Do you get direct deposit at work? Do you own mutual funds in an investment account? Have you purchased a stock lately? Is your home or car insured? If so, then chances are high that you were fewer than six degrees of separation from B2B e-Commerce. Review the questions below about your personal finances. If you answered “Yes” to any of the questions, then you can read how B2B e-Commerce may have impacted your life.
Does your employer use direct deposit for your paychecks?
Most businesses use direct deposit for employee payroll disbursements due to the extensive savings that can be generated. Direct deposit uses Electronic Funds Transfer (EFT) to deposit money from your employer’s bank account into your own checking or savings account. The cost of printing, mailing and processing a check is typically 10 times more expensive than EFT. The direct deposit and electronic funds transfer processes are enabled by B2B integration technologies. Some employers manage their own payroll while others outsource this business process to a specialized firm. A few days prior to the end of each pay period, each employer determines their payroll based upon the hours worked, annual salary and benefit elections for each employee. Employers then send a file containing the results of payroll processing to its bank in a format such as EDI or NACHA. The payroll file contains the amounts that should be credited to each employee’s account as well as the routing and bank account numbers for each worker. The bank then forwards the EFT request onto Automated Clearing House (ACH), which transfers the funds electronically.
Do you own a mutual fund?
Mutual funds retain the services of professional money managers to monitor market trends. The fund managers make decisions about which securities to buy and sell based upon their opinion of a stock’s future potential. But the actual holding of the securities is performed by a third-party firm, typically a custodial bank. The custodian acts provides safekeeping and recordkeeping of the fund’s assets to prevent potential fraud by the fund manager. The fund manager’s records can quickly become out of sync with the custodian’s actual holdings, requiring the need for a daily reconciliation. As a result, mutual funds receive daily reporting from their custodians on exactly which securities they own. This reporting between custodians and investment managers is transmitted using B2B integration technologies such as SWIFT. Without an automated exchange of data, a very laborious process would be required to determine the holdings of each investment manager. B2B technologies enable the mutual fund manager to determine the value of each individual share in the fund. These valuations are the basis for the price you see listed next to a mutual fund in the newspaper and in the monthly statement you receive from the fund.
Have you made a stock trade lately?
To perform a stock trade you may have used an online trading service or you may have called your broker. In either case, your stock trade instructions typically are converted into an order message based upon a B2B integration standard called FIX. For stocks traded on exchanges such as NYSE or NASDAQ the FIX messages are then relayed directly to the market for execution. For other stocks which trade Over-the-Counter (OTC), the FIX message might be routed to another broker or to a different electronic marketplace for execution. Following a trade execution there is an additional series of B2B messages, typically in FIX format, exchanged between the brokerage firms involved and other parties such as the clearing systems and the custodial banks. These post-trade messages are used to confirm that the trade occurred and affirm that the trade is correct. Once all parties have agreed upon the trade, clearing and settlement occurs. Stock ownership records are updated and the actual funds are transferred between buyers and sellers.
Did you purchase auto, home or property insurance through an agent?
Online purchasing of auto, home and property policies over the web has become more common in the property and casualty insurance market. However, many consumers still purchase policies through specialized insurance sales representatives called agents. Agents typically are not actually employees of the companies that underwrite your insurance policy. Instead, most agents are independent entities that sell exclusively on behalf of one insurer or sell policies for multiple carriers. Each insurance company might have thousands of agents nationwide selling and servicing their policyholders. Consequently, there is a need to automate, high volume transactions between the agent and the insurance company. B2B integration technologies such as ACORD and EDI are used to digitize these agent-to-carrier transactions. When you first apply for a new policy, the agent gathers your personal information, policy preferences and property details, which it transmits to the insurance company using B2B. If you are involved in a car accident then your agent will use B2B integration technology to submit the claim to the insurance company. If your car requires repair or you require medical services, then the insurance company will use B2B integration technologies to manage the auto repair companies and health care providers which may be used to resolve the claim.
