Established and emerging settlement systems face a number of challenges.
- Customer integration costs
Typical settlement systems provide custom APIs or integration methods for their customers. Customers must then consider the cost of integration against the potential benefit of the settlement system. With IFEX, settlement service providers are able to provide a standardized interface to their customers that will remove this barrier.
- Communicating explicit service properties
Settlement systems must communicate their beneficial properties to customers in order to drive initial customer integration. While the 'larger market' argument is valid, under IFEX, ease of integration should rapidly render this argument irrelevant since the cost of integration will approach zero and customers will be more likely to integrate with a wide range of settlement systems that are able to provide access to unique market segments. Other sales points put to customers may include speed of settlement, settlement guarantees, guarantees of finality (no possibility for transaction chargeback/cancellation/reversal), and fee structure. IFEX provides a real time avenue for the objective description and provision of such service properties to clients, including the capacity to change these service properties in response to internal, market, regulatory or other external forces.
- Market responsiveness
Historically, settlement system providers have typically signed fixed period contracts with customers. Given the inflexible nature of such fixed agreements, the modification of fee structures in response to market or regulatory change has proved difficult and expensive. With IFEX, it will be possible for service providers to distribute changes to service terms in real time, reducing implementation times and increasing competitiveness.
The IFEX Protocol
promises to delivery increased transparency, efficiency and responsiveness to financial settlement system providers.