The time it takes to clear cheques and other payments has been a longstanding gripe among personal and business banking customers. Under pressure from the Office of Fair Trading and the Treasury, the UK banking industry had pledged to speed up its clearing service from three days to same-day by 2007. This so-called 'Faster Payments' project was the biggest change in UK payments history for more than 20 years. It took three years, more than 200 people and about £300m to effect.
But by early 2007 it was clear that the deadline - November that year - was going to be missed by at least six months. KPMG was brought in to help the stakeholders - including 13 banks and building societies and Apacs, the trade association for payments - meet their revised deadline of May 2008. And this deadline, warned the OFT and Treasury, would be set in stone.
Where do you begin to sort out someone else's mess? KPMG's team of 10 consultants began by talking to all parties involved to understand why the programme had been so delayed. Then, to bring the enormous complexity of the project under control, KPMG quickly produced and issued a programme governance document which clarified all the roles, lines of reporting, parameters and deadlines that were essential for delivering the project on time.
A rigorous progress report cycle - meetings every two weeks with representatives from each of the banks, infrastructure-provider VocaLink, payments scheme operator Chaps and Apacs - helped identify and solve problems swiftly. Such a firm, centrally controlled approach was seen as tough but fair and transparent, and most people recognised that it was in everyone's best interests.
'KPMG managed to work with both the central team and the wider groups of stakeholders, and that minimised any potential friction,' explains Paul Smee, chief executive of Apacs.
Thorough testing ensured that the banks' payments systems were successfully integrated with the new Faster Payments central infrastructure, and that all parties were able to process the high volumes expected to go through the system. KPMG insisted that only those systems that had completed all the necessary tests could move forward to the next phase.
In the final days before going live, KPMG revealed a highly detailed schedule with escalation and alert procedures, incident management dress rehearsals and carefully managed conference calls between the banks and other stakeholders. Just before launch, KPMG ran a two-week trial, during which the banks, Bank of England, Chaps, Apacs and VocaLink successfully sent small amounts of money through the system, reconciling them at each end and recording the transactions in online statements. This significant exercise gave all the stakeholders confidence in the system ahead of its public launch.
On the agreed deadline day, 27 May 2008, 11 of the 13 banks met the programme requirements by receiving payments on the same day, and most were also able to send a payment on the same day. The OFT, Treasury and Bank of England are all satisfied that banks are now giving customers the speed of service they deserve. In fact, UK banks are now among the fastest in the world at transferring money between customer bank accounts.
Says Smee: 'KPMG brought a different dimension to the project delivery as well as a fresh eye - which was very important, given the history of the project.'
With the Treasury's demand for same-day cash transfers still unmet, Apacs, the trade association for payments, called in KPMG. The consultancy pulled together diverse stakeholders - 13 banks, Apacs, infrastructure provider VocaLink, scheme operator Chaps, and the Bank of England. Its structured approach brought clarity and discipline to the replanning and management of the programme. The resulting system withstood extensive tests and brought a world-class service to UK customers from the day it was launched.
- Win respect by making tough decisions - it will help overcome competitive rivalry;
- Demonstrate your independence to encourage others to share more openly;
- Give everyone a clear set of demands - it concentrates all minds wonderfully.