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Business - Finance
Payment service and systems consolidation:
will consolidation lead to commercial payment monopolies?
One of the more interesting observations to emerge from
a recent survey on payments and payment systems concerned
international payment systems: "Payments processing
is a volume business. Many small and medium sized banks
will no longer be able to cover their costs. A large number
of co-sourcing and outsourcing operations are expected
in the years ahead." Would this lead to commercial
payment monopolies?
Payment services and systems are experiencing rapid change.
External pressures come from both businesses and legislative
bodies. Efficient, cost effective payment systems are
critical for economic developments; lack of them can be
a significant barrier to economic development. As in so
many other areas of economic life, the European Commission
is "legislatively active". It has an objective
of creating a single European payment area (SEPA) and
is seeking more efficient and cost effective cross-border
payments, which will demand substantial reduction in the
cost structures and tariffs.
Payments are part of the core systems within most banking
institutions. The challenges facing the core banking systems
have been documented widely and extensively. They are
legacy systems. In so many cases the internal processes
and systems that have been in existence for 20 to 30 years,
are encompassing the developments for adaptations and
product development. Core banking systems were primarily
processing systems. Data storage and archiving were expensive.
Concepts such as data mining, enabling banks to exploit
customer information for sales, marketing and management
purposes, had not evolved into commercial applications
when core-banking systems were implemented. Features such
as modular and database-centric are alien to the complexity
time and create costs by forging such links with core
banking systems.
The risks of replacement are high and the costs of replacement
are substantial. Projects to replace core-banking systems
are littered with failures. However, the longer they last
the more costly they are to develop and maintain.
Few senior executives are likely to volunteer for this
challenge on their watch. In light of the poor historic
success rates in replacing the core banking system such
projects are not merely job threatening. They carry potential
damage to an executive's personal reputation and in extreme
cases of failure "reprimand" from financial
regulators.
Banks are now facing new external pressures for development.
They have to prepare for more efficient, low-cost processing
and strong growth, particularly in cross-border traffic.
Upgrading the old systems is often very costly, and maintenance
costs are already too high in relation to current standards.
Renewing the systems is, finally, the only option.
It is unlikely that all but the major global banks, which
have developed substantial revenues out of turning their
payments capabilities into a business, can provide the
scale of investment over a relatively short period of
time to meet the demands and obtain a return on that investment.
Growth of co-sourcing and outsourcing deals could lead
to consolidation and possible monopoly issues? Payment
systems and services would them face some of the issues
being hotly contested in the securities clearing and settlement
business:
· Should some elements of the payment business
be regarded as "essential services" or utilities?
Should they be subject to separate governance and regulatory
regimes?
· Should there be some supervision over the way
in which banks use payment services to cross-subsidise
or leverage other services they offer customers?
· Does or will continued consolidation heighten
systemic risk, national, regionally and globally through
concentration of the payments business amongst too few
participants?
· Are these issues which should be addressed by
financial regulators, competition authorities or Central
Banks, perhaps through the Bank of International Settlements?
· Would a blue print, setting out a plan to address
payment consolidation issues, be a more effective and
efficient way of addressing the major question posed by
what seems to be an inevitable consolidation in the payments
business?
These are all major questions, which the payments industry
will have to address piecemeal or otherwise over the next
decade. |
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Energy - Peru
Peru Could Export LNG for Decades
Peru's reserves of natural gas could allow the nation to become
an exporter of liquefied natural gas for many decades, the general
manager of Peru LNG Co., Carlos del Solar, said Wednesday.
That company plans to build a plant to produce LNG, primarily
for export to markets in North America.
Although a land dispute has delayed construction of its planned
LNG plant, del Solar said work should start next July. Two regional
governments have tentatively settled a dispute over a patch
of land where the company wants to build the LNG plant.
He said the company wants the government to pass a law giving
it legal security that disputes over who owns the land don't
erupt.
"We can't be exposed, involving a plant that will cost
$1.6 billion, to the possibility that in five years or 10 years
someone could come along and question that we bought the property
from the owner," he said.
He said that Congress could pass a law this week clarifying
the land ownership issue.
"We still have other themes to resolve, which we hope to
resolve before the end of the year. If we do this then we can
start the construction in July, and it will take 42 months.
We have the possibility of exporting LNG at the end of 2008
or the start of 2009," he said.
Hunt Oil Peru, a unit of Dallas-based Hunt Oil Co., and South
Korea's SK Corp. (003600.SE) created Peru LNG Co. to build a
plant that is slated to produce approximately 4.4 million metric
tons of LNG a year for export.
In September last year, Peru LNG Co. announced a preliminary
deal to sell LNG to a unit of Belgium's Tractebel SA, part of
the Suez group, (SZE) which could export that gas to Mexico.
Hunt Oil Co. leads a consortium that also has received a contract
to develop Block 56, where the natural gas is scheduled to be
used for export.
Block 56 contains from 2.5 trillion to 3.0 trillion cubic feet
of gas, government officials have said. It is located near Block
88, which is being developed as part of the $1.6 billion Camisea
natural gas project in the south-eastern jungle region.
Source: Peruvian media
Write: by LuisB |
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Date: 1-Dec-2004
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Hexxagon
happens to be one of those games that's easier to
play than it is to explain. You play as the red
diamonds, and your goal is to take over the board
by leaping into the spaces adjacent to your opponent's
watery globules.
Source: Neave
Games
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