

Banking standards aren’t necessarily the most exciting subject in the world. But the Electronic Banking Internet Communication Standard (EBICS) is a genuine game changer. Launched in 2005, EBICS is an interbank protocol originally developed by the German Banking Industry Committee. It was created as a means for banks and companies to exchange files over the internet, replacing older communication networks, which were restricted in their bandwith.

So where are we now? Well, the protocol is very firmly established and is used as a means of secure information exchange by banks in Austria, France, Germany and Switzerland. What’s more, its popularity is growing all the time. With their multinational customers clamouring to use the protocol, banks in other countries across Europe are also integrating EBICS into their systems.

What’s so special about EBICS?

In my opinion, its main advantages for banks include:

  • Cost. EBICS helps banks to save money. That’s because there’s (nearly) no charge for using the net infrastructure – which naturally makes it far more cost-effective than SWIFT.
  • Customer retention. Of course, you want to hold on to your corporate customers – that goes without saying – and EBICS makes it easier for you to do that. By giving your customers a multi-banking overview of all their accounts with their banks that use the protocol, you can position your bank as their partner of choice. You also have a direct bilateral connection to your corporate customers without an intermediary third party.
  • Security. You want a fast and secure internet communication channel that connects your bank with its customers? You’ll find it in EBICS. The protocol’s state-of-the art functionality incorporates HTTPS, XML, file compression, encryption and digital signatures. It also enables end-to-end security, using up-to-date security methods.
  • Use cases. With EBICS, one size really does fit all. The protocol supports a wide range of business transactions, including direct debits and credit transfers, account statements, cash management, status reports, security orders, guarantees and letters of credit, along with many others.
  • Operations. EBICS also allows banks to automatically import customer master data into their systems and vice versa: corporate customers may download master data (e.g permission profiles) so they can synchronise their own data with the bank configuration.
  • Mobility. The protocol really allows your customers to get a grip. As well as enabling the transfer of data, the standard can be used to execute payments, guarantees and security orders through the use of electronic signatures. Authorisations from several people within your customer’s organisation can happen independently of case, location and time. Furthermore, the EBICS applications can be used on a wide variety of devices (desktop PCs, tablets, smartphones).
  • Visibility. Is your customer wondering whether the multi-million euro payment is not only received by his bank, but also accepted and processed? Now they need wonder no more. EBICS supports an acknowledgement log that lists the results of any initiated customer action. This enables the corporate customer to track not only the data transfer, but also the processing of submitted data.

Given these benefits, I think there are good reasons for all European banks to support EBICS. The protocol improves their competitiveness by giving them an online communication channel with any EBICS corporate customer Additionally, it is also increasingly used in interbank communication and in clearing – although that’s a topic for another blog entirely.

What’s more, banks can directly exchange financial data with their corporate customers over the internet – and without having to rely on SWIFT. EBICS has a standard onboarding process and – this will come as music to your ears – it is remarkably straightforward compared with SWIFT. It’s probably also worth mentioning that every corporate customer – regardless of its size – can use the protocol directly via its bank.

A changing landscape

Personally, I find it odd that despite its many advantages, EBICS is not – yet – a European-wide standard. Having said that, the EBICS Company (which is responsible for maintaining and developing the standard) is keen to extend the use of EBICS to European countries that are not currently using it and to further harmonise the data transfers.

EBICS fits perfectly with the broader trends that are shaping the European banking industry today. The revised Payment Services Directive (PSD2) is creating a more integrated European payments market while the Single Euro Payments Area (SEPA) is generally driving the harmonisation of payment instruments and payment formats across Europe. EBICS complements these developments with solutions for corporate customers such as mass data processing and the authorization (distributed electronic signature) of payments by several people according to a granular, multi-level authorization concept.

Look to the future

Going forward then, how is the future of EBICS likely to pan out? My view is that the protocol will become a European-wide commincation channel that is used for customer-to-bank communication as well as for interbank communication.

Also, I think that more countries will either become active members of the EBICS Company or support the protocol without joining it. Why? Well, as multi-banking becomes the new standard in corporate banking, banks will be pushed from their corporate customers to support EBICS. And who can blame them? It’s only natural they would want to take advantage of this cheap – but standardised – communication channel.

Ultimately, EBICS is a future-proof and user-friendly protocol that enables multi-banking capabilities and is proven over years.Leading technology vendors already integrate EBICS into their banking products. At CoCoNet, we have implemented EBICS into our own products right from when the standard was launched. Thanks to the technological capability that exists today, banks can adopt the protocol quickly and easily. In fact, there’s no excuse not to!

EBICS is a great thing – which is why it is in the interests of banks and their corporate customers that it does become a Europe-wide standard. And why stop there? Potentially it could become a standard that is used not only in Europe – but right across the world.

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