SWIFT Comes of Age: changing corporate experiences
by Jonathan Ashton, Head of Channel Management & Integration Services, Global Transaction Banking, Deutsche Bank
Deutsche Bank has been one of the pioneers of SWIFT connectivity for corporates and has successfully worked with a wide range of corporate treasuries, payment factories and shared service centres to communicate financial information through SWIFT. In this article, we look at where SWIFT for corporates is today, and how this could evolve in the future.
The first corporates connecting to SWIFT, which were frequently amongst the largest, most diverse and complex organisations in the world, inevitably experienced some challenges, as connectivity to the network formerly reserved for the banking community was a new phenomenon not only for the corporates themselves, but also for their banking partners. Fundamentally, for both new and well-established corporate users alike, SWIFT is delivering on, and exceeding corporates’ expectations, and enabling them to standardise their bank communications infrastructure and achieve a higher degree of straight-through processing.
Furthermore, with far greater experience across the market both of the implementation process, and how to leverage the opportunities that SWIFT presents, corporates embarking on a SWIFT implementation today can expect a much easier experience than the early pioneers. There are various reasons for this. Firstly, the major banks in particular have become far better equipped to support their corporate clients through the SWIFT implementation process. Secondly, with the maturity of service bureaus and member/concentrators, the process of connecting to SWIFT is becoming increasingly structured and convenient. Thirdly, as the needs of corporate users become better defined, the range of services is increasing, such as the evolution of electronic bank account management (EBAM) leading to a richer experience.
Inevitably, a business-critical project requires detailed planning and substantial effort in testing, but a factor which characterises corporate SWIFT projects today is the high level of satisfaction in the final solution. Like the banks and financial institutions that have communicated using SWIFT for many years, corporates are now finding that SWIFT becomes a reliable and discreet element in their overall systems environment on which they have to focus very little, enabling treasury and finance professionals to concentrate on the needs of the business rather than the technical infrastructure that underpins it.
There are inevitably some frustrations still outstanding for some corporate users, particularly those that are multi-banked. A good example relates to the legal documentation which each bank requires their customers to complete before communicating via SWIFT. For some companies, this has been time-consuming and created project delays. Many banks are now adopting as pragmatic an approach as possible, and keep the scale and complexity of legal agreements to a minimum. Although it is unrealistic to think that a single agreement covering multiple banks is likely, the documentation overhead is not too onerous as there is a single agreement for SWIFT, and individual agreements with partner banks to cover specific products and services.
Another challenge, although this is likely to be relatively short-term, is that it is not always obvious who to contact about SWIFT connectivity support issues. If connecting through a banking system, it is usually easy enough to know who to contact and the service is usually quite integrated with the overall banking service; when connecting through SWIFT, it may not be obvious whether to contact the bank, the service bureau or SWIFT. However, this is not posing any real difficulties, and companies are quickly becoming accustomed to a slightly different way of working.
Expanding the appeal of SWIFT
In the early years of SWIFT connectivity for corporates, the companies initially attracted to the service were amongst the world’s largest, with the most complex connectivity needs. Over time, there has been developing interest amongst a wider spectrum of firms as connectivity becomes easier. There has been substantial progress in smoothing the integration between ERP systems and treasury management systems (TMS) which is making it easier to embed SWIFT into a company’s technology infrastructure. In addition, the launch of Alliance Lite towards the end of 2008 has the potential to expand the appeal of SWIFT connectivity to smaller companies or those with more straightforward connectivity needs. Alliance Lite provides a packaged solution that enables corporates to link with their banks through SWIFT directly without routing information to or from internal systems and within a simple legal framework. Alliance Lite has additional potential too. As the solution matures, it is likely that it will become more closely integrated into banks’ connectivity offerings and therefore become an integral part of banks’ connectivity portfolios.
To date, as a young solution, the take-up is still relatively limited, but it is likely to grow in countries such as the UK where no existing multi-bank communication channels exist, so Alliance Lite is likely to grow in appeal. Similarly, Asia may lend itself to Alliance Lite, where ERP usage is currently less prevalent than in Europe and North America. In order to be a viable solution in the long term, Alliance Lite will need to develop its global applicability and support not only international needs but also in-country payment and cash management needs. In some markets, such as Germany and France, there is already acceptance of multi-bank connectivity, with EBICS and ETEBAC respectively. ETEBAC in France is due to be discontinued, and it is likely that EBICS will be an alternative for many organisations; however, SWIFT will co-exist as a viable alternative.