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Why electronic banking transactions can take much time

Banks

On paper, it seems ridiculous. You send some money via electronic banking and the transaction apparently goes into limbo, reaching intended recipients far behind the scheduled time.

The lag prompts suspicion. Most times, the delay is often attributed to system down times.

“I’d be fairly surprised if banks were deliberately delaying fund transfers,” says financial strategist, Luke Lucas.

“In this day and age where it’s easier than ever to blow a whistle anonymously online, the outrage that would follow if a bank were found to be doing this would be huge. The potential cost to the brand would significantly outweigh any benefits they might receive in the form of additional interest or fee revenue,” Lucas says.

“Honestly, I would be more convinced that it was incompetence rather than deliberate misbehaviour,” he says, adding that funds are meant to get to the recipient in good time.

Behavioural economics expert, Dr. Michal Strahilevitz, also doubts that banks purposely muck customers around. “But the fact that some customers perceive this to be the case is good enough reason for banks to work harder to speed up the process!” Strahilevitz adds.

Banks would create much goodwill if they did raise their game, rather than blaming each other, which leaves customers “doubly frustrated,” she adds.

The Chief Currency Strategist at the global payments provider, OzForex, Jim Vrondas, blames the frustration on the funds transfer network.

The co-founder of the personal finance app, Pocketbook, Bosco Tan, also argues that the cause of delay is technical, the result of the need for processes to be underpinned by clearing houses that authorise end-of-day transfers between banks in bulk.

The clearing house aspect slows down the process.

Financial institutions in Nigeria and across the globe are increasingly investing in systems that will make their e-payment system faster.

They keep upgrading the capacity of their platforms.

Transactions happen in real time, free of charge; you avoid paying bank fees because you are dealing with people like yourself.

If your bank lags, using a modern fast-track payment service could well make sense.

Bankers will contest that faster payment leaves less time for checking details, increasing the risk of errors.

Yet the suspicion that authorised deposit-taking institutions wilfully profit on “float” looks set to persist because, for one thing, it is hard to disprove.

Doubtless, as Strahilevitz argues, a system swift in more than name would earn the banks friends. Roll on the day when, as with email, every electronic transaction completes in a second.

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