THE INTERNATIONAL ELECTRONIC PAYMENT NETWORK FOR POSTAL ORGANISATIONS EUROGIRO

News Contents 1999 2 / May Can Posts and Postbanks meet the challenges? 2 ING succeeds in selling cross- border payments as a single Postal financial services have been one of the golden eggs in the postal product sector. Due to demands for privatisation, increased profitability and increased competition postal financial services are under pressure. ING Bank managed to increase sales of cross-border payments by 10% within a n The European experience shows us that In some countries the division of the post year. Postbanks can easily survive and be impor- and the Postbank has lead to 100% privately tant market players on cross-border transacti- owned postbanks. ons and Postal Financial services by serving the market where they are already holding a This development has been necessary to 3 Eurogiro offer global reach of key position: Retail payments and payments secure the survival of these organisations in USD payments for Small and Medium sized enterprises. a highly competitive European financial market. It could be argued that this trend is Global reach of Eurogiro will be the effect of The European case shows that it is really likely to be duplicated in most regions new agreements with Bankers Trust and possible to have success in this area. This outside Europe. Chase. success has first of all been built on common projects with a real benefit to all involved Within the area of cross-border payments the organisations. experience is that it is important for postal organisations to be able to move quickly and 4 A large post in a small In most countries Postal organisations or also to be prepared to take up the challenges country Postbanks combined have the widest of new payment channels emerging rapidly distribution network and customer reach of on the market. P & T Luxembourg has a large volume of any financial service institution. transactions via Eurogiro.

A position which constitutes a large Building regional payment systems is the potential for product sale. way forward 4 Target of 98% reached in Postal organisations or Postbanks can not In other parts of the world where the distri- Quality Test in March expect to duplicate the role of the global bution of bank accounts still is limited, the banks and large domestic corporate banks, Postal organisations stand a unique chance Early results of the March quality test shows who will dominate the market , but there is of utilising this market with the enormous fine quality ratios. definitely an enormous potential of volu-me network of post offices and access to custo- if Postbanks decide to move as niche players mers, especially private individuals but also and effectively decide to be active on the pension companies, governments etc. 5 Postgirot Bank a dominant market for international payments. player in the Swedish pay- Following the experiences from the forming ment market. European Posts and Postbanks have faced of Eurogiro, success depends very much on increased pressure to change keeping the tasks simple and business orien- Postgirot Bank focuses on new services and ted. Electronic cross border payments are fully automated processing. During recent decades Postal organisations particularly suited for a regional project. The have changed from being Post & Tele orga- needs are similar in all countries, it is simple, nisations into autonomous Tele and Postal and costs can be shared between par- units and in almost all European countries ticipants. Furthermore approximately 75% of 6 A strong co-operation the Postal Financial Services have been cross-border payments are within regions enables Eurogiro to function separated from the Post and organised as and only about 25% transregional. with only 8 people either Postbank divisions or separate Continues... companies within the post in order to secure Outsourcing and extensive use of member increased independence, responsibility and resources are the key to Eurogiro’s success. autonomy.

All this has secured more market orientated postal financial services utilising the 7 Eurogiro is facing up to the strengths of the postal organisations regar- Henrik Oksholm, EU Cross Border Directive ding distribution and generally good image. Eurogiro Network Just as important, the role of the Post/Post- A/S: “Building Eurogiro partners are well placed to face banks to serve the lower end of the market regional payment the challenges from new EU directive. has been maintained. systems is the way forward for postal organisations” NEWS

Continued from front page Eurogiro News is the newsletter for the promotion of information, ideas and knowledge in Eurogiro. To be competitive towards other providers The very reason for the high degree of of international payment services, harmonisation within Eurogiro is the close Eurogiro News is published quarterly by: experience indicates that important factors co-operation which enables Eurogiro to for the clients are transparency in pricing standardise procedures. As an example the Eurogiro Network A/S and time scales, competitive pricing, Straight Through Ratio in Eurogiro on Girostrøget 1 security and speed. Giro to Giro transfers is nearly 96%. That DK- 0800 Høje Taastrup means that the cross border payments Denmark In order to actually create these elements actually reach the recipient at the promised tel: + 45 43 71 27 72 and be able to offer them to the clients, the time without manual handling, thereby also fax: + 45 43 71 26 62 e-mail: [email protected] element of co-operation between the minimising cost in the back office partners of the regional system is essential. investigating queries from clients etc. Subscription enquiries: An effective co-operation is more likely to Kristian Blicher Andersen / Birgit Østergaard be reached with a limited number of Tel + 45 43 71 27 72 participants.

No part of this publication may be Cross border payments triple in 10 years photocopied or otherwise reproduced without the written consent of Eurogiro Network A/S 1995 Americas Europe/Africa Asia/Pac. Total Volume (m) 303 853 232 1.386 Editorial Committee: Value ($trn) 28.3 82.8 18.9 130 Henrik Oksholm, Editor-in-chief, Eurogiro Revenue ($bn) 4.9 14.0 3.9 22.8 Network A/S Nicole Walker, Swiss Post – Postfinance Susann von Gunten, Deutsche Postbank AG Interregional transactions are approximately 25%. Cecile Koops, ING Bank Intraregional transactions are 75% Alan Nicholson, Postbanken BA Stefan Sjösten, Postgirot Bank 2005 Kristian Blicher Andersen, Eurogiro Network Americas Europe/Africa Asia/Pac. Total A/S Volume (m) 594 2.265 1.193 4.052 Value ($trn) 57 173 106 336 Printed by: Saloprint A/S Revenue ($bn) 4.6 17.8 7.9 30.2 Although Eurogiro Network A/S has made every effort to ensure the accuracy of this Intraregional transactions will still account for 75% of the transactions. publication, neither it nor any contributor can (Source: The Boston Consulting Group: Global Payments 1998) accept any legal responsibility whatsoever for consequences that may arise from errors or omissions or any opinions or advice given. ING succeeds in selling cross-border Final editing: 26 April 1999 payments as a single product

The Eurogiro network is an international By maintaining a close dialogue with regional offices serving middle sized electronic payment network for the postal corporate clients and through frequent visits by the product marketing financial institutions. department for international payments to the regional offices, ING Bank The Eurogiro network is the only electronic managed to increase number of cross-border payments by 10% within a cross-border payment system which covers year. both postal and bank products. Eurogiro has 23 member institutions. n The challenges of selling and marketing The communication was extensive with adds Although Western Europe is the core-area, cross border payments. Why is this so in newspapers, direct marketing and training Eurogiro now spans four continents. The electronic payment system of Eurogiro is difficult? of the staff in regional branches to approach administered by Eurogiro Network A/S in clients with these products. Due to these Copenhagen, which also provides the It is difficult, because a payment is a “dis- efforts sales were increased and this resulted organisational framework for the further satisfier” in marketing terms: Clients tend to in an increase in amounts transferred of development of the co-operation. The forget correctly executed payment orders, 20%. company is owned by 17 European but they do complain if something goes shareholders. wrong. A payment is a product that you can Also the awareness level of Eurogiro and not really make attractive and is as such Worldgiro payments in Netherlands has Eurogiro Member institutions: difficult to market. Therefore you do not raised significantly. Now almost every Austria: P.S.K. AG • Belgium: really see banks putting a lot of effort into corporate – small, medium and large ones – POSTCHEQUE • Denmark: BG Bank A/S • marketing and communication of internatio- knows the products. Finland: Leonia Bank Plc. • France: La Poste nal payments. • Germany: Deutsche Postbank AG • Iceland: Consequently it should be possible for the Iceland Post • Ireland: AN-Post • Italy: Poste Italiane S.p.A. • Japan: Postal Savings Bureau However, ING Bank did against the trend sales staff to agree with customers with a • Luxembourg: P & T • Morocco: Office try to market international payments more big turnover that a fixed monthly service fee Nationale de Poste • Netherlands: ING Bank than is common. The payments in question is applied irrespective of the number of N.V. /Postbank N.V. • Norway: POST- were labelled in the name of the Dutch transactions actually passed. “This off BANKEN • Portugal: CTT Correios • Postbank. The target group was corporate course gives new accounting challenges to Slovakia: Postova Banka • Spain: Argentaria • customers. The products were made as the product department, but the increase in Sweden: Postgirot Bank • Switzerland: Swiss simple as possible and fixed low fees were sales has been worth the extra effort in our Post Postfinance • Turkey: General introduced. The product was given a name: case” says Laurens Mes from ING Bank. Directorate of Post • United Kingdom: Eurogiro (payments to EU countries) and Girobank PLC • USA: The Chase Manhattan Bank, Bankers Trust Company Worldgiro (payments to other countries). The objective was to build a brand which is not common with these products.

2 NEWS

La Poste and Western Union strengthen WU-Eurogiro oppor- their collaboration tunities presented to n By the end of 1999, almost 1700 post offices in France will serve as point of sales for the potential agents international very urgent cash product of Western Union. The widening of the scope of the agreement will give La Poste the opportunity to enlarge their international business. By the Post banks and postal organisations were end of 1998, 650 offices of given a valuable insight into the La Poste were offering the practicalities of a Western Union co- Western Union service in operation at a workshop in Limoges in France. The increasing France on 14 and 15 April. The workshop demand from customers for which was organised by La Poste, Deutsche this safe and fast service led Postbank, Eurogiro Network A/S and to an increase in transacti- Western Union was aiming at presenting for ons of 328% last year. Thus, potential agents the business opportunities more than 250.000 under the Eurogiro – Western Union transactions for a global umbrella agreement. The workshop had amount of more than 816 participants from eight countries, who were m. FRF were made in 1998. provided with information on organisation– al and technical issues, including a visit to La Poste’s Western Union operations centre John Skinner, in Limoges. Western Union speeking at Western Union has locations in 170 the workshop in Limoges countries with more than 50.000 point of sales. Eurogiro offers global reach of USD payments.

Global reach of Eurogiro will be the effect as the two new agreements with Chase Manhattan Bank and Bankers Trust Company widen the geographical scope of USD payments. n Chase Manhattan Bank became member the world: the only countries not accessible payment. This has lead to enormous of Eurogiro in 1995 to fulfill the need for are those subject to legal restrictions from investments being made in cheque proces- payments to accounts in the US, a service US-authorities . sing facilities. Consequently cheques are which was not offered by the US Post. The widely used for cross border payments into turnover in the cash business through US In many third world countries the domestic the USA, however the cheque will normally Post never reached a significant level and currency is either not convertible or it is too be issued by the USD provider based on an US Post left Eurogiro by the end of 1998. unstable for international use. This has me- electronic payment instruction by the foreign This step made it naturally for Eurogiro to ant that international payments to private financial institution. find a new US member. persons and companies in these countries have to be made in an alternative currency. The new agreements with Chase Manhattan At the same time it was decided to make the The economic weight of the USA has given Bank and Bankers Trust offer the other coverage global by adding USD payments to the USD the role as the international reserve Eurogiro members to outsource their telex countries outside of USA. International US- currency and the favourite currency in many key administration and cut the costly pro- DOLLAR payment procedures have a unique trades, including the oil business. As a cedures in this respect. On a global scale feature in that the payment (instruction) consequence customers with need to transfer only a very marginal and falling number of would normally be sent to the US-DOLLAR money to third world countries often ask for payments are sent by telex today and as a account bank instead of to the bank of the the transfer to be denominated in USD. communication tool to corporate customers receiving customer (which may well be in it has virtually vanished. To maintain the another country). With this feature in mind, The primary products destined for the USA telex equipment and especially the cumber- it made sense for Eurogiro to widen the US- are transfers to accounts and payments to be some and often manual telex key admini- DOLLAR services in US to a global US- paid out as cheques. There are considerable stration is a heavy overhead cost for a DOLLAR service for the members. With the differences between the payment markets in postal or banking institution only sending new agreements both existing and new Euro- the USA and Europe. In USA the cheque has telex payments a few times a week. giro members will obtain a global reach on retained its leading position as instrument of Nevertheless many choose to maintain the USD cheques and payments to USD telex set-up for the sole reason that telex is accounts. Both Bankers Trust and Chase the only safe way to reach a minor number Manhattan Bank have the global network Bankers Trust in Briefs of third world banks which are not which allows them to direct payments from connected to a modern network. The Eurogiro members to almost any corner of Bankers Trust holds a seventh position in obvious solution to this problem is the US according to total assets and outsourcing. By directing their payments to capital. It is a wholesale bank covering a “telex only” banks through Bankers Trust Chase Manhattan in Briefs wide range of business areas among which and Chase Manhattan Bank via Eurogiro, correspondent banking is one of the core the members are able to close their telex Chase Manhattan Bank is the third businesses. Globally Bankers Trust operations, without jeopardising their biggest bank in USA. Chase Manhattan Company runs USD accounts for reach. For many banks or postal Bank has activities in both retail and approximately 3000 banks world wide and administrations their reach of “telex only” wholesale business areas and has has swift keys with more than 17.000 banks would actually be significantly locations in more than 50 countries. By banks world wide. By year end 1998 widened as both Bankers Trust and Chase year end 1998 Chase Manhattan Bank had Bankers trust had total assets of USD 133 Manhattan Bank maintain telex authentica- total assets of USD 366 billion and billion and shareholders equity stood at tion keys with nearly all of the “telex only” shareholders equity of USD 23,8 billion. USD 4,8 billion. financial institutions globally.

3 INFORMATION

P & T Luxembourg: A large post in a small country

In spite of the small size of the country, P & T Luxembourg holds an important position among the Eurogiro members, when measured by the volume of transactions via Eurogiro. n Luxembourg has for many years had a by P&T Luxembourg’s Eurogiro depart- by being present at trade fairs and at similar top ranking in the European Union, when it ment. Six full-time employees and up to events, P&T Luxembourg is promoting its comes to wealth pr capita and success in nine part-timers are responsible for a products and services towards the corporate fighting unemployment. Also from a smooth running of the service between 6.00 customers. Eurogiro perspective Luxembourg must be a.m. and 10.00 p.m. Data entries are considered a success, with P & T Luxem- possible between 8.00 a.m. and 4.00 p.m. The activities of P&T Luxembourg not only bourg being among the members sending Two thirds of the transfer forms are treated include financial transactions such as high volume of payments through Eurogiro. by automatic optical reading, whereas the Eurogiro, Western Union, Visa and current Out of 430.000 people living in the Grand last third has to be treated manually. accounts, but also all aspects of letter post, Duchy of Luxembourg 34,9% are parcel post and communication services. foreigners. This figure represents the highest The Eurogiro Department is located within P&T Luxembourg, which is 100% owned by percentage in Europe and in addition to the the Cheque Department in Luxembourg the state, has 106 post offices in Luxem- foreigners who work and live in Luxem- City. The advantage of such a concentration bourg, all of which offer a complete range of bourg 73.000 persons come to work in the at one place is that it enables interactivities products. P&T Luxembourg including the grand duchy from countries around Luxem- between transfer section, query department Telecom part employs around 2800 people. bourg. These two factors partly explain the and other services of the Cheque success of Eurogiro in Luxembourg. Department. The strategy for the future consists in Another explanation is the fact that Luxem- enhancing the current business branches and bourg is mostly an import country within The fee for cross border payments (1.98 creating new activities such as Internet- Europe. Last but not least, Luxembourg can EUR per transaction) is the cheapest within banking. When it comes to the cross-border pride itself of its position as one of the most the Luxembourg banking place, and with no payment business P&T Luxembourg can important financial centres of Europe. fees for incoming transactions, P&T look at the future with confidence as market Luxembourg has a very attractive pricing for studies confirm the continued potential for Organisation of cross border payments. the customers. Marketing activities are further increase in the number of cross- considered a key for success in P&T border transactions. All payments sent directly to CCP, or Luxembourg, and the products are marketed deposited at one of the 106 post offices in in advertising campaigns in the written press the country are processed the following day as well as in electronic media. Furthermore

Target of 98% Reached in Quality Test in March

Early results of the March quality tested the quality of the standard products – of the Straight Through Processing has test showed fine quality ratios. The the 4 days transfer and the Urgent transfer – become a part of the yearly test in November. new test introduced on money twice a year. Later testing of the Straight Results have been very encouraging (stable orders reveals a 98% compliance Through Ratio entered the picture. Quality around 96% for transfers) but are by no with the requirement to issue testing is an ever developing business with us means an excuse for leaving things as they payment instruments the day after and a top priority at the Eurogiro User Group are. Eurogiro has developed an “Electronic receipt in the receiving institute, and the Operational Performance Group”. Verifying Tool” to sort out messages with which is directly on target. incomplete account numbers before the Customer products at the core of the transactions are sent. Quality testing is as n Checking the quality of the transactions testing important as ever and Eurogiro is set to between the Eurogiro members is a key task enhance the quality to offer better products at in the co-operation, which is performed twice Eurogiro promised fixed time scales to the lower costs. a year, most recently in March 1999. Among customers long before the EU Cross Border the new areas tested in March was the time Payment Directive so required. The used to process a Money Order and the performance according to the promise has compliance with the requirement to issue been monitored closely. Not so much to beat payment instruments the day after receipt in the marketing drums but to fuel the incentive the receiving bank. The test also shows the to improve local quality and to direct time taken to process a money order in the attention to the fact that dependence on the sending bank. Other tests which have been quality of other members is enormous. introduced for the March 1999 quality test Especially the Urgent Payment is critical. It are the testing of time scale of queries and is a fairly costly product due to its speed and the testing of use of format for return of it puts much pressure not in the least on the payment. receiving institution to credit receiving customer on the day of receipt. Therefore, the Ms Kaarina Merilinna, Leonia Bank, Finland Urgent Product is monitored regularly twice and Chairman of the Operational a year. Performance Group says: “the concept of testing regularly is as old as the Eurogiro Inter bank quality matters more and more product standards. To us the promise of fixed time scales was a prime sales argument, but it With the ever increasing pressure on prices, made little sense if we did not follow the the losses due to bad quality in handling have Among the new areas tested in March was performance closely. In the beginning, we come more and more into focus. Monitoring the time used to process a Money Order

4 INFORMATIONS

Postgirot Bank a dominant player in the Facts about Postgirot Bank, International Swedish payment market. u Staff: 190 persons u 3 million international payments a year Postgirot Bank focuses on new services and fully automated processing in their international division, to retain and further expand the banks domi- u Every third international payment from nant position in the Swedish payment market. Sweden n Postgirot Bank, the Eurogiro member in Electronic based payment orders are u More than 75% of all corporate Sweden, is a money transfer and cash processed automatically without any manual transfers are made electronically management bank and one of the leading interference unless the payments need to be Swedish banks for cross-border repaired for some reason. The repair items u Foreign exchange dealing in about 40 transactions. are automatically sorted out in a queue and currencies then repaired on the screen. Postgirot Bank provides service for both u Trade Finance business with 60 corporate and private customers, and offers International Payments ordered from the countries a complete range of services for internatio- Post Offices are registered in full by the nal payments. Postgirot Bank handles one Post Offices and the captured data are u 1200 Post Offices offer International out of every three payments from Sweden to transmitted on-line via the Post Office payment services (connected on-line) recipients abroad. counter system to the central system of Ms Ulla Regeheim, Head of Payment Postgirot Bank, International. Services: “The customers today require efficient international payments and Postgirot Bank, International extensive reporting facilities, Therefore we try to make the customers’ capital more efficient by providing accounts for smooth General Manager Credit national and international payment and Postgirot Bank Delegation reporting services, while also offering International complementary administrative and financial services - our goal is to have the most satisfied customers in the international Controlling/ payments market.” Administration All international payment orders are centralised and processed in the central computer system at the International Division of Postgirot Bank, which is located Payment International International Trade Finance in Stockholm. Services Clients Products

More than 90% of all international payment orders are channelled via the Eurogiro and Postgirot Bank AB, which is a public limited company wholly-owned by Posten AB SWIFT Networks. The advantage of (Sweden Post Ltd), has been in business since 1925. Today the bank is the market leader in Eurogiro is that the customer always knows payments, serving 95% of all the companies registered in Sweden. With 1.7 million how much a service will cost and how long customers and 3,000 employees, Postgirot Bank mediates payments of about SEK 5,000 it will take until the payment reaches the billion per year. beneficiary’s account. Besides the traditional paperbased services, Postgirot Bank offers many different electronic Paper based payment orders are registered services, which are designed for everything from mass payments to single financial by the operational staff. After verification, transactions that must be made at short notice. These PC-based solutions also include a the transactions are processed automatically wide range of cash management facilities to suit both large and small companies. and executed by the Eurogiro or SWIFT Networks (in some cases Postgirot Bank also issues Bank Cheques). Name of the persons from front Although Sweden does not participate in left side: the EMU from the start, the introduction Ms Ulla Regeheim, of the Single European Currency has great Head of Payment influence on Swedish companies and Services organisations. Many companies with Tuula Selldén, international activities want to use the Payment Services - Euro for payments to their suppliers and Pension payments also for their own invoicing purposes. From the back left side: Therefore, approximately 300,000 of Steffan Mattson, Postgirot Bank’s corporate customers have Payment Services - been provided with a domestic ”Dual Pension payments Currency Account” since January 1999. Stefan Sjösten, The idea is very simple. A Euro pocket is Product Manager - attached onto the existing Postgirot acco- Eurogiro & SWIFT unt and the account number is the same. The customer can continue to use the ac- count as before but with the possibility to handle transactions both in SEK and EUR.

5 INFORMATION A strong co-operation enables Eurogiro to function with only 8 full-time people

By outsourcing and by using extensive resources from members in various projects, the EUROGIRO company is able to manage far more than a staff of 8 people normally would be able to. In this way Eurogiro has the advantages of a small efficient company combined with the strengths of a multinational organisation.

products and the system and the Business Eurogiro Board Audit & security Development Team with a focus on Marketing/PR and ways to increase busi- ness.

Besides the permanent groups the Board can Eurogiro Advisory group Network A/S set-up ad-hoc groups for specific purposes. An example of this is Eurogiro’s Internet Eurogiro organisation project which can also be used to illustrate how new development is handled in Eurogiro. In the first stage a project team User Group Working Groups: with representatives from 5 countries and Eurogiro worked on a feasibility study on e- Business Development commerce having regular meetings. After Internet approval a group consisting of 5 Operational Performance representatives from Andersen Consulting Pension Payments and 5 part/full time representatives from member countries have set-up a project team working out of Copenhagen. Eurogiro n The Eurogiro Board consists of 17 Eurogiro Network A/S has the responsibility Network A/S has participated with 1-2 members representing the Western European for managing and developing the Eurogiro resources in this project. members of Eurogiro. Besides having these system for cross border payments and to co- 17 shareholders, 6 members are users of the ordinate new activities related to internatio- Eurogiro system. Both shareholders and nal payments but not necessarily to the users have the same obligations and rights system. in relation to the Eurogiro system. The Operational Performance Audit & Security Team monitor the Chairman company on behalf of the Board. The User Audit&Security Group Ms. Karina Merillina, Leonia Bank, Group meeting is a yearly meeting for all the Chairman Finland users of Eurogiro. The Advisory group Mr. Arne Lenstrup, BG Bank A/S, Members consists of senior management Denmark Ms. Karin Pleyer, Deutsche Postbank, representatives advising the company on Members Germany strategic issues. Mr. Roja Dwarosh, Swiss PostFinance, Mr. Alan Hughes, UK Girobank, UK Switzerland Mr. Wolfgang Roiser, P.S.K., Austria Mr. Gerald Haumersen, ING Bank, Mr. Annelise Lysdal, Eurogiro Network A/S Advisory Group Netherland Chairman Mr. Vidar Myhre, Postbanken, Norway Mr. Jürg Bucher, Swiss PostFinance, Mr. Yannick Pain, La Poste, France The advantages of the above procedure is Switzerland Mr. Uwe Holmsgaard, Eurogiro Network I/S that Eurogiro very quickly can draw on the Vice Chairman best expertise among the vast staff in the Mr. Bjarne Wind, BG Bank, Denmark member banks and that specialised expertise Members The operation of the system is outsourced to therefore is not necessarily in the company Mr. Wolfgang Roiser, P.S.K., Austria COMPAQ who runs the call centre from itself. It also enables Eurogiro to act very Mr. Max Flury, Swiss PostFinance, Southern France and the Network Manage- quickly towards new opportunities, which is Switzerland ment is run by SITA/EQUANT. The increasingly important in the fast changing Mr. Michael Flötenmeyer, Deutsche application itself is developed in Denmark payment market. All this creates added Postbank, Germany by DATAMAN who is also responsible for value for the members of Eurogiro, Mr. Willem van der Hoek, ING Bank, developing the Eurogiro link into the advantages that eventually may result in Netherlands Western Union system. The outsourcing of either better products or cheaper services for Mr. Tom Rønning, Postbanken, Norway system operations and development enables the customers of the Eurogiro members. Mr. Alan Hughes, Girobank, UK Eurogiro to keep the resources in the Mr. Luigi Spena, Poste Italiane, Italy company to 1-2 persons co-ordinating the Managing D. Mr. Henrik Parl, Eurogiro activities. Business Development Team Network A/S Chairman Ms. Annelise Lysdal, Eurogiro Network A/S New projects are co-ordinated by Eurogiro, Ms. Nicole Walker, Swiss PostFinance, but the project groups consist of Switzerland Seen as a whole the 17 European members representatives from the shareholders. Today Members represent about 100 million accounts in there are two permanent groups besides the Ms. Cecile Koops, ING Bank, Netherland excess of 50.000 post or bank branches and Audit & Security Group: Operational Ms. Susann von Gunten, Deutsche several 100 million customers. Under the Performance and the Business Development Postbank, Germany Eurogiro organisation the members work Team. Both are focused on defining new Mr. Stefan Sjösten, Postgirot, Sweden closely together to find common solutions activities for Eurogiro; Operational Mr. Alan Nicholson, Postbanken, Norway especially on cross border payments. Performance with a focus on payment Mr. Henrik Oksholm, Eurogiro Network A/S

6 TRENDS

Facts: EU Directive for Cross Border Eurogiro is facing up to the Credit Transfers u In force in the European Union and the EU Cross Border Directive European Economic Area u Implementation by 14 August 1999 Longstanding principles of free transfer times, individual pricing policies u A framework to be worked into the and best effort pay back practices are challenged vigorously by the national legislation of member directive 97/5/EC from the European Union, which is due to be countries implemented in August. However, the Eurogiro partners are well placed u Covers credit transfers up till EUR to face the challenges. 12.500 u Includes obligations for banks in the n Apart from the EURO, only few EU Challenges to be faced may more likely following areas: decisions have had impact on the banks in occur in the area of sharing risk in case of u Prior information to customer: transfer Europe similar to the one of the Cross refund and executing the repair procedures time, interest and fees, value date Border Directive for Credit Transfers. within the set time frame. Eurogiro has policy, exchange rates Directive 97/5/EC of EU will have caused responded to these challenges in several u Information subsequent to transfer: more than the ordinary stir in the banking ways. Primarily by setting up a Service reference, original amount, charges community when it comes into force on 14 Level Agreement to be signed by Eurogiro paid, conversion August 1999. Especially in the low value, members before August 1999, in which all u Time frame must be agreed with high volume segment where Eurogiro is issues related to the directive are covered. customer, if not within 5 banking days most active. With the directive’s minimum Secondarily, the March Eurogiro quality test u Execute within agreement, otherwise obligations on pre-transfer information, time will provide the partnership with a precise subject to refund and interest taken, obligation to execute within agree- picture of the situation for repairs and thus a u Reference: Directive 97/5/EC of the ment and refund in case of non-execution, good point of departure for amendments. European Parliament and of the the customer is much better equipped to The technical adjustments to the transfer Council on Cross-Border Credit pose clear demands to his bank and to standards have been implemented for quite a Transfers. Published in the Official compare bank services. Most likely, the while. Journal of the European Communities press will keep the pot boiling in violation (L43/25) cases for single customers and consumer All in all the Eurogiro community is well organisations. prepared and well positioned to succeed in the tougher environment, but the increasing Eurogiro has already covered most of the demands for efficiency and cost cutting will way put ever more focus on the Straight Through Processing and the service quality of the The Eurogiro community has a long record members and the network. of guaranteed time scales and price transparency so some of the key challenges of the directive have already been met.

Security standards further strengthened by new security policy

n Eurogiro wants to maintain a security Among the more practical things the level that is in accordance with international Information Security Policy set the standards. The overall goal is to maintain requirements to physical security, access the availability, integrity and confidentiality control, account control, segregation of of the exchange of data in the Eurogiro duties and contingency procedures. network to protect the system against internal and external threats. It is essential that all individuals involved in the operation of the Eurogiro Systems are The Board of Eurogiro has the ultimate familiar with the Eurogiro Information responsibility for the security policy and the Security Policy to ensure that it is known operation of the Eurogiro Systems. The and acted upon within their sphere of Board of Eurogiro has appointed the control and influence. Only by this we can Eurogiro Audit and Security Group to ensure that any security breaches, weakness ensure that these responsibilities are carried and errors are reported and responded to as out. soon as they are detected.

Uwe Holmsgaard The old security documents have been To ensure that all adhere to the provisions of Eurogiro Network A/S: merged into a single document – The the document the Eurogiro Audit and “The security policy applies to Eurogiro Information Security Policy. The Security Group requires that the internal all members, Eurogiro structure of the document has been audit departments carry out an annual Network A/S and third party enhanced to give a clear picture of the scope independent evaluation of the compliance. suppliers of outsourced of the Eurogiro environment and the roles Furthermore the group reserves the right to components of the system” and responsibilities of all parties. The policy perform an external audit whenever it is applies to all Members, Eurogiro Network deemed necessary. A/S and third party suppliers of outsourced components of the system.

7 First installation in P.S.K hosts Vienna Eurogiro Activity Calendar Eastern Central Conference Summer 1999

Europe. n Vienna was the centre of attention for 26-28 May 1999 senior executives of postal banks and n As the first country in Eastern Central organisations of East Central Europe when Eurogiro User Group Meeting - Dublin Europe, Postova Banka of the Slovak P.S.K. hosted a conference on Eurogiro and Republic has now finalised the installation International Transfer Business. The of the Eurogiro system. After becoming a conference which had participants from post June 1999 member of Eurogiro, Postova Banka will be banks or post organisations from the Czech able to transform paper based money orders Republic, Croatia, Hungary, Poland, Operational Seminar - Copenhagen and other transfers into more efficient Romania and Slovenia was aimed at For operational managers and staff in electronic payments through the Eurogiro presenting the opportunities which follows Eurogiro members - focus on straight system. when connecting to the Eurogiro network. through processing of cross-border A majority of the other East Central Presentations of the governor of the payments. European postal organisation and post banks Austrian Central Bank and the EU are expected to follow the example of ambassador to Austria, focussed on the Postova Banka, to become member of challenges in EU in general and with special Midsummer 1999 Eurogiro during 1999 and 2000. attention to the expansion of the EU towards Central Europe Western Union Kick-off Meeting - Italy

Eurogiro chooses August 1999 active Euro UPU Congress Beijing Strategy Workshop in Asia n At a meeting in Copenhagen 3-4 March n Eurogiro was represented at a conference 1999, two of the working groups of in Bangkok held in the first week of March, Eurogiro got together to discuss new 1999 with participants from 13 Asian postal initiatives in products and services in the organisations. Mr. Uwe Holmsgaard, euro area. Technical Manager in Eurogiro, presented There was a general agreement that Euro- and demonstrated the Eurogiro Solutions. pean integration and the introduction of the The conference which was organised by the Euro will very strongly influence the Universal Postal Union, covered the topics payment market in the long run, but also of international postal financial services and that the short term effects have been limited. the prospect for Asian organisations to The meeting agreed to look actively at move more actively into that area of designing Euro products and services for business. specific customer segments and to evaluate present settlement routines.

Among the subjects covered in the next issue of Eurogiro News appearing in August are:

u Report from the Eurogiro User group meeting u Immigrants in Europe – a growing cross border market segment u Report from Eurogiro seminars u Portrait of a Eurogiro member

Please forward ideas, comments, articles etc. to:

Eurogiro Network A/S Girostrøget 1 DK-0800 Høje Taastrup The workshop in Bangkok covered the topic Denmark of international postal financial services Att.: Kristian Blicher Andersen