ISA Transfer Delay
Comments
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To borrow some verbiage quoted at me a while back, do you have experience that would allow you to estimate the costs and timeframe associated with these changes being specified, approved by management, a project management team assembled, scheduled, designed, programmed, documented, put through quality control, merged with existing systems and documented, tested and the results documented, audited and the results documented, planned for release, support staff trained on the new functionality and finally approved for release with all of these stages being monitored not just by internal auditors and the security assurance team but by external auditors?Matthew2018 wrote: »Well bang goes my vast experience of business systems development and information architecture. You must write a book on your methodology.
I mention as it would be helpful to have this information in mind if you decide to have a conversation with IG about why they haven't implemented such a system yet when by your estimation it will save them money.0 -
To borrow some verbiage quoted at me a while back, do you have experience that would allow you to estimate the costs and timeframe associated with these changes being specified, approved by management, a project management team assembled, scheduled, designed, programmed, documented, put through quality control, merged with existing systems and documented, tested and the results documented, audited and the results documented, planned for release, support staff trained on the new functionality and finally approved for release with all of these stages being monitored not just by internal auditors and the security assurance team but by external auditors
I mention as it would be helpful to have this information in mind if you decide to have a conversation with IG about why they haven't implemented such a system yet when by your estimation it will save them money.
Yes. Several decades including banking.
That's why I know that if they (Natwest and IG) have decided to go for a manual approach there is a reason for for it. I would not want to be a manager who said "we are staying with an inadequate and very expensive manual system because we didn't get round to changing it". That response would be career limiting especially when there is an alternative.
By your account the alternative system with direct credit is already in existence at Natwest. All they have to do, if IG have not already sent the details, is ring them up and ask for the bank account to send the money to. The reference of my account would already be with Natwest because it was sent with the original request to transfer. No paperwork would need to go back from Natwest to IG. A simple e-mail to say money transferred would work.This would have the advantage that it uses all fast digital systems and none of the existing expensive, manual systems would be needed.
You may be correct that Natwest is using outdated manual systems because it can't work out how to use their own digital systems. If so that's incompetance and I'm glad I'm getting out. I doubt it though.
To my mind this is deliberate because there is an advantage of 10 or so days when the money is in is not in my account.
Which is it?0 -
Yes, Natwest definitely do have electronic transfers, and I've experienced an electronic transfer first hand. But to be able to use this system, the other ISA manager must have the systems in place to accept an electronic ISA transfer and must agree to receive the ISA paperwork and funds electronically. This process of agreeing how to process the transfer is set out by HMRC and requires Natwest to do a paper transfer if IG requires this.Matthew2018 wrote: »By your account the alternative system with direct credit is already in existence at Natwest. All they have to do, if IG have not already sent the details, is ring them up and ask for the bank account to send the money to. The reference of my account would already be with Natwest because it was sent with the original request to transfer. No paperwork would need to go back from Natwest to IG. A simple e-mail to say money transferred would work.This would have the advantage that it uses all fast digital systems and none of the existing expensive, manual systems would be needed.
I've stated this at least a few times, and I think I have been very clear, but let me try one more time in the hope you will understand:You may be correct that Natwest is using outdated manual systems because it can't work out how to use their own digital systems. If so that's incompetance and I'm glad I'm getting out. I doubt it though.
The only conceivable reason Natwest would not use its electronic transfer system is if IG was incapable of accepting an ISA transfer electronically. Natwest has been using their digital system for years and states the vast majority of transfers are processed in this way (except, evidenly, when they bump into luddites like IG).
We've already debunked this myth in post #7. Remember the 32p of interest they would receive per week delay on your £2575 balance? Remember agreeing that the difference in cost for the paper transfer would be far higher than the postage and stationary alone which would put the cost in pounds rather than pence? While I don't like to give banks any credit I don't think they are due, even I have to credit Natwest with the sense not to earn extra pennies by spending extra pounds, especially with a task that will take more work and be less familiar to their staff.To my mind this is deliberate because there is an advantage of 10 or so days when the money is in is not in my account.
Without any doubt, IG is using outdated manual systems. Probably because they have decided that the cost of developing electronic systems outweighs the benefits for them.Which is it?
Armed with your several decades experience, including in banking, you might be well placed to convince them of the error in their ways, or alternatively they might be able to explain to you why they disagree with your assessment.0 -
In your experience Matthew:Matthew2018 wrote: »
Well bang goes my vast experience of business systems development and information architecture. You must write a book on your methodology.colsten wrote:
Eh? Unless there's economies of scale, it will be nigh on impossible to justify the cost of fully digital systems over manual handling.Matthew2018 wrote:;Fully digital systems will always beat the costs of systems which include some degree of manual control, such as cheque handling
- if a firm already has a functioning system of processes and procedures in place which deal with manual receipt of cheques, physical paperwork, bank account credits etc, in relation to a transfer from any of the whole range of ISA providers (there are over 500 of them from Aberdeen to Zopa), exactly how much will it cost to implement a new electronic system of data exchange to interface with the systems of each of those sending providers?
In broad terms, is it
(a) it costs a large amount of money;
(b) it costs no money at all;
(c) we can tell the CEO that the cost is negative, because it's hopefully a cost saving eventually after we finance the project and wait around for a long enough payback period
My contention would be option (a) - a new and fully digital system would cost a non-zero amount of money to implement. You might demonstrate that once up and running it would be cheaper per item processed, but there is a huge implementation cost to get there, and the money to buy the first system has already been spent. I could replace my XF with a Tesla and have a lower petrol cost per mile, but if I factor in depreciation on the new car that's a hell of a lot of *extra* cost to replace something which already works adequately. The payback period is long, especially if I'm not doing many miles per year.
Taking IG Securities as your receiving ISA provider, there are only 5-600 other ISA managers who might send them investor cash from time to time. But the implementation would not be complete (allowing the former paper-based system of manual communication and reconciliation to be discarded) until the last of those ISA providers is fully electronic.
Maybe the most heavily- venture-capital backed new fintech disruptor will aim to go fully electronic from day one; but looking down the alphabetic list of people from whom they'll receive transfers, before we get to the brands you've heard of - Aberdeen Asset Management and Aegon and AJ Bell and Aldermore and Aviva etc, you get to "6 Towns Credit Union Limited, of West Bromwich" - who I'm sure are quite respectable but do not sound like they have billions on hand from venture capitalists with which to build their interface. The firms will have to cater for the 'lowest common denominator' when rolling out processes and procedures.
To each of those ISA providers who might be sending stuff (money, securities, client data) to our transferee ISA management business, will 'going fully electronic' mean sending an electronically signed document by encrypted email as you suggest, or uploading the document to a sftp site or data portal or some other method of transmission? And will the method and format of the document being sent be 100% consistent between everyone across the industry providing and processing the information - clearly an encrypted version of a signed scanned PDF is different to an encrypted version of an xml file written to a particular schema even if it provides the same basic info, and would be handled differently by the recipient.
If there are over 550 registered ISA managers, there are over 150,000 potential combinations of two different managers exchanging information between themselves, but some of those exchanges might never actually be needed and may be wasted effort to establish. So hopefully a collaborative 'one size fits all' solution can be engaged at industry level, to stop the occasional customer raging about how nothing should be done on paper by a human in this day and age. Except the customers don't all rage, they often suck it up, and individual businesses seeking competitive advantage in the financial services arena do not always want to share protocols and operating methods, nor agree to spend £000s per day on a team of consultants to implement a system when they already have a system.
It would be great for those 150000 handshakes to happen electronically and all be agreed on the best fully digital method. However, some will see that there could be a manual process as a backstop. And if the process for manual intervention has to be in place anyway (you hope you don't need it but don't want to turn a customer away just because his former ISA manager is having difficulties), you are still going to pay the salary of the person doing the manual checks and balances, so the 'nice to have' electronic system is going to be an incremental cost on top, no?
With economies of scale, you have more ability to reduce costs through implementing a clever system. If NatWest or HL can do a transfer electronically for 20p instead of 70p, that's half a quid saved and they only need to process ten million ISA transfers to be able to afford a million pounds of consulting and four million pounds of hardware, software and training. The payback period might only be a matter of a few years for them. Meanwhile, it seems like it would not be worth it for the lower volume business at 6 Towns Credit Union.
So 6 Towns Credit Union will continue to send paperwork by post. And HL and Natwest will need to employ staff to open the letters from such firms, and bank the cheques, and have a managmeent overlay to oversee the process. If they still have the people and process and overhead from the 'old school' way of doing things, because 6T are sending them snail mail, or haven't automatically tagged their cash payment in the banking system with the right secret codes which allow auto matching and reconciliation... then maybe the saving is not 50p a transfer but only 25p a transfer, doubling the payback period of the project.
Continuing the car analogy if I change the Jag for a Tesla I would be diverting a year's post tax salary to getting the new beast, but still need to keep my old one taxed and insured so I can occasionally drive London to Edinburgh without stopping for a several-hours charge along the way.
[disclaimer - 6 Towns may well be fully electronic for all I know. They are just the first name on the HMRC list of managers]0 -
[QUOTE=bowlhead99;75704633
In broad terms, is it
(a) it costs a large amount of money;
(b) it costs no money at all;
(c) we can tell the CEO that the cost is negative, because it's hopefully a cost saving eventually after we finance the project and wait around for a long enough payback period
[/QUOTE]
Any change will cost money but see below for a negligible cost solution. This approach could lead to significant operational cost savings both to old and new ISA managers. However I can't tell unless I actually do some proper business analysis.
It's sad that things probably won't change, or more accurately things cannot change. I've lost track of how many new projects I've been responsible for which had trouble getting past the design stage because old legacy systems couldn't be adapted easily to incorporate new interfaces required.
Looked at with a business process hat on there are very few business processes needed to transfer an ISA. From the point at which money has been taken from the old ISA account, the old ISA manager needs to send two things to the new manager. Documentation and the money.
With documentation there are so many methods of sending this from one place to another. They each have their advantages and disadvantages. However the only one that banks seem to be able to use involves physically sending pieces of paper with words on. Paper needs a multitude of other processes both for the sender and the recipient. Filing the paper, scanning, Retyping into new system for a start.
It is worth noting that the construction of the first transcontinental telegraph in America in 1861 rendered Pony Express redundant. Bank messengers in London were no longer required in the 1960s. Here we are nearly 160 years after telegraph started, in 2019, unable to use any form of technology to transfer information. Try looking up EDI.
Here's my two penneth for a very simple approach. Use PDF files and send the documentation electronically. (Note: on my computer PDF printing can be selected as printing to another printer.) PDF files can be secured so that only the correct recipient can open them. Use telephone to contact the other party to communicate passwords or other security codes. No extra systems development is required.
For money transfer well what can I say. If a bank can send money round the world instantly at the push of a button it should probably be able to handle this!
If any bank needs to contact me to pay me my fee for this advice leave a response on this forum and I'll get back to you. I prefer bank transfer but I will accept cheque. There's a hitching rail for your horse if necessary but please let me know in advance so that I can move my car.0 -
I am sure they'll all be queuing up. Well done.Matthew2018 wrote: »
If any bank needs to contact me to pay me my fee for this advice leave a response on this forum and I'll get back to you.0 -
So in the new system the person at the transferring bank has to arrange a time to speak to the relevant staff at the recipient bank to communicate security information to be manually keyed into a system, so both banks will need to arrange to have human staff available to devote their time to communicating by telephone on that transaction at the exact same time, rather than the post office solution where someone drops off the item at their convenience and someone else picks it up at their convenience.Matthew2018 wrote: »Here's my two penneth for a very simple approach. Use PDF files and send the documentation electronically. (Note: on my computer PDF printing can be selected as printing to another printer.) PDF files can be secured so that only the correct recipient can open them. Use telephone to contact the other party to communicate passwords or other security codes. No extra systems development is required.
And we're using portable document format for the file spec (primarily designed for portability across systems rather than for feeding a database), and because it's a simple print and there is no system development being done by the sending bank, it will just have been printed in accordance with the sending bank's standard, so the ending data is not really any more suitable to directly interface into the recipient system then if it had been received in paper and scanned with OCR (still in the sending bank format, rather than in the format the recipient bank wants).
So basically you have compressed the timescale for a document being received (versus post) but have introduced a requirement for concurrent staff availablity within the two businesses for the phone conversation (which adversely impacts the timescale), and as there was no actual system development, many of the inefficiencies in the 150000 pairs of financial institution relationships still exist.
As "Fully digital systems will always beat the costs of systems which include some degree of manual control", your proposition of not digitising it, doesn't really seem to fit your own brief
You acknowledge that "more accurately, things cannot change" and that in your experience things don't get past the design stage as they are complex and existing paid-for systems may not interface well, and that must be especially true when you are trying to digitise transactions between multiple parties. Seems to be a glimmer of recognition that how it was first explained to you might be a reasonable explanation, rather than your original attitude of "you've got to be kidding me!"0
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