Taking the SWIFT Route to Treasury Automation
By Eleanor Hill, Editor
One of Australia’s largest listed companies, Wesfarmers was looking for a way to automate its confirmations and payments, notably those relating to foreign exchange (FX) deals. Seeking a solution that would integrate seamlessly with its treasury management system (TMS), Wesfarmers’ treasury team opted for SWIFT Alliance Lite2 – garnering significant cost and time efficiencies in the process.
Headquartered in Perth, Wesfarmers’ diverse business operations cover home improvement and outdoor living; apparel and general merchandise; office supplies; and an industrials division with businesses in chemicals, energy and fertilisers, as well as industrial and safety products.
Although each of these businesses are run autonomously, the majority of the group’s treasury operations are centralised in Australia. As Peter Dagnia, Senior Finance Manager, Group Treasury, Wesfarmers, explains: “All the debt is raised centrally and we do FX dealing on behalf of all of our businesses on a back-to-back basis. We’re also the banker for the group. So, all of our physical bank accounts are in the name of Wesfarmers Limited and each of the businesses has a bank account with us in their name.”
To make sure that group treasury was operating as efficiently as possible, Dagnia and his team initiated an automation programme, starting in 2009. “One of the areas we were most keen to automate was FX, since we have a significant volume of transactions across the group – and the value of these deals is also high, with some deals running to tens of millions of dollars.” Before treasury could get to that point, however, it was necessary to put in place systems that would establish the correct processes, workflows and controls to enable automation.
“We embarked on a phased automation journey, with the first step being to roll out a new TMS, namely City Financials’ eTC Treasury Workstation. With eTC in place, we then integrated 360T to enable more seamless web-based FX trading. This means that we no longer had to manually enter FX deals into eTC. We also plugged market data feeds from Reuters into the set-up, as we wanted the best market data available. With the fundamentals covered, it was then time to look at automating the FX-related confirmations and payments.”
Dagnia was exploring options in this area when he met a local SWIFT consultant at an industry conference – and was introduced to the concept of Alliance Lite2. This cloud-based solution offers a direct SWIFT connection to counterparties and is highly scalable, so there are no barriers to entry from a volume or value perspective.
Hosted and operated by SWIFT, Alliance Lite2 permits manual and automated message exchange with additional options such as back-office integration, so it was a good fit for Wesfarmers. Dagnia continues: “I was very interested to learn about Alliance Lite2 and once SWIFT visited the management team to explain how it could work and the benefits we could reap, it became very clear that the solution would offer some enormous process efficiencies – with minimal technical or operational disruption.”
Alliance Lite2 implementation
To get started with Alliance Lite2, all that’s required is a standard PC or laptop with Internet Explorer browser, a telecoms connection to SWIFT, via the internet or SWIFT Alliance Connect, and the secure Alliance Lite2 USB token provided by SWIFT. Automated message processing requires a further Windows server running in the background.
The whole implementation process is fully customised and managed by SWIFT’s Consulting Services team, ensuring smooth on-boarding from start to finish.
Goodbye manual processes
Since treasury is largely centralised, Wesfarmers’ opted to roll out SWIFT Alliance Lite2 for group treasury, but not for the operating units. “One of the great benefits of implementing a cloud solution is that it’s minimally invasive and always kept up-to-date. So, the technical side of the implementation was very straightforward, especially since eTC is configured to handle SWIFT, with matching software built into it.”
Given that automating the foreign exchange dealing workflow was the key priority, MT300 confirmation matching was the first step in the Alliance Lite2 implementation. “That was relatively easy to achieve and means that as soon as we perform a deal in 360T, the MT300 is waiting for us in eTC. We then went on to set up automated MT101s, so that payments relating to FX deals are sent without authorisation, which is where the biggest process efficiencies have been reaped.”