SWIFT and Standardisation: An Unfolding Story
by Corinne Babok, Marketing Group Manager, Société Générale Payment Services, and Martine Boutineau, Technology and Product Research Advisor, Société Générale Payment Services
The ability for corporate customers to connect to their banks through SWIFT is one of the most significant milestones in the development of corporate-to-bank connectivity. This goes far beyond simply providing a new mechanism for corporates to connect with their banks, it also extends to the way in which information is exchanged between corporates and banks, ensuring that both parties have a common understanding of data.
In this article, we examine some of the trends and new initiatives in corporate-to-bank connectivity.
Value of standardisation
In many countries, corporate treasurers are more aware of the benefits of standardisation than their banks. Many companies today need to connect to a large number of banks through multiple systems, produce information in many different formats and import data presented in a variety of ways into their ERP and treasury management systems. A standardised approach to connectivity would mean that multiple communication channels could all be replaced by one system, which is the aim of SWIFT. In addition to a common communication channel, in an ideal world, all parties to a financial transaction would also use a standard format, bringing a number of advantages, as the case studies in this Guide illustrate:
- A reduction in the technology and business resources required to maintain connectivity with relationship banks;
- A common approach to security;
- A unique repository for User Identifiers shared by multiple systems;
- An improvement in reconciliation and account posting, as the same information is provided irrespective of the source. Therefore, consistent rules for automated reconciliation could be put in place.
Where do we stand today in terms of connectivity and format standardisation?
SWIFT connectivity for corporates - MA-CUGs and SCORE
SWIFT connectivity is gaining momentum amongst corporates, with strong year-on-year growth in the number of corporates connecting to their banks through SWIFT (see Luc Meurant’s article in this Guide). Yet the story of corporate access to SWIFT has really only just started. In many ways, the introduction of MA-CUGs (Member Administered Closed User Groups) was the first chapter. From that point, corporates have had a means to reach all their banks in a similar manner, to transmit cash management transactions, confirmations of market transactions, etc.... Added to that, FileAct capabilities have enabled them to choose freely between the benefits of a communication standard and the specific formats they might require. For instance, at Société Générale, we have made our full range of services available through FIN, complementing our offering with messages such as MT3XX, MT 210 (advice to receive).We also use FileAct coupled with a wide range of local and international formats, including Edifact and XML. However, to take advantage of these capabilities, corporates needed to have SWIFTNet services available with all their banks, and to register in as many CUGs!