Main role of Colonial bank


Little brief on Colonial Bank

The main role of Colonial Bank is to enable businesses or individuals who need money, to meet and do business with people who have money.

It is a subsidiary of Bank South Pacific and the bank is in operation for 130 years in Fiji.

It operates in four business streams, and to broadly classify it, these are:

  • Banking
  • Life Insurance
  • Health Insurance
  • Investments

Financial Intermediation

The payment system is the backbone of a country's monetary and financial system and it plays a critical role in a country's economic development. It is through the payments system that money goes around. It allows money to be transferred between savers and lenders, buyers and sellers or from one point to another. By reforming and developing the payments system, it is possible to reduce the overall transaction costs and improve the efficiency of financial transactions in an economy. And these efficiency, convenience and security have favourable flow - on effects to the whole economy.

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The central bank inevitably plays a key role in this payment process. This stems from their primary functions of providing liquidity to commercial banks and clearing payments between banks. This clearing service in Fiji has evolved over the years. Before the system was introduced, the clearing was done in central bank where all commercial banks would come in once a day to clear their payments under their supervision. Then commercial banks themselves took over the entire process with approved rules and guidelines. And now, the banks have shifted their focus on real time payment system.

Like other banks, Colonial Bank has modern banking technologies like Automatic Teller Machine (ATMs), Credit and Debit Cards, EFTPOS and online and internet banking.

The complexities in the financial intermediation are increasing with the development of modern products to better suit the evolving demands of customers. Inevitably, it is the central bank that takes a lead role in the modernization of the payments system because of its importance to the economy and the entire financial system. At the same time, such a system facilitates our work as custodian of financial stability.

Payment mode is wide ranging. Cash is the common mode of payment. However, the inconvenience of carrying cash and increasing security threats has encouraged the move towards other payment media. But paper based instruments like cheques and drafts are not so convenient. In modern times, cards and electronic payments are regarded as the most convenient and safer instruments, although they are too are subject to certain risks.

The manual payment system that Colonial and Reserve bank used did work adequately, but it also had some shortcomings. The major one was that it takes too long to clear cheques and this had implications on cash flows and financial performances. Second, carrying cash has its risks. Thirdly, the cost of paper based instruments like cheques is relatively high in Fiji adding to the cost of doing business.


Colonial Bank has many functional departments such as Human Resource Department, Marketing Department, XXXXXXXXX, YYYYYYYYYYYY, ZZZZZZZZZZ.....and Treasury Department.

Our project focuses on Treasury Department to find out how Web 2.0 can improve the current system to allow better collaboration and communication so that more output such as productivity and shareholder wealth can be improved.

The main role of Treasury Department is to ......................................................

Information System in Treasury Department

The processing of data in the Treasury Department is fully automated with the use of payment processing software called in FijiClear.


FijiClear is the name of Fiji's Real Time Gross Settlement (RTGS) system. It enables payments to be made electronically to/from within the country from one commercial bank to the other. Transfers are denominated in Local Currency only (FJD).

FijiClear enables the processing of payments to be done as and when they happen - hence the term "real time". It is an electronic way of making payments within a country and getting immediate settlement of those payments.

In simple terms it means that instead of waiting for several days for funds to be available for use, the receiving party or beneficiary will have funds in their account within one business day or in some cases almost instantaneously. Similarly, the party making the payment is assured of safe and immediate delivery of those funds.

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The key elements of FijiClear are speed, certainty, reliability, safety and security, convenience and cost.

The system is for the transfer and settlement of Fiji dollar denominated funds only. It enables payments instructions to be processed and settled individually and continuously throughout the working day. All settled transactions are considered as final and irrevocable. Thus the receiver will be able to use the funds immediately without being exposed to the risk of the funds not being settled. This is in contrast to the previous manual system which operated on a deferred net settlement system, where payments are processed throughout the day but the actual entries are only affected at the end of the day.

Financial Innovation

FijiClear is another instrument available in Fiji to customers through which they can make payments to one another.

The global trend is toward electronic real time payment system. World wide the financial landscape has changed driven by a number of factors including growth in financial markets, cross border flows, technological advancement in communication and information technology, changing macroeconomic factors, and globalization of markets and business.

Benefits of FijiClear

There are a number of benefits of using FijiClear.

To the Payee i.e. the person receiving money, the benefits include:

  • Funds are credited into the account straight away. So there is no waiting of 3 - 7 days for funds to be cleared when using a cheque;
  • There is time savings as one does not have to physically visit a bank to deposit cheque;
  • There is no uncertainty of any dishonoured cheques with the associated charges and loss of income;
  • Immediate crediting of account means that any overdraft limit is reduced and hence lower interest charges;
  • Immediate crediting of funds will help in cash flow; and
  • Reduced overhead or staff cost as there is less paper work.
  • There are also benefits to the Payer i.e. those making the payments:

  • There is less risk of transporting cheques;
  • There is savings in time and charges; and
  • There is better business relationship with creditors.


Reserve Bank of Fiji has established a secondary site which is on line which means that if necessary they can operate the system from this alternative site. The site also acts as data backup. In addition, the communication lines are dedicated to the system and are secure. There is a dedicated team in the Reserve Bank monitoring and overseeing the transactions during the day. This team provides adequate liquidity during the day to allow the system to work smoothly. IT backup support and service agreement is in place.