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EBICS – The Standard for Corporate-to-Bank Communication?

2010 is an exciting time in the world of B2B integration standards for the European banking sector.  In this case, I am not referring to the continued rollout of SEPA in the EuroZone, but rather the extended reach of EBICS.  EBICS is a highly secure file transfer protocol being used in the French and German banking communities for exchange of cash management related transactions.

The name EBICS stands for Electronic Banking Internet Communications Standard (EBICS).  EBICs is the successor to an earlier standard named BCS that was used in the German banking sector from the mid-1980s until the end of 2007.  BCS refers to the Banking Communication Standard which was developed by the German Credit Committee, which is known as Zentraler Kreditausschuss Association (ZKA) in German (longer, but no doubt easier to say than Eyjafjallajokull).

BCS was originally designed to offer a standardized approach for corporate-to-bank communication.  In the early days of electronic banking many of the technology vendors were developing their own proprietary protocols in lieu of a widely adopted standard.  BCS was based upon the ISO 8571 standard commonly known as FTAM (File Transfer Access and Management).

German banks were mandated to offer BCS as a communication adoption starting in the 1990s.  The mandate along with the publicly available distribution of the specifications led to widespread adoption of BCS across German industry.  Challenges began to emerge shortly after 2000 with the popularity of the Internet as a network for business transactions.  As with all transaction types, the industry began to seek alternative IP-based protocols for electronic banking.  The ZKA responded by evolving the BCS standard into a more fully-functional, Internet based standard called EBICS.

EBICS is a transport protocol that offers secure transmission of files independent of the payload.  As a result, EBICS can be utilized to exchange a variety of banking information such as account statements; securities holdings; debit and credit payment orders.  EBICS supports the traditional SWIFT FIN/MT message classes such as the MT 103 and MT 940.

Furthermore, EBICS can be easily extended to support the new ISO 20022 XML (SWIFT MX) messages.  The EBICS protocol is based upon HTTP, but with network encryption using TLS.  Due to the nature of the financial transactions EBICS supports, high levels of security are incorporated.  EBICS also offers checkpoint/restart capability which enables the file transmission process to gracefully resume in the event of interruption (rather than having to start over).

EBICS has been offered in Germany since January 2008.  Adoption has been much quicker than other B2B messaging standards. The success is due in part to the fact that the traditional alternative, the legacy BCS standard, will no longer be supported at the end of this year.  All of the major German banks – Deutsche, Commerzbank, Dresdner (Allianz) and HypoVereinsbank support the protocol along with the smaller, regional institutions.

The big news in 2010, however, is not just the decommissioning of BCS, but rather the adoption of EBICS within the French market.   A new version of EBICS (2.4) has been developed to meet the needs of the local French payments and banking sector.  Much like in Germany, EBICS will be replacing a legacy communications protocol called ETEBAC (Echange TElematique BAnque Clients) in France. ETEBAC is scheduled for end-of-life in 2011, which is driving a sense of urgency for French corporate and financial institutions to migrate to new connectivity options.  EBICS is not the only option for French corporate. Treasurers can choose to connect to their financial institutions via SWIFTNet or alternatively via a web-based portal provided by the bank itself.

ETEBAC, the French communications protocol being replaced, has a rich history much like BCS.  The original versions of ETEBAC (v1 and v2) were unidirectional in nature.  ETEBAC1 enabled corporate clients to upload a file (e.g. payment instruction) to a bank using a secure transmission over the phone network.  Conversely, ETEBAC2 offered the ability to download a file (e.g. account statement) from a bank.   The most popular version of ETEBAC was version 3, which supported bidirectional exchange of files via the TRANSPAC network.  A fourth and fifth version of the ETEBAC standards were developed but never reached the popularity of ETEBAC3.

The rollout of EBICS in France and Germany offers an interesting case study in the evolution of B2B communications standards.  In my next post I will highlight what we can learn from the new EBICS protocol.

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