Reflections on real-time issues
In this section, the RTE fellows share their views on real-time economy. The RTE fellows are a group of top-level promoters of RTE technologies and are active participants in the RTE community as well; they make RTE happen on a day to day basis. Person who considers him/herself an RTE fellow, may contact development@realtimeeconomy.net.
Social Media Developments in the Real-Time Economy
Here is an article written by technology entrepreneur Teemu Arina / Dicole Ltd. and media scholar Sam Inkinen about the impact of social media in the real-time economy.
Nordic focus - appeared in Financial i June 2007 issue (Bo Harald, TietoEnator)
Here is an article by Bo Harald...
My name is Guy. Same Guy and I make digitalisation happen. Where does my name come from? From the fact that there is an urgent need to remind all sorts of service providers that they serve the same customer for his many needs and in different roles and that there are important opportunities to speed up digitalization if this is realized.
Why is this urgent? Because digitalization is so important for corporate and public sector productivity, because digital services are so central to corporate competitiveness in an open global economy and because the context end-users are living in is continuing to become overcrowded with information, alternatives and activities. As there is less time for any one thing it is imperative to, by all available means, lower the threshold for taking new services into use. We have seen good examples of how this can be done by making things clinically simple – but that is not enough any more. Further digitalization of services should be mandatory – and at least when tax payers money is involved – build on what the end user already is used to and trusts. This is where banks have a big role to play – and a big responsibility.
What can banks do to speed up digitalization in society at large? Naturally, they should offer all their own services in a digital format, thus feeding the massive ‘e-habit’ only large volume financial transactions can create. Secondly, they should develop new streams of income from valuable services and cut their costs (banks in Finland have halved their total costs with the help of digital services). Then these tools need to be embedded in e-business and e-public sector services. One such example is the use of e-banking log-in tools for identification of people in public sector services and for e-signatures on documents between third parties. The alternative – to have to equip people with a separate public sector smart card and readers could easily cost EUR 40 upfront (there are 460 million citizens in the EU). Experience also shows that public sector smart cards are seldom used, as most people prefer to use already familiar, in this case bank tools.
From a corporate productivity and competitive service viewpoint, more significant development is taking place in the area of e-invoicing. E-invoicing is of course nothing new – it has been around for decades – mostly in vertical environments using proprietary, expensive and inflexible technology – resulting in further costs when trying to make disparate formats interoperable via re-formatting. This has lead to a situation where the SME sector (17 million enterprises in the EU representing the highest potential for digitalization) have not had the tools to join digital value chains or have been forced to use different applications or portals with different suppliers and customers.
The solution to this dilemma has been found – it is to make invoice transportation use the payment network, payment file technology and netbanks for inputting and outputting – just like sending and receiving payments – using the payment address for a corporate or private e-invoice receiver. When launched by banks in Finland in 2004 it was a surprise to everyone that so many enterprises signed up right away. The European Commission and the European Central Bank have taken an active role in encouraging banks to create a common standard and launch this concept as a part of SEPA. Estimates from the corporate sector indicate that annual processing cost savings could be in the region of EUR 200 billion. Banks are now moving and this will also improve volumes for traditional e-invoicing service providers. But as the savings are divided into so many small parts, big hands are needed to steer the mass market. Eventually this will be connecting every bank account globally also for e-invoicing and other documents like e-orders.
Again it has been vital to start from the end-user and realize that there are no corporate customers – only human customers – Mr Same Guy in different roles. When it is possible to offer the same tool to the end-user for their needs in private, citizen and employee roles – for the same purpose in different environments or new purposes - significant cost savings can be made, and above all the time to market is shorter.
Bo Harald's reflections on e-invoicing
Bo Harald is head of Executive Advisors, TietoEnator, Helsinki
http://boharald.blogspot.com
Payments in the real-time economy (Harry Leinonen, Bank of Finland)
Here is an article by Harry Leinonen...
Most payments are still today handled using paper-based paradigms and although electronised, mostly processed by batch systems. However, there are also some payment services based on modern real-time processes, but just within the same bank or service provider for example the web-payments of Finnish banks and PayPal. These are developed especially for e-commerce purposes.
Most other industries have moved to real-time and in-time deliveries. Parcel transportation and container companies know in real-time the position of every individual parcel or container. The Finnish libraries know in real-time the position of every book. It seems high time that banks would start to strive for the benefits of low-cost real-time and network technology.
There are major benefits for customers and banks in real-time processing of payments. The balances can be invested more efficiently both overnight and intraday. There would be no payments in transit, which result in better control of the payment process. Errors would be detected immediately, when it is much more efficient to correct them than based on delayed error reports some days later. The security will increase, when modern security features are used and the cover is secured before crediting. As all payments would be immediately processed, it would guarantee payment reception and immediate finality. The main processing efficiency would be gained by deep integration of event-driven business processes, between all concerned parties payers, payees and their banks. A network of basic Java-processes in a web of servers would provide the payment transportation service in the same way as transporting emails, SMS-messages and alike. The cost level of distributed network-based server technology is clearly lower than that of centralised batch-based mainframe technology.
The basic requirements of a real-time payment infrastructure are a common global definition of the payment network structure, participant interfaces and message standards, real-time account systems of the service providers, an interbank trunk network among the service providers, a general e-identification service, secure and protect hardware devices for the encryption and identification processing and a real-time settlement service among banks. In fact, this resembles very much the current email services, when the balances are added and the security level is improved. Customers would view their payment accounts much in the same way as they view currently their email accounts. Instead of emails they will see incoming and outgoing payments on their payment accounts. The account service providers would send individual messages directly between them in the same way as email service providers send emails.
Currently e-mails are accessed both via PCs and mobile phones. This will probably also be the case for real-time payments as the mobile phone contains all the necessary features for becoming an efficient payment platform for consumers. It can interface with the merchant terminals. Payees can accept the payment with simple clicks. The receipts can be stored in the memory of the phone. The balance of the account and the individual payments can be viewed on the screen. Modern phones contain also advanced security features. User-friendly m-payments will most probably be the fast track to real-time payments.
A coordinated and cooperative undertaking by all involved parties is needed in order to reach the new level of technology and efficiency.
author Harry Leinonen, Bank of Finland
