The computer networks through their performances and advantages have represented and will still remain the main communication infrastructure for the informatics systems. Through their connectivity at a world level an informational medium with resources and services has been created, which permits people to get informed and work together in different domains of activity. This process has taken part in all the domains of activity, including the banking one. For the Romanian banking system, 2006 has been a year marked by the efforts of the modification and lineament of the banking legislation to the European standards from the perspective of the adherence and also by the informatization projects that have taken place throughout the banking system level.the informatization, banking system, EU integration

Vatuiu, Teodora

English

Research Papers in Economics

  1 
Accomplishments and perspectives  
of the informatization of the Romanian banking system 
in the context of Romania’s integration in the EU 
 
VĂTUIU TEODORA, LECTOR UVIV, DR.  
Universitatea Constantin Brâncuşi, Tg-Jiu 
LUNGU ION, PROF. UNIV. DR. 
Academia de Studii Economice, Bucuresti 
 
The computer networks through their performances and advantages have represented and will still 
remain the main communication infrastructure for the informatics systems. Through their connectivity at a 
world level an informational medium with resources and services has been created, which permits people to 
get informed and work together in different domains of activity.  This process has taken part in all the 
domains of activity, including the banking one. For the Romanian banking system, 2006 has been a year 
marked by the efforts of the modification and lineament of the banking legislation to the European standards 
from  the  perspective  of  the  adherence  and  also  by  the  informatization  projects  that  have  taken  place 
throughout the banking system level. 
 
1. General considerations 
 
The continuous technologic development and the competition between the existing 
banking  organizations  and  the  new  set  up  ones  have  influenced  the  diversification  of 
banking products and services, which are now available through electronic way. All this 
forms  the  so-called  electronic  banking  or  e-banking.  The  fast  development  of  the  e-
banking  qualities  has  both  benefits  and  risks  due  to  the  security  of  the  data  transfer 
networks. But banking risks exist through the definition of the institution itself or, through 
the nature of its specific activities, so that it is important that the risk due to e-banking is 
known, controlled and well managed, in the purpose of reducing it.   
 
2.  Electronic payment Systems  
 
The developments in informatics and communication have allowed the appearance 
of electronic payment systems. The new technology was used firstly in the domain of 
interbanking funds transfer, then in electronic commerce transactions and in the domain of 
services through credit card payment, Internet and other technical payment services. These 
technical systems have allowed distance payment. Concerning the payment system, the 
pyramid scheme and the role of the central bank remain the same, but the circuits of the 
system  suffer  important  changes.  The  national  circuit  connects  and  alginates  to  the 
international  one  under  every  aspect:  operational,  responsibilities,  surveillance,  and 
indemnification, juridical.      
 
3.  Reducing  risks  concerning  IT  projects  accomplished  in  financial 
institutions   2 
 
Although for the financial companies risk becomes an element that needs being 
kept under control in any circumstances, in the case of implementing some IT projects, the 
risk management becomes a key of success.  
Risk can come from the direction of businesses, people, or  IT elements. While 
some risk elements are obvious, others are more difficult to identify. Risk implies choices; 
assuming risks represents, in many cases, significant opportunities for organizations. 
Risks can and are, in general, more significant in the last phases of a project. Still, 
the  management  of  risk,  the  process  of  identifying  risks,  of  analyzing  and  answering 
factors of stress, must begin even before the launching of a big IT project. 
Organizations must admit that the management of risk is an iterative process that is 
why regular evaluations of the risk are needed. IDC considers that the causes of failing IT 
projects are not immediately obvious in most cases. 
Still, there is no need to identify and rank risks if the organization doesn’t manage 
to initiate a series of strategies for reducing risks. There are numerous strategies that can be 
applied, each risk category needing different strategies.  
Organizations  should  take  a  series  of  measures  at  an  organization  level  for 
improving  the  capacity  of  dealing  with  risk.  Through  others,  IDC  recommends  that 
organizations should develop consciousness for management of risk between employees, 
examine  and  learn  from  past  mistakes  and  make  sure  that  role  and  responsibilities 
concerning  dealing  with  risk  are  well  defined.  IDC  analysts  show,  also,  that  a  tight 
relationship  with  providers  brings  value  to  the  projects  and  can  minimize  risks 
significantly.    
 
 
4. Interoperability of the applications and Web services market 
 
Interoperability  of  the  applications  is  a  must  for  the  implemented  solutions  in 
financial  institutions,  being  necessary  for  assuring  the  connectivity  of  the  existing 
applications at the level of a financial institution and for interoperability with different 
systems of the partners. 
According to IDC estimations the global market of Web services and of solutions 
dedicated  to  interoperability  of  applications  has  been  appreciated  at  approximately  3,4 
billion dollars. For the coming years an important evolution in this sector is estimated, 
Web services covering a higher request of integrating informatics systems. In this way, in 
the year 2008 the market of solutions based on Web services is estimated at approximately 
11 billion dollars.   
IDC predicts a consolidation of the market of solutions based on Web Services for 
the period 2004-2008. Defining some evolved standards, as well as accepting them by an 
even bigger number of companies will contribute to adopting this technology on a higher 
scale. Also, Gartner, in a recent study, has stated that architecture oriented on services will 
gain a special importance in the IT&C domain.  
Taking in account the transfer on Web of relevant information for business, it is 
necessity to use methods which can permit the implementation of a good security service 
and can assure data confidentiality. For these reasons, IDC and Gartner consider that the 
accomplishment of comprehensive standards in the domain of Web services, now available 
in the testing phase, will permit encoding data transfers and usage of digital signatures. For 
the SOAP protocol extensions for attaching identification elements will be available, being 
assured an efficient control of the identity of users which make the connections. Standards 
for Web services are available for public testing.     3 
 An  example  of  accomplishing  the  interoperability  of  informatics  systems  at  a 
national level is the electronic system of payment designed by BNR. The modernization 
process of the national system of payment started in 1995 with the consolidation of BNR’s 
capacity of implementing monetary policy, the modernization of the system of payment on 
paper and the approach to a society prevailing without cash.    
Through  the  second  part  of  the  process,  is  followed  the  facility  of  economy’s 
development through the growth of security and efficiency of the system of interbanking 
payment, passing to a society prevailing without cash and the establishment of a legal basis 
well-underlined  for the payment and discounting system. The project is operable at the 
moment,  being  assured  the  interoperability  at  the  level  of  informatics  systems  from 
different banking institutions.  
 
5. Accomplishments and perspectives 
 
Beginning with January 2007, the new System for Reporting Credit Institutions at 
National Bank of Romania SIRBNR was set up. This way, during a project that was started 
2  years  ago,  there  has  been  created  a  system  according  to  reporting  requests  at  the 
European Central Bank, requests from data and information beneficiaries from BNR and 
requests  from  reporting  institutions,  which  will  have  direct  access  to  primary  reported 
indicators, but also to centralized situations and aggregated at the banking system’s level.    
At present, through SIRBNR is transmitted a number of 8 reports, the other reports 
being  introduced  gradually  into  the  system,  according  to  a  plan  settled  by  the  Mixed 
Methodological  Committee  BNR-ARB.  SIRBNR  will  function  for  a  period  of  time 
together with the old reporting system.     
Apart from the reports already planned to come into function through SIRBNR, any 
new request concerning introducing some indicators or new reports will be done only with 
the notice of the Mixed Methodological Committee, after a preliminary analyze of the 
requests, for avoiding the appearance of redundancy and parallelism. 
At present, the implications of the implementation of Basel II Agreement of capital 
and of the application in perspective of international standards of financial reporting IFRS 
on the SIRBNR system, through adopting the reporting formats COREP and FINREP are 
analyzed.     
During the year 2006, efforts for eliminating the last “on paper” components of the 
SEP have continued. 
During last year, a study of quantity impact for determining the effect which the 
regulations that follow will have upon the regulated level of the necessity of proper funds 
of credit institutions has been done.  
The  application  of  International  Financial  Reporting  Standards  (IFRS),  initially 
announced  for  2006,  will  be  introduced,  according  to  the  decision  of  Public  Finances 
Minister and BNR, beginning with January 1 2008. It must be stressed that the application 
of IFRS produces changes in all sectors of activity of credit institutions, with implications 
upon  informatics  systems  in  what  concerns  processing  transactions,  accountability  and 
reports’ system. The application of IFRS implies a detailed process of training, process 
which credit institutions have already run. The banking system is ready to report according 
to  these  standards,  being  necessary  though  that  the  other  economic  agents  to  run  this 
training process.   
An older desideratum of banking community is the accomplishment of an on-line 
reporting system by the National Office of Preventing and Fighting Money Washing and 
eliminating daily reports on a magnetic support.    4 
This  goal  was  included  in  a  larger  project  in  2005,  of  creating  informatics 
infrastructure for collecting data from financial institutions and for dividing data between 
implied institutions. The solution promoted by banks for the accomplishment of an on-line 
reporting system was that of connecting by the National Office of Preventing and Fighting 
Money Washing to the interbanking network. It is expected that this system will become 
operational in the first half of this year, as a result of signing the protocol concerning the 
connection to the interbanking network by the by the National Office of Preventing and 
Fighting Money Washing and BNR. 
SWIFT has started updating the infrastructure according to the second phase of 
migration to SWIFTNet, which will take place during 2007-2008. This consists in updating 
security mechanisms and instruments of administrating relations with corresponding banks 
for the SWIFTNet platform. This way, a unique model of security will be introduced for an 
access to all services of SWIFTNet based on public key infrastructure (PKI), assuring a 
better control of traffic and mechanisms against unsolicited traffic. Key elements of the 
migration are PKI, HSM and RMA. Training has started last year, there is a limit term of 
31 October 2007 for Romania.    
 
 
Conclusions 
 
SEP’s  coming  into  function  during  year  2005,  has  lead  to  the  acceleration  of 
settlement of accounts and to the reduction of costs for funds transfer, has created the basis 
for diversification and improvement of payment services, has created the possibility of 
integrated processing of payments coming from initiator to a beneficiary and has generated 
a process of reform of payment systems of credit institutions, through the automation of 
payment processing. For this automation, the banking community has chosen a solution in 
two  steps.  In  the  first  part,  the  physic  exchange of  debit  payment  instruments  will  be 
centralized at TransFonD, and settlement of accounts will be accomplished through SENT 
system,  using  the  mechanism  of  direct  interbanking  debit  and  the  formats  of  XML 
messages adapted for each payment instrument.    
This solution was already accepted by the National Bank, which has elaborated a 
regulation,  analyzed  by  the  banking  community.  The  project  has  as  objectives  the 
processing  of  all  debit  payment  instruments  with  a  high  automation  degree,  the 
minimization  of  manufactured  processing  volume  and  the  reduction  of  errors  level, 
assurance of a high security level, through the use of digital signature and not least, the 
reduction of processing costs for debit instruments for banks and TransFonD. 
For the second stage, the banking community will decide upon modifications of 
legislations and upon necessary investments so that the circuit and processing of debit 
instruments are made through digital images exchange. 
Apart  from  the  project  concerning  the  automatic  processing  of  debit  payment 
instruments, foe the following period there are other SEP developments taken into account, 
as: the use of SWIFTNet services and network for SENT system, the implementation of a 
new help-desk application, the development of secondary market, through the creation of 
an electronic transfer platform, etc. 
The  use  of  SWIFTNet  services  and  network  for  SENT  system  would  permit 
recycling of the investment in SWIFTNet infrastructure through exchange of payment files 
of  low  value  and  can  represent  a  substantial  reduction  of  transfer  costs  for  credit 
institutions,  generated  by  the  growth  of  the  volume  of  messages  transmitted  through 
SWIFTNet,  but  also  by  the  reduction  of  costs  with  the  operation  and  upkeep  of  the 
infrastructure.     5 
The year 2006 has also meant the set up of the project concerning the application of 
The New Agreement of Capital - Basel II, which sets the basis of new principles for risk 
management  and  causes  the  reconsideration  of  the  whole  philosophy  concerning  the 
capitalization  of  banks.  During  this  project  have  been  defined  the  national  options 
concerning credit risks, for the standard approach and for that based on internal models of 
rating and legislation has been harmonized with the European one.  
The  projects  from  the  banking  system  will  continue  with  a  series  of  aspects 
concerning the modernization of the Romanian banking system run with the support of the 
Convergence  program,  through  the  Special  Projects  Initiative  –  SPI,  and  also  with  a 
presentation of the Single Euro Payments Area – SEPA project. 
  
Bibliography 
 
Ionela Costică, Sorin Lazarescu, 2004- Politici si tehnici bancare, Editura ASE, Bucuresti,  
 
Nicolae  Dardac,  Teodora  Barbu,  2005-  Moneda,  banci  si  politici  monetare,  Editura 
Didactica si Pedagogica, Bucuresti,  
 
Mugur  Isărescu  1996-  Sistemul  bancar  în  România  ;  Evoluţii  concrete  şi  perspective. 
Reforma  sistemului  bancar  şi  integrarea  europeană.  Banca  Naţională  a  României, 
Bucureşti,  
 
Rotaru,  C.,  2000-  Sistemul  bancar  românesc  şi  integrarea  europeană,  Editura  Expert, 
Bucureşti,  
 
Rotaru, C, 2001 - Managementul performanţei bancare, Editura Expert, Bucureşti,  
 
Stoica, M., 2002- Gestiune bancară, Editura Lumina Lex, Bucureşti,  
 
* * * Legea nr.58/1998 privind activitatea bancară, republicată, M.Of. nr.78/24.01.2005 
 

Accomplishments and perspectives of the informatization of the Romanian banking system in the context of Romania’s integration in the EU

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