As the trend towards automated processing increases, and as the demands of the financial business become more complex, Oracle FLEXCUBE, a sophisticated package, breaks down these complexities by its quick, easy-to-use features, which are essential to successful financial management.
The Funds Transfer (FT) Module that constitutes a part of Oracle FLEXCUBE is a front office system that handles the processing of the transfer of funds (local and foreign) between Financial Institutions. Financial institutions or banks can initiate these transfers for themselves, or on behalf of their customers.
The FT Module is a comprehensive transaction handling and management system, which integrates with the overall system for settlement of payments, charges, commissions and MIS. The system handles all the necessary activities during the life of a contract, once it is booked. All the relevant account balances will be updated when Transfers are processed.
Exchange rate conversions are automatically effected in cases of Cross-currency Transfers based on the rate and method of conversion that you define. The essence of a funds transfer (i.e., transfer of money and the generation of messages) is handled comprehensively by this module.
With regard to funds transfers, you will encounter some basic terms frequently, which are listed below:
| Field/ Term | Explanation | Applicability | SWIFT Equivalent | ||||
|---|---|---|---|---|---|---|---|
| Ordering Customer | The initiator of the transfer instruction also referred to as the Remitter. The remitter is the source of funds in a payment order | Only in the case of customer transfers (refer section ‘Classifying Funds Transfers’, below) | Field 50 | ||||
| Ultimate Beneficiary | The Ultimate recipient of funds as a result of the funds transfer (also called beneficiary customer). | Only in the case of customer transfers | Field 59 | ||||
| Ordering Institution | The financial institution that originates a bank transfer / customer transfer | Field 52 | |||||
| Account with Institution | A financial Institution that services the account for the beneficiary customer beneficiary institution | Customer and Bank Transfers | Field 57 | ||||
| Credit Advice | An advice given by the Account With Institution indicating credit to the account of the beneficiary | Any transfer | MT 910 | ||||
| Cover Payment | The reimbursement of an intermediary through one’s correspondent | Customer and Bank Transfers | MT202 Cover Message | ||||
| Sender | Sender of a Payment Message (Not necessarily the Ordering Institution) | Any transfer | |||||
| Receiver | Receiver of a Payment Message (Not necessarily the Beneficiary Institution) | Any transfer |
A Funds Transfer is a sequence of events that results in the movement of funds from the remitter to the beneficiary. It is also defined as the remittance of funds from one party to itself or to another party through the banking system. It is an essential support function for other financial products such as loan repayment, settlement of trade bills etc., apart from being an important stand-alone function in a typical bank.
Classifying Funds Transfers
Funds Transfers can be classified as Incoming, Outgoing or Internal depending on the direction of flow of funds in the transfer. Incoming or Outgoing transfers are indicative of whether funds are coming in or going out of the bank. Internal transfers indicate funds being transferred within the bank itself (between two accounts within the Bank). No other financial institution is involved in such transfers. Based on the parties involved in the transfer, Funds Transfers can also be classified as customer transfer, bank transfer and bank transfer for own account.
Customer Transfer: A customer transfer is a transfer in which either the ordering customer or the beneficiary customer, or both, are non-financial institutions, i.e. at least one party in the chain is not a financial institution.
Bank Transfer: A bank transfer refers to the transfer of funds between the ordering institution and beneficiary institution. Here the originator and beneficiary and all intermediary parties are financial institutions.
Bank Transfer for Own Account: A transfer initiated by a bank to transfer funds from one of its accounts (held in one Bank) to another account (held in another Bank).
Messaging which constitutes an important ingredient of a Funds Transfer is supported. In Oracle FLEXCUBE, FTs can be executed using any of the following media types:
The following SWIFT messages are supported for FTs:
| Type of transfer | Message type | ||
|---|---|---|---|
| Customer Transfer | MT 103 and 103+ | ||
| Customer Transfer with Cover | MT103 and 103+ and MT202 | ||
| Bank Transfer | MT202 and MT205 | ||
| Bank Transfer with cover | MT 202 and MT205 | ||
| Bank Transfer for Own Account | MT200 and MT210 | ||
| Notice to Receive | MT 210 | ||
| Incoming Bank Transfer with Notice to Receive | MT 202 and MT 210 | ||
| Confirmation of Debit | MT 900 | ||
| Confirmation of Credit | MT 910 | ||
| Multiple Customer Credit Transfers | MT102 and 102+ | ||
| Request for Transfer | MT101 | ||
| Multiple Bank Transfers | MT203 | ||
| Multiple Bank Transfers for Own Account | MT201 |