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Eurogiro News 7
Activity Calendar
Summer/Autumn 2010
How a Post creates value for its clients by using advanced
FX services
Over recent years, Israel Postal Bank has developed advanced FX solutions for its clients, using
basic MCSSP services, and has created a strong competitive payment portfolio for retail as well as
corporate clients. Mr Shmuel Engelstein, CFO and Deputy Director from Israel Postal Bank, explains
how this was done
How did Israel Postal Bank use its en-
hanced FX capabilities for the benefit of its
clients?
First of all, we used it to broaden the num-
ber of currencies in which a client could
send and receive transactions, and se-
condly we exploited the option to tell clients
what the exact pay-out amount would be
for the beneficiary. This became possible
when we knew the actual rates in advance
of starting the deal. Earlier, we were only
able to execute a transaction in currencies
where we had account relationship with an-
other financial institution in the beneficiary
country. Also, the FX was historically done
via USD or EUR so the final rates were
not known until after the deal. It transpired
that the new service was attractive to retail
clients as well as to corporate or public
clients such as universities and government
institutions.
What were the main benefits for Israel Post
Bank in implementing a 3rd currency FX
service?
The main benefit was, of course, that our
services were much more competitive
towards the clients. Transparency is a
key differentiator and being able to offer
pay-out of an exact amount in a beneficiary
currency is a great advantage. This was
in addition to the transparency we were
already offering in terms speed and quality,
enabled by using the well-known Eurogiro
services.
However, through acquiring this service,
Israel Postal Bank also benefitted from
considerable savings in processing the
transactions. This was largely due to fact
that we reconcile all transactions via our
EUR or USD accounts, so we now have
far fewer accounts to manage. Our liquidity
management has significantly improved.
We subscribe to a service where we get
daily rates, 24 hours in advance, and can
manage low value transactions based on
these. These transactions can be handled
direct at our branches without involvement
from our central office. We are currently
reshaping our branch system to take ad-
vantage of this in an automated way and
we expect to be ble to reduce the cost of
handling significantly when we are live from
the second quarter of 2013.
There is much focus in the workers’
remittance industry on transparency in all
elements of the transaction. In which way
has this impacted on your approach to the
enhancement project?
We are well aware that transparency is
essential for clients and recognise this from
the competition and the authorities as well.
We were mainly driven by our wish to serve
the clients better and assumed that they
would come to us if we did. This has proved
to be true, since we have not only signifi-
cantly increased the number of cross-border
transactions we process, but have gained
new clients, particularly from the public sec-
tor. The basic value of FX transparency is
high for all types of clients, and by offering
a better service we have created a much
stronger business for Israel Postbank Bank
out of our cross-border transactions and our
Eurogiro membership.
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Israel Postal Bank uses the basic multi-
currency settlement services (MCSSP)
from Deutsche Bank, along with an add-on
option for handling large deals.
Basic advantages of MCSSP:
>
Transparency on rates at time of
payment initiation
>
Competitive and transparent rates
>
Easy access to FX competence &
capabilities
>
Additional currencies without additional
accounts
>
Lowers the cost of cross-currency
payments
>
A close-knit community:
All deve-
lopment in Eurogiro has been driven,
and to a large extent manned by
Eurogiro members. Initially the share-
holders pushed every initiative (and
continued to keep all profit of the
company within Eurogiro for further
development). Today, all members are
invited to engage in the development
of Eurogiro and its services. Members
meet at least once a year, many
contribute regularly in working groups as
well and an extensive pool of shared infor-
mation makes contact easy. The
Eurogiro company is kept small and lean
and one of our core obligations is to
facilitate cooperation.
Your Global Payments community
Today, Eurogiro is truly a global community.
We have a branch in Singapore. We are
focused on generating value for members
with new payment channels, for instance
from mobile payments and by engaging in
new types of partnerships. We are fit for
competition in a compliance and cost-
focused industry. And we are dedicated to
our community of member organisations
and to the friendships among colleagues
from all over the world. We are ready for
the next 20 years.
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