Financial Edi

Financial EDI used in Malaysia

What is Financial EDI?

Financial EDI (FEDI) is the computer-to-computer exchange of payment and payment-related information between companies using a standard format. Unlike other forms of EDI, such as exchange of price quotes or purchase orders, financial EDI always involves a bank because a financial transaction (a payment) is being effected. Due to this fact, a new business opportunity now exists for banks in the cash management industry. 

Financial EDI used in the bank of Malaysia

Electronic funds transfers between banks in Malaysia are facilitated by two systems that are the RENTAS and SWIFT.

SWIFT

SWIFT is an organization co-operatively owned by many financial institutions and based in Belgium. SWIFT has many functions, in particular supplying secure, standardized interface software to financial institutions around the world.

In 1973, banks still communicated via telex — not very secure, minimum standards and not automated either. Imagine receiving 10,000 telexes a day. So, 239 banks from 15 countries formed a cooperative to “automate the telex”. They called it the Society for Worldwide Interbank Financial Telecommunication (no “s” at the end). S.W.I.F.T.

SWIFT are now one of the prime network providers for movement of cash between banks (the average daily value of SWIFT payment messages today is over $5 trillion!), and for many other types of transactions. SWIFT provide a financial EDI infrastructure, offering Electronic Funds Transfer (EFT) and Electronic Trade Confirmation (ETC), allowing the banks and other parties involved, the message partners, to have Straight Through Processing (STP). The idea is to substantially reduce the time taken to process a transaction from a few days (as is only possible conducting the transaction manually), to within a day.

How the SWIFT works?

The SWIFT network sends messages using a technology known as packet switching. Packet switching involves splitting up data into small...