The Financial Services Industry
The introduction of technologies such as EDI has enabled the financial services industry to automate many of the day-to-day processes between counterparties.
Financial services firms provide a wide array of products and services to their clients, both retail and commercial, across commercial banking, securities, cards and merchant services, insurance and employer services. Particularly when supporting commercial clients, the industry relies on the ability to manage complex information flows whether processing payables and receivables, supporting post-trade securities flows, transmitting merchant settlement files, or enabling group benefits eligibility claims.
The growth of international trade has created interdependencies between buyers and suppliers across geographies, resulting in the globalization of the financial supply chain. Complexities arise when working across international boundaries, including differences in currencies, regulations and accounting practices. EDI mitigates these complexities by aligning financial supply chain information flows with the movement of goods in the physical supply chain. A fully automated financial supply chain enables the seamless, accurate and timely exchange of financial data between buyers, suppliers and their financial institutions.
With EDI, an organization can electronically receive an invoice and initiate a payment. Eliminating the paper in payables and receivables flows enables organizations to reduce days sales outstanding and days payables outstanding, optimizing their cash conversion cycles. EDI also provides a lower-cost alternative to traditional paper-based payment methodologies, while eliminating errors associated with manual processes.
Due to the global nature of the financial services industry, there are numerous file format and communications protocols in use today, along with a number of regional EDI networks. The structure of the financial supply chain and a description of the communication protocols and file format standards used are described below.
