We often say that in banking payments have gone from boring back office activity to the forefront of innovation and have even coined the term ‘paytech’ to prove that this transformation has occurred.
Spending four decades in payments has caused me to pause and reflect on payments in the 1980’s.
CHAPS had been live for 13 months when I started in The City. At that time CHAPS wasn’t real time gross settlement or even truly same day (I seem to recall that it had a form of recourse until 12 noon the next day but I might be wrong on this as I was only 18 at the time) and the ‘A’ (Automated) in CHAPS was a misnomer.
The correspondent bank I worked in received about 3,000 inbound CHAPS payments a day each one required printing, the printed copy was ‘ticked off’ a list of numbers, the beneficiary account number was then manually looked up or recalled from memory and handwritten on the printed CHAPS payment, the account number was then input into ‘the system’, checked and released to the beneficiary account – five clerks required to process a single inbound payment (unless it needed ‘repairing’ which took extra resources).
The easiest job was the final check (‘releasing’ the payment) – the operator had to type in the control number to call the payment up, then type Y, Y, N and N. Can’t remember what the four key strokes confirmed or did but it took all of this just to credit an inbound CHAPS to a beneficiary’s account.
All of this was, however, a big innovation compared to Bankers Payments and the Town Clearing – more about that another time.
Today, I can open an App in my ‘phone on the other side of the world and make an almost instantaneous payment from my UK account to any other UK account for free – all without the need for a whole host of bank clerks needing to manually handle my automated payment.
Payments: from the back office to the forefront of innovation.