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IFX for Business Banking White Paper

Background

Increasingly, financial institutions and their banking partners are looking to implement XML-based solutions toaddress the complexities of corporate banking needs while also taking advantage of all of the benefits thatnetwork environments offer - whether it be internet, intranet or extranet based. The Business Banking serviceof the Interactive Financial eXchange (IFX) standard is an XML-based message set that has been designed todo both.

IFX for Business Banking is designed to be used across various types of applications - from internal systemscommunications of business banking data to data integration across many companies by automaticallyintegrating data from trading partners into internal enterprise systems.

Ultimately, the goal of the IFX for Business Banking service is to create a standard that will allow companies

to interact more effectively with each other and accomplish end-to- end e-commerce.

Why XML and IFX?XML is a format for defining, transmitting, validating and interpreting data over the Internet betweenapplications and between organizations, and is widely viewed as the leading data exchange technology for e-commerce. XML makes it easier for companies to integrate data from business partners into their back-endsystems because, in addition to structuring data -- i.e., telling what the content is and what role the contentplays, such as whether it's a heading, a footnote or just data -- XML "tags" tell a user how data is organizedand how to read the information in the file.

However, XML alone only provides the grammar rules for communication. The building blocks to richtransactional conversations are provided through the business message sets that have been defined in IFX.The IFX for Business Banking service was built by leading financial institutions and trading partners, workingtogether to create a useful set of elements that encompass a wide variety of traditional business bankingrules.

Addressing the Complexity of Corporate Banking NeedsThe required business rules that support the banking needs of corporate customers can be highly complexand encompass detailed processing rules that are just not seen in a consumer based banking model.Requirements to support features such as multiple payments with multiple due dates being applied to singleinvoices and all of the possible permutations thereof are more the norm than the exception.

With the use of the IFX Business Banking service, the ability to translate such complexities in an XML-basedformat is central to creating a useful, reliable communication mechanism. Some of the uses of IFX forBusiness Banking include:

The ability to transmit documents and information over the Internet more easily and with lessintervention or reformatting than required today.

Usage of standard formats for banking transactions utilized in the business/corporate day-to-dayoperations.

The ability to exchange payment instructions, bank confirmations, bank statements, receiptsinformation, and account reconciliation documents with banking partners and/or betweenorganizations.

Automatically update internal systems with the XML-formatted data in any of these documents.

Integrated Support for Retail and Wholesale BankingAdditionally, the IFX specification allows for optional integration of Retail and Wholesale banking services. IFXprovides a wide range of retail banking features that can easily be integrated with banking applications thatrequire support for both. This is particularly useful in inter-bank transactions, record keeping and datatransmission.

Integrated with the Rest of IFXThe Business Banking service is integrated into the IFX Framework - the foundation of the IFX Specificationincludes a set of common objects that can be used across multiple types of financial services. This facilitatesthe implementation of cross service applications.

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KAVIAdvance the StandardSM

For example, with a common definition for a "customer" that is used across multiple services, multiple types ofapplications can leverage off of one standard to utilize that piece of data. A financial institution that wishes tooffer seemingly disparate services (such as banking and insurance) that may be located in different businessunits can take advantage of the common object definition to unify the disparate systems.

IFX for Business Banking Features and Benefits

* As of Version 1.3 issued in 2002

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Benefit Feature

Supports multiplePaymentOriginationmodels.

Single Payer/Single Payee/Single Remittance Single Payer/Single Payee/Multiple Remittances Single Payer/Multiple Payees/Multiple Remittances Intermediary Bank routing and settlement information Central Bank Reporting for international cross border

payments

Support for DirectDebit Origination*

Origination of direct debit by payee vs. payer All the features of Payment Origination

Control Notification Check Sum Totals for various characteristics

PaymentAcknowledgment

Summary and Detail Acknowledgment for total numberof payments and dollars

Status for acceptance, rejection or change Detail information for each payment file or group of

payments transmitted

Remittance Detail Single or multiple invoice detail Line item detail by invoice Multiple delivery options, i.e., direct or indirect

ComprehensibleRemittanceReporting*

Remittance details from multiple sources, i.e., Lockboxprocessing, ACH, and Wires

Single or multiple invoice detail Line item detail by invoice

Positive PayServices*

Check Issue notification for in-house check printing Reconciliation status for checks paid, outstanding,

canceled, and/or stopped

Balance andTransaction

Reporting

Account balances for cash forecasting Based on parent/child relationship

Transaction reporting for general ledger accountreconciliation

Check Order andReorder*

Details for generation of paper checkbook orders, i.e.,name and address on check, type of check stock,checkbook cover, promotion, etc.

Automatic reorder or reorder with change

Pay ServiceWrapper

Grouping of many payment requests into one servicetransmission

Includes control total record

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