Pioneering SWIFT Corporate Connectivity in China
by Wang WeiXing, Product Manager and Zhou MuYang, Product Manager, Cash Management, China Merchants Bank
At China Merchants Bank (CMB) we have a long history of delivering quality and excellence to our institutional customers, including both domestic Chinese corporates and international corporations seeking to expand their activities in China. Although not the largest bank in China, we have a very strong reputation for corporate banking, supported by an extensive domestic network and a robust international network through our correspondent banking partners. We offer innovative technology, a comprehensive range of products and services, and high quality skills and expertise to help our customers grow and thrive. As part of our on-going commitment to supporting our corporate customers in their activities both within China and internationally, we were one of the first banks in China to offer SWIFT connectivity to our corporate customers through SCORE (Standardised Corporate Environment).
Rationale for introducing SWIFT connectivity for corporates
With a significant increase in the number of foreign companies doing business in China in recent years, and ambitious overseas growth plans amongst Chinese corporations, we made the decision to introduce SWIFT connectivity for our corporate customers in 2008. We recognised that this would enable them to leverage a single banking platform for all of their cash management activities worldwide, across all cash management banks, avoiding the risk of fragmented processes and information as they expanded their geographic footprint. In this respect, CMB was a pioneer of SWIFT corporate connectivity in China, as one of the first banks to offer this service.
Addressing the challenges of multiple banking relationships
Many corporations both within China and internationally have multiple banking relationships for cash management in order to support their payment and cash management requirements in each country and region. There is also frequently a strong correlation between the banks that provide financing and those that are selected to provide financing services. Although there is typically a trend amongst corporates to reduce the number of cash management banks, this may not always be easy to achieve in practice. Consequently, companies are seeking to halt the proliferation of different electronic banking systems, each of which may use different file formats and have separate integration requirements, and rationalise their bank communication infrastructure.
At a global level, the preferred way of achieving this is through a bank-neutral, non-proprietary platform through which corporates can communicate with all their cash management banks. This provides greater flexibility for corporate users as their banking needs and cash management partners change in the future. SWIFT provides industry-leading security and reliability, and is the network through which banks globally communicate amongst themselves. Therefore, extending this network to corporate market participants was a logical and desirable development. Today, there is a wide range of services that corporates can access through SWIFT, including payments, account information, trade services and most recently, electronic bank account management.
Corporate user profiles
SWIFT connectivity has grown in popularity amongst corporates worldwide, and since CMB introduced corporate connectivity through SWIFT in 2008, China is no exception. There are two groups of customers that we find are most attracted to SWIFT: Chinese companies with an international growth trajectory, and foreign multinational corporations investing in China. By implementing this, these companies enjoy a consistent experience when communicating with their banks worldwide.