Overview

Traditionally, banks used many different systems to complete high value payments, either to settle funds between banks, or to transfer funds for corporate clients. Within many countries, real-time gross settlement (RTGS) systems are used for this purpose. Many of these systems are either changing to use ISO 20022 message standards or are planning to do so soon.

Typically, high value payments involve several parties:
  • Debtor, also known as originator, person, or organization, who wants to transfer funds immediately to a beneficiary.
  • Creditor, also known as beneficiary, person, or organization, that receives funds immediately.
  • Debtor financial institution (debtor FI), or originator bank.
  • Creditor financial institution (creditor FI), or beneficiary bank.
  • Clearing and settlement mechanism (CSM).
  • Optional additional service providers.
  • Transport network such as SWIFT.

Each system operates according to a set of rules, or a scheme, that defines the business rules and technical rules under which the scheme operates. Business rules might dictate, for example, maximum execution time, maximum amount for a payment, minimum information to be provided for a payment, or how settlement is done between participants. Technical rules might dictate, for example, the format and content of messages exchanged between parties, interaction patterns between parties, and timings for those interactions. A typical scheme is the T2 real-time gross settlement (RTGS) system that supports European banks.

Financial Transaction Manager for High Value Payments overview

IBM® Financial Transaction Manager for High Value Payments adds the capability to process high value payments to the IBM Financial Transaction Manager suite. It supports the message types and business flows that a debtor financial institution (originator bank) or creditor financial institution (beneficiary bank) must support to interact with other parties to exchange payments and payment-related transactions by using ISO20022-based messages. The messages can be exchanged in one of the following ways.
  • They can be exchanged directly by following the Cross-border Payments and Reporting Plus (CBPR+) guidelines.
  • They can be exchanged by using a High Value Payments Plus (HVPS+) compliant RTGS, such as one of the following RTGS systems.
    • EURO1
    • NBO
    • RIX
    • Kronos2
    • T2

FTM for High Value Payments also provides integration points to other systems within a bank. These integration points are used when the High Value Payments business flows need to call services that are provided by those systems.

Figure 1. An FTM for High Value Payments installation
Diagram of how High Value Payments interacts with the FTM middleware. The diagram shows the transaction processing engine, which runs on IBM App Connect Enterprise, providing the runtime processing of the high value payments. It connects to a database for configuration and operational data. The configuration and administration user interface runs on WebSphere Application Server and has a view to the database and a connection to the transaction processing engine. Also shown are the interfaces between the transaction processing engine and the customer and the channel. One side of the transaction processing engine interfaces with systems such as T2. Its other side interfaces with the internal systems of the bank. Finally, the IBM App Connect Toolkit and Rational Software Architect development tools are shown in their role of creating the solution and deploying it to IBM App Connect Enterprise and the database.
Financial Transaction Manager for High Value Payments (High Value Payments) provides the following benefits:
  • Adds the ability to process outbound and inbound high value payments to the Financial Transaction Manager suite.
  • Delivers a payments solution that complies with the CBPR+ guidelines and the following HVPS+ real-time gross settlement (RTGS) schemes.
    • EURO1
    • NBO
    • RIX
    • Kronos2
    • T2
  • Supports the business flows and ISO 20022 messages that are defined for the schemes. ISO is the International Organization for Standardization. ISO 20022 is the standard that is used by the financial industry to create message standards.
  • Provides the capability to be extended to support specific ISO 200220-based RTGS payment schemes.
High Value Payments runs as a Financial Transaction Manager application. It consists of reference applications for each scheme, complete with artifacts such as the process model, configuration data, functional flows, message maps, and scripts, that make up the application. The reference applications implement a typical business process for a debtor financial institution (originator bank) to process outgoing payments. The processing for the originator includes the following functions.
  • Receiving the payment from the debtor (from the channel system).
  • Interacting with the fraud detection, sanction screening, and accounting systems in the bank.
  • Delivering ISO 20022 messages to the external party or the RTGS.
  • Processing ISO 20022 confirmations from the external party or the RTGS.
Similarly, the reference applications implement a typical process for a creditor financial institution (beneficiary bank) to process incoming payments, and other non-payment messages.

Full details of the provided business process flows are described in Functional flows. Details of the ISO 20022 messages that are supported, and the transformation maps to and from the Financial Transaction Manager canonical form (ISF), are described in Mappers.

Postinstallation and configuration overview

After the reference applications are installed, they can be deployed. By default, the reference applications are configured to interact with a set of simulators that are included with the reference applications. These simulators are for the real-time gross settlement (RTGS) and for each of the external bank systems that the application must interact with. You can use the simulators to set up a running deployment of the reference application for test, education, and demonstration purposes. These simulators are described in Simulators.

To prepare to process real payments for a bank, several steps are needed:
  • High Value Payments must be set up for options and configuration to suit the bank. For more information about customization, see Setup and customization.
  • High Value Payments must be integrated with a number of external systems that provide services that are called by the High Value Payments business flows. The reference applications are configured to interact with simulators for these systems. These simulators must be replaced with real systems, which would normally involve an integration project. The interfaces to the simulator services use asynchronous IBM MQ request and reply messages. Financial Transaction Manager and IBM App Connect Enterprise provide a rich set of capabilities that accelerate this integration. For example, allowing alternative transports such as HTTP or APIs, and transformation capability to match the required formats of the external systems. For more information about integration, see Integration overview.
  • High Value Payments must be connected to the external party or the RTGS. The SWIFT network is typically used. A separate offering, such as Financial Transaction Manager for SWIFT Services, is needed to provide the SWIFT connectivity.
  • An organization might want to customize the business process flows to meet their specific requirements. Most of the steps within the High Value Payments process can be controlled by configuration. This configuration provides flexibility and the ability for a bank to tailor and extend the process to suit their needs. Different sets of configuration, which arrange the services differently to support alternative accounting models, are provided. Also, an organization might require integration with more systems that use further services that must be called as part of the business flows. For more information, see Setup and customization.