Nearly three years since the plan was announced, a stampede of banks have migrated to Fedwire's new funds transfer format, both to meet the Federal Reserve's year-end deadline and to cash in on the promise of lower operating costs and increased efficiency.
The Fed New Format should be a boon to banks because of a reduction in manual posting and other back-end processing. The new format eliminates the need to truncate payment-related information when forwarding payment orders through Fedwire that were received though CHIPS and S.W.I.F.T. "One of the things that this modification does is allow them to improve their straight through processing rate," says Karen Roche, svp of financial services at Logica Inc. Massachusetts-based Logica was one of a handful of technology vendors that has converted big banks to Fed New Format, with capabilities to send and receive messages, when the Fed allowed the bi-directional messages this summer. Chase Manhattan, Citibank, J.P. Morgan, the Bank of Nova Scotia and seven others were the first to be certified to send and receive.