Europe must improve payment efficiency if it is to rival other financial markets

The European Central Bank (ECB) was created in 1998 to set monetary policy for the Eurozone. ECB IT director Magi Clavé talked to Computing about integrating new countries into the single currency, the impact of the Single European Payments Area (Sepa) initiative and the challenges of technology implementation over such a huge, multinational estate.

What is your long-term aim?

We want to be as efficient as all the other markets in the world. The US Federal Reserve and the Bank of Japan are our reference points.

It is crucial that in the long term we have a very efficient Euro banking system – it is key for Europe to compete in the global economy. If we compare our system in terms of transactional running costs with the Federal Reserve, it is much more expensive because of the fragmentation of the market. Sepa [which will mean all EU transactions are treated as domestic rather than international] will look towards cutting this difference, and once that is established we can be at least as efficient.

What are the main challenges?

One of the challenges within the Euro system is for us all to work better together – with the ECB at the centre co-ordinating the national banks.
There are two levels in the Euro system: the countries that have the Euro; and those who are not in the Eurozone but who are involved in Sepa. So there are two levels of co-ordination required.
Even after the Sepa implementation we will continue to work on collaboration. We have a huge demand coming from business and from the national banks to improve in this area.

Does Sepa require major IT change at the ECB?

What has been done by us is small compared with the commercial banks that have to update their systems to comply.
Our Target real-time transaction system [an online system for settling the transactions between financial institutions in the Eurozone] is more of a technological revolution for us than Sepa. It is really demanding on our IT resources and is transforming the way banking has been working so far. It is also changing our day-to-day operations and our procurement structures.

What are the IT implications of the expansion of the Eurozone?

This year we incorporated Slovenia into the Euro, and Malta and Cyprus will join in January. Integrating new countries means incorporating their information and data in our systems, rather than deploying technology at their end.

In the early days, most of the work was led by the ECB but we are now trying to use the resources of others more. We are moving to a more collaborative model with the national banks, trying to make use of their capacities and their assets.
But every central bank is different, so each has a different approach to technology. And some countries that have joined the Euro have had to shift some IT responsibility to the ECB, and that changed our system landscape.

What other projects are under way at the ECB?

We are running a number of projects in different domains, mainly around improving efficiency. We are implementing enterprise resource planning systems to get all our data onto one platform and putting in enterprise content management software to make sure it can all be accessed in the right way.
Teleconferencing forums are also being factored in over the next two or three years.

Security is always high on banks’ IT agendas. What role can the ECB play?

Security is huge and we are paying more and more attention to it. But it varies as a priority between different IT departments and there is always a balance between how much security you want to build into a system and the user-friendliness of that system. We are trying to bring everyone up to the same standard – a difficult thing to do across such a big area.