It is Thursday, 30 March 2023, and project staff from financial institutions and employees of Gravning are toasting a successful Target2/Target2Securities migration in their regular exchange round. All participants in the T2K exchange initiated by Gravning agreed: the migration weekend and the Go Live with all its challenges were successful!
It has now been a few weeks since one of the largest payment traffic projects for banks and savings banks was completed with its culmination, the migration to the ECB’s new T2 platform. The years of project work on the part of the central banks and the participating institutions had its work cut out. Postponements due to the Corona pandemic, technical challenges and resource bottlenecks accompanied the institutions through this mammoth project. This is a good reason to take a brief look back at this intensive period and to highlight the challenges as well as the opportunities
Gravning was allowed to accompany several institutes in different phases of the migration. From the preliminary study to the rough/technical conception to the implementation and go live. Our regular T2K call offered a platform for exchange for institutes from all over Germany. The initiated exchange round was a very welcome and sought-after exchange platform.
Because, if we are all honest, alone everyone sometimes feels overwhelmed by such big issues. But in a team and in direct exchange, you get concrete, immediate feedback and also security for your work.
The Target2 platform
But now to Target2 itself: The advantages of the new platform cannot be denied.
- a news format of the latest standard,
- common components for different T2 services,
- the separation of payment transactions from monetary policy operations; and
- uniform liquidity management mean a simplification of applications and processes in many places.
What does the AI say about T2
By the way, this is also confirmed by Chat GPT, which presents the following advantages when asked. We have only taken keywords from the comprehensive T2 report:
Advantages of T2 migration:
- Increasing efficiency: uniform platform
- Seamless processing of payments and securities transactions within the European Economic Area (EEA)
- Cost reduction: through standardisation of processes and systems
- Risk reduction
- Increased liquidity: better integration into global payment traffic
Sometimes, however, these advantages are only apparent at second glance or with some distance to the project events. Especially since Chat GPT uses data from 2021 and does not include the current developments around the successful migration.
What WE have learned
In order to reap the benefits, the banks and their service providers had to put a lot of resources into the project work. In addition, different organisational units within the bank were affected by the T2 migration. In addition, the project had a very
high risk component
because, in the event of non-participation or incorrect implementation, the banks would be largely excluded from payment transactions and monetary policy operations, which assured the project the necessary attention also from management.
Another risk factor and a major unknown was the platform itself. In discussions with participating institutions and the Bundesbank, one did not get the impression that all participants attested to sufficient performance and stability of the platform at all times. The performance that the platform delivered during the test activities was insufficient for a long time The authentication app (GoSign) was a headache for the bank IT staff (installation difficulties and security concerns) and in the end it was just a case of “fingers crossed” and hoping that the central bankers had also done their homework properly.
So that’s the “hard” criteria against which a project can be measured. What we found very positive was the great networking and mutual support within the banking community. Questions about the specifications were shared with everyone, tips and tricks within the application were discussed and if you simply wanted to vent about the slow progress, you always found at least one open ear. I would also like to give special praise to the Deutsche Bundesbank, which provided really great support despite frequent headwinds.
The German banks have once again shown that they are wonderfully networked and can concentrate on major projects. We at Gravning are proud to be able to contribute to the Target2 migration as well.