A New Chapter in SWIFT Corporate Access
by Elie Lasker, Head of Corporate Market, SWIFT
SWIFT Corporate Access has gone from strength to strength in recent years, fuelled by both the global financial crisis and treasurers’ and finance managers’ continuing desire to streamline business processes. Before the crisis, there was a general inclination amongst corporate treasurers to rationalise banking partners, to increase cash management efficiency and mitigate the challenges of communicating with multiple banking partners. As awareness of counterparty risk has increased, this trend has shifted, with treasurers preferring to establish a strong, diverse banking panel with the financial strength, geographic reach and product richness to support the company’s cash and risk management objectives. Similarly, corporate treasurers and finance managers are seeking to reduce their reliance on banking partners so that they are able to adjust their banking relationships without technical impediments.
These trends have been instrumental in extending the appeal of SWIFT connectivity, not only amongst the largest multinationals that have been attracted to SWIFT in the past, but across a wider spectrum of organisations. With companies of all sizes seeking to extend their geographic reach to respond to, and anticipate changing economic conditions, many will have multi-banking requirements. This creates the question of how to integrate with these banks in a consistent and efficient way. Increasingly, treasurers and finance managers are opting to access their banking partners through SWIFTNet, the financial messaging network used for communication across the banking community. By the end of 2009, over 600 corporates were using SWIFT to access their banking partners, including many multiples of this figure in terms of the number of legal entities and subsidiary companies. This represents an increase of over 30% from 2008, a trend which we have seen continuing during 2010. This article looks at some of the trends and initiatives that are both enriching the experience of corporate users of SWIFT and making it easier to take advantage of these opportunities.
Service bureaus: connectivity & integration
While early adopters typically chose to install and maintain the technical infrastructure for connecting to SWIFTNet, referred to as ‘direct’ connectivity, subsequent corporate users have typically opted to connect ‘indirectly’ i.e. through a service bureau. Working with a service bureau helps to reduce the cost and effort required both to set up and maintain the connection to SWIFT, and to integrate SWIFT messages with internal systems such as the ERP and TMS.Service bureaus provide a range of services, which may differ between companies, but typically centre around SWIFT connectivity and integration with internal systems. For example, a service bureau will ensure that messages can be transmitted and received to and from the relevant banks. Data is mapped between corporate systems and SWIFT and in some cases, data may be enriched. In addition, as part of its integration role, the service bureau will validate messages sent from the client to the bank to ensure that it complies with the necessary formatting requirements and relevant regulations such as anti-money laundering.
Service bureaus provide a range of services, which may differ between companies, but typically centre around SWIFT connectivity and integration with internal systems.
The industry is maturing in supporting SWIFT connectivity for corporates and there are now a large number of service bureaus catering for corporate needs globally. Most of these are relatively small software providers, but some banks are also now putting their support behind chosen service bureaus, such as through white labelling programmes. In addition to using service bureaus, smaller companies with lower transaction volumes (i.e., less than 200 per day) can also take advantage of Alliance Lite, a convenient web-based alternative to full SWIFT connectivity. Between 10 and 15% of corporate users now access SWIFT through Alliance Lite, with 28% of new users during the first half of 2010 opting for this approach. In some cases, these are smaller companies for whom the functionality of Alliance Lite is sufficient for their needs, while in others, companies are making use of Alliance Lite as a first step towards more comprehensive SWIFT connectivity. Alliance Lite represents a convenient way of rapidly achieving access bank account statements and confirming treasury transactions, and in some cases, companies will extend their access to include payables and collections.