Johannesburg, 24 Jan 2005
A more efficient, secure and reliable online solution for electronic payments is being introduced in a phased approach by First National Bank (FNB) to replace a financial transaction processing facility that has its roots in the early digitisation of banking systems in the 1970s.
According to Dr Chris Kotz'e, Head of FNB eSolutions, the Magnetic Tape Service (Magtape) was first introduced to replace the paper-based banking processes that existed prior to the introduction of computerised transaction processing facilities.
"Magtape is essentially a method of information transmission that relies on magnetised tape - similar to a video tape - on which financial instructions are recorded. The tape containing the instructions is physically delivered to a central clearing bureau that sorts and facilitates the clearing between banks. The recipient bank receives the financial instruction and processes the transaction to the designated account. Settlement between the banks is facilitated through the South African Reserve Bank," he explains.
Apart from being cumbersome and risky, the specialised equipment necessary to create and read these tapes has, to a large extent, become obsolete. The continued use thereof introduces operational risk into the industry.
"In an industry that processes some 40 million payment instructions with a combined value in excess of R220 billion per month, it is essential that risk be kept at the absolute minimum," comments Kotz'e. "There is also limited opportunity to provide value-added services to clients as part of this process."
"As alternatives, FNB offers its magtape users a suite of online solutions. All they need do is access an FNB application via direct link or securely over the Internet - through one of our business banking services - create the payments and execute them," says Kotz'e.
These systems have enabled banks like FNB to allow clients to directly access the technology that is necessary to effect bulk transactions, effectively removing the need for archaic equipment and methods such as magtape. The result, says Kotz'e, is a system that is more secure, more reliable and faster than ever before.
He adds that, in terms of reporting, new payment mechanisms offer digital outputs that can be integrated into back-office financial and management applications. "This makes for easier reconciliation of accounts and is considerably more reliable than the paper-based reports generated by the existing magtape system," Kotz'e concludes.
If you would like further information on the basket of eSolutions services, please contact your nearest FNB branch, the Magtape Call Centre on 086 11 00 141 or visit the FNB Web site, www.fnb.co.za, and click on the `Business` icon in the toolbar.
FNB is a division of FirstRand Bank (Ltd) and is an authorised financial services provider.
For any product or service related client queries, please contact the ESolutions call centre on 086 11 00 141.
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