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Modern Society & Banking

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  • 27-07-2014 1:39pm
    #1
    Sully
    Moderators, Education Moderators, Technology & Internet Moderators, Regional South East Moderators Posts: 24,056 Mod ✭✭✭✭


    Hopefully this is the right place for such a discussion but I have always wondered how in such a modern society with all the technology we have it still takes so long to do simple banking tasks.

    - If I want to transfer money electronically into another bank, it can take a few days and it depends on the time of the day you make the transfer.

    - If I get a cheque and lodge it, it can take up to a week to 'clear'.

    - If I lodge money into my AIB through An Post, the funds are credited but I won't be able to see them until the bank resumes to normal banking hours.

    - If I pay my credit card bill it takes until the next working day before it will be clear on my account that a payment was made.

    Surely banks can implemented an electronic systems to check if there is sufficient funds before sending out a transfer then check with the next bank if such an account exists, and if so, that bank lodges the money accordingly and do whatever other work needs to be done (record keeping, updating other banking records etc) at the same time.

    With cheques, again, check if the account exists on both sides, that there is sufficient funds and that the cheque is valid, then lodge and do whatever work needs to be done.

    Is there a reason why all this needs to be done during business hours and takes so long?


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    #2
    Nervous Wreck
    Closed Accounts Posts: 16,115 ✭✭✭✭Nervous Wreck


    If you were the only person in the country, it'd probably be as quick as you want. With hundreds of thousands of transactions going on every day, I think a one working day timeframe for interbank transfers is pretty reasonable.


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    #3
    Sully
    Moderators, Education Moderators, Technology & Internet Moderators, Regional South East Moderators Posts: 24,056 Mod ✭✭✭✭Sully


    Nervous Wreck wrote: »
    If you were the only person in the country, it'd probably be as quick as you want. With hundreds of thousands of transactions going on every day, I think a one working day timeframe for interbank transfers is pretty reasonable.

    It doesn't stop us in any other area of doing business on the internet. If I transfer from AIB->AIB it's instant, and rightly so.

    But with cheques, I have to wait nearly a full week before it's clear. Surely it shouldn't take that long?


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    #4
    GerardKeating
    Registered Users Posts: 7,652 ✭✭✭GerardKeating


    Sully wrote: »
    It doesn't stop us in any other area of doing business on the internet. If I transfer from AIB->AIB it's instant, and rightly so.

    It would be nice if the same also applied to InterBank,
    Sully wrote: »
    But with cheques, I have to wait nearly a full week before it's clear. Surely it shouldn't take that long?

    Some of the delay is deliberate, gives the person/company whom wrote the cheque time to stop a fraudulent/altered cheque.


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    #5
    dotsman
    Registered Users Posts: 3,636 ✭✭✭dotsman


    Sully wrote: »
    If I want to transfer money electronically into another bank, it can take a few days and it depends on the time of the day you make the transfer.
    The main problem here is that banks were early adopters of IT. At the very heart of their vast and complex IT systems lies very ancient and simplistic architecture (we are talking about software sitting on mainframes written back in the 70's by people no dead/retired. Most of the state-of-the-art IT offerings offered by banks (online/phone/tablet banking) all sit on top of this. Thus you have an extremely complex web of systems all built on top of each other over the decades and interdependent on each other. If you go in and try to change the very core, you will end up having to redesign/rewrite pretty much everything! Next, you have each of these separate cores all built independently within each bank. For all the banks to migrate to a new system, they would all need to spend huge amounts of money, all at the same time and ultimately all agree what the new architecture should look like.

    SEPA was introduced just this year after years of bureaucratic discussions between central banks. Ultimately, it is not really an improvement over the existing process, merely a mask on all the banks architecture, so no they can all be consistently slow!
    Sully wrote: »
    If I get a cheque and lodge it, it can take up to a week to 'clear'.
    cheques and modern society does not compute! Cheques are from the middle ages. The sooner they are exterminated, the better.
    Sully wrote: »
    If I lodge money into my AIB through An Post, the funds are credited but I won't be able to see them until the bank resumes to normal banking hours.
    I assume because An Post only send on the details to AIB via a batch file.
    Sully wrote: »
    If I pay my credit card bill it takes until the next working day before it will be clear on my account that a payment was made.
    Again, most payments (due to the huge volume, inter-bank dependencies and ancient architecture, what looks like a simple transaction to you will likey involve numerous batch processes moving the funds from one file to the next before it eventually reaches the destination.
    Sully wrote: »
    Surely banks can implemented an electronic systems to check if there is sufficient funds before sending out a transfer then check with the next bank if such an account exists, and if so, that bank lodges the money accordingly and do whatever other work needs to be done (record keeping, updating other banking records etc) at the same time.
    As per above, SEPA was the best that could be done. Ultimately, it's own to a combination of lots of complex systems, unique to each bank (all over the EU/worldwide) sitting on ancient architectures.
    Sully wrote: »
    With cheques, again, check if the account exists on both sides, that there is sufficient funds and that the cheque is valid, then lodge and do whatever work needs to be done.
    Again, cheques are (eventually on the way out. The problem with cheques is the cheques themselves, not any IT system (the electronic solution is the Debit Card and EFT)
    Sully wrote: »
    Is there a reason why all this needs to be done during business hours and takes so long?
    As per above regarding why it takes so long. As for the business hours, it's not so much that it is done during business hours - it's actually done overnight, as depending on what you are doing, it is based on accounting principles and/or ancient architectures.

    As you mentioned AIB above, you shot note this: AIB tried to upgrade it's accounting engine (just one of the ancient components at the core of it's IT architecture a few years back. It ended up being a huge disaster (and a hundred million euro plus lawsuit).

    To put it another way, Banks are the reason why IBM still exists!


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