Bankenes Batalingssentral a/S

Established as a affiliate of the Norwegian commercial and saving banks, the primary purposes of BBS are 1) to act as a clearing house of Bank Giro system and 2) to implement R&D to provide the banks with competitive future payment system. Underlying intention is to compete with Post Giro system and to obtain the market share for banks as a whole. Giro market has a scale of economy. The bigger the share is, the bigger the profit will be. Giro is widely used in Norway. Other than its convenience, the following reasons contributed its diffusion.

• Giro is backed up with the real funds.

• Not only the money but also the information payers can send to payees. This is particularly important to the business payees; one of the most difficult administrative chores is to identify the money they actually received. Companies can receive giros with added information such as customer IDs and billing numbers. *1

*1 Depending of the forms of Giros the additional data change; Generic green paper Giro only accommodates one optional field (“Beloper gjelder”) and company specific giros can have more data.

Problems

Bank Giro system performed well during the 70s However, Bank Giro and BBS face the some crucial problems now. They are:

• Recent technological developments have broadened the scope and type of payment services. As mentioned in the case, business-to-individual payment has already gone mostly electronic and business-to-business is also in the process. BBS, established as a form based manual service clearing house, consequently faces to an identity crisis.

• Post Giro is increasing its market share. Taking a full advantage of tits position of quasi government agency, Post Giro can enjoy its monopoly on certain payments made by government, free charges, postal fee exemption, convenience of the locations.

• BBS was established to delegate the interest of the banks when Norwegian banks highly cooperated. After the regulatory changes in 1983, however, the banks...