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BOSTON – Even non-techie folks in credit union land might as well go ahead and learn to bandy about the acronym “STP” like they know what it means, because they probably soon will. STP stands for “straight-through processing”, and industry groups are now working on standards for the end-to-end handling of real-time transaction processing that could mark the end of the old batch processing system. “With STP, human intervention will no longer be required at any stage in a funds-transfer process, including final settlement,” says Dana Gardner, senior analyst with The Yankee Group, the Boston-based communications and networking research and consulting agency. “One hundred banks worldwide are designing the STP rules. Given the amounts of money typically involved in daily global transactions, the level of security, reliability and verification will be extremely robust,” Gardner says. The industry’s Institutional Transaction Processing Committee is promoting initiatives and mandates that should help lead to the adoption of STP technologies and standards, and it’s happening anyway, Gardner says. “STP is on the verge of creating de facto standards for swift, reliable and automated end-to-end transactional processing across complex business processes,” the Yankee Group analyst says. “Such a standard, or at least a set of best practices, is in great demand across the e-commerce landscape.” Gardner says financial trades and transactions currently are handled by participants executing steps according to “set triggers; one step must be completed before another begins. It’s a vestige of the old batch processing systems.” “STP, however, requires the industry to adopt a flexible, adaptable infrastructure to eliminate system and process redundancies, and to slash the number of manual steps necessary for transactions processing.” Gardner also says that it’s no surprise that the financial services industry is leading the way. “The global financial sector has often been a leading-edge adopter of information technology. Banks, brokerages, stock exchanges and other financial institutions serve as reliable bellwethers of what the general enterprise market should expect from new technology,” he says. Trials are currently under way to integrate disparate IT systems to allow straight-through processing to occur by integrating “through a message broker that runs on top of queue-based systems such as MQ Series or MSMQ,” Gardner says. That’s the beginning. The adoption of STP may indeed “prove instrumental in setting the standards for much broader business-to-business transactional processing, and it has implications for choreographing Web services,” the Yankee Group analyst says. “As today’s batch, or trigger-based, functions are replaced by a virtual matching capability, where the transaction passes back and forth between the participants and is enriched with each pass, a re-engineering of networked relationships is under way,” he says. Gardner compares the effort to re-engineer for STP with the modernization of IT systems prompted by the Y2K issue of the late 90′s. “By further obsolescence of batch processing, it will spur modernization that begets increased commerce and the demand for newer systems and business models,” he says. “The Yankee Group predicts STP over the next five years will hasten the business use of e-business, expand global supply and value chains, improve risk management, and improve business applications such as supply chain and business process management through real-time processing, real-time access to enterprise data, and graphical tools to map and adjust highly complex business relations,” Gardner says. -

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