International Bulletin

November 2006

Acquisition of Magex P2P Payments Platform
As part of its strategy to enter the growing field of electronic person-to-person (P2P) payments, on September 5, BankServ acquired the Magex Managed Payments Platform from financial technology developer Magex Holdings Ltd. The Managed Payments Platform covers the P2P payment systems that let consumers exchange money over the Internet or using their mobile phones. With the deal, BankServ also acquired two new customers and six new employees. The press release announcing the acquisition can be found here in the news section.

BankServ Welcomes First UK Service Bureau Customer
BankServ is proud to announce that it has boarded its first service bureau customer in the United Kingdom. Colchester Global Investors, a leading independent investment management firm, joins BankServ’s growing service bureau based customer list. To maximize cost efficiency with their securities transactions and reconciliation of securities and payments, Colchester has linked the service bureau to their internal back office system in London.

BankServ’s fully managed SWIFT Service Bureau enables Banks, MA-CUGs, Broker/Dealers, Fund Managers, and other Financial Institutions to achieve increased ROI through lower cost of ownership for SWIFT connectivity, while reducing risk and insulating the financial institution from the demands of planned SWIFT upgrades, such as SWIFTNet Phase 2.

Russia Conference Highlights TurboSwift
Andy Maloney and Mary Ellen Putnam recently traveled to Russia to co-host a seminar with one of BankServ’s Moscow based distributors, Finnet Service Ltd. The purpose of the seminar was to present TurboSwift as a SWIFT Interface solution to PC Connect users who need to migrate from their systems by the end of 2007. The seminar was held at the Moscow Settlement house, MICEX, who also use TurboSwift products in their own Service Bureau. Senior management from MICEX were on hand to endorse the BankServ product offerings and later hosted the TurboSwift User group meeting to discuss BankServ's preparations for SWIFTNet Phase II.

SwiftNet Phase 2 Updates

Testing
BankServ’s development team is currently wrapping up pilot testing on the TurboSwift Phase 2 upgrades and the new TurboRMA product. We are finalizing the FIN and RMA Qualification Tests with SWIFT, after which BankServ will progress on to the required 90-day customer certification phase. Limited pilot tests were carried out with Helaba Bank in the UK and DSK in Eastern Europe.

Message Authentication Codes (MAC Trailer)
One of the changes being implemented during SWIFTNet Phase II is the replacement of the MAC within block 5 of FIN messages with a PKI signature held externally to the FIN message. Whilst the primary impact of this change is during message transmission and reception with SWIFT, there is a potential impact on back office systems if they have been built to expect the presence of the MAC trailer in FIN messages. Customers whose systems rely on the presence of MAC or PAC trailers in the messages will need to adapt their business applications or interfaces in readiness for phase II. Throughout the Phase II migration, planned to start Q1 2007, SWIFT correspondents will be at different stages regarding the uptake of PKI signatures. During this migration, SWIFT will continue to deliver both MAC messages and PKI signatures depending on the receiving correspondent’s status. However, once the receiving bank switches to Phase 2, Protocol 3, the messages received will only contain the PKI signature.

Elimination of BKE Key Distribution Files
An additional potential impact of SWIFTNet Phase II on back office systems is the fact that, when BKE is retired, the BKE Key Distribution will no longer be available. Some back office systems use the Key Distribution File as a mechanism for importing a list of authorised SWIFT correspondents (ignoring the BKE Key information in the file). Such systems will need to be updated to use the RMA Export File which can be produced from TurboRMA in a standard format specified by SWIFT.

Upcoming Key SWIFT Dates

November 18, 2006: SWIFT Standards Release 2006 is now live. For those requiring SR2006 support, please ensure that you have upgraded to TurboSwift 7.4.2, currently available on the BankServ FTP site.

December 15, 2006: Order deadline for
SWIFTNet Phase 2 Migration Kit
The Kit will contain the SWIFTNet Release 6 interface software and the HSM device, and will be shipped at least 3 months before the designated C1 deadline.