The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Bahamas Automated Clearing House (BACH) is aiming to process “close to two million” electronic banking transactions in 2013, and yesterday confirmed it planned to introduce Customer Initiated Entries (CIEs) this year.

Brian Smith, the BACH’s general manager, told Tribune Business that this latest function would allow all Bahamians to make electronic payments, using the Internet, from their bank account to the intended recipient at another financial institutions,

Describing this as having “unimaginable benefits” for the Bahamian payments system and wider economy, Mr Smith said that since the BACH launched three years ago, paper/cheque transactions had declined in line with the surge in electronic payments.

Electronic transactions facilitated by the BACH increased by 30-40 per cent year-over-year in 2012, aided by more companies using this for payroll.

Mr Smith said the BACH was now handling “well over one million” electronic payments per year, and was on target to come close to the two million mark for 2013.

“That’s exactly what will happen, and it will be this year for sure,” he told Tribune Business of the CIE plans for 2013. “That’s where it stands, and as far as I know, we’re on schedule to implement this year.”

Explaining how Customer Initiated Entries (CIEs) would work, Mr Smith said the originator/payer would log into their bank’s Internet system, and provide the receiver’s account number and amount of the payment.

That would be inputed, and communicated, to the bank receiving the payment via the BACH. While this sounded simple, Mr Smith said two potential obstacles remained.

The receiving bank would have to “upload” and accept the file from the originating bank, and all Bahamian commercial banks will need to implement compatible technology platforms and systems to facilitate all this.

“We’re a link in the chain, and can’t speak for all the other links in the chain,” Mr Smith said.

Still, he added of CIEs: “It will bring unimaginable benefits”. For starters, instead of having to use the “unreliable” mail to post cheque payments, or drive to a bank or company to make them in person, Bahamian residents and companies will be able to do them online and “save”time and hassle.

Mr Smith added that Bahamians, with accounts at separate banks, would be able to make cash deposits to both from one institution.

“For companies, this will lead to less trips to make cash deposits at the bank, as payments to them will be accepted electronically,” he said.

“They will not have to worry about keeping cash on the premises, or hiring these huge armoured trucks to transport cash.

“It will mean a reduction in false and fraudulent cheques. Banks will see a reduction in back office paper, and consumers will see big benefits in getting cash-ready payments.”

Ultimately, CIEs were further improve efficiency and reliability in the Bahamian payments and banking systems, providing businesses and consumers with more certainty that they will receive what they are owed.

Mr Smith said Bahamians could also use CIEs to send money to Family Island residents, who would receive the payments immediately to their account, rather than having to wait for weeks for mailed cheques.

“It’s got huge benefits, and it’s something we’re really looking forward to and will happen this year,” he told Tribune Business.

Since going live three years ago, the BACH has been acting as a conduit for cheque payments, passing electronic information between the relevant banks; introduced direct credits allowing companies to meet payroll electronically; and “in limited circumstances” facilitating payments to the likes of insurance companies.

“What we’ve seen over the past two years is a decline in the number of cheques and a commensurate uptick in a number of electronic transactions,” Mr Smith told Tribune Business.

“Before the BACH, in terms of electronic, paperless transactions, we had zero, and now we have well over one million a year. By the end of this year, we’re hoping to be close to two million. The volumes are certainly going up. With CIE transactions coming on later this year, who knows what the volumes will be in 2014? I think they’ll be pretty good.”

Mr Smith said the BACH now facilitates around $8 billion worth of transactions per year, with cheque payments cleared within one-and-a-half to two days

Ian Jennings, Commonwealth Bank’s chairman, yesterday confirmed that CIEs were the BACH’s “next phase”.

He acknowledged, though, that getting all the Bahamian commercial banks “in sync” in terms of the necessary systems and infrastructure to facilitate CIEs was “a challenge”.

“We don’t have a facility to start testing, because some of the other banks have got to get the infrastructure foundation in,” Mr Jennings said.

“We were working on 2013 as the target, but I don’t know if we’re going to meet that date. You’d be able to make the individual payment from your online banking, and it’s intended to replace written cheques.