Published: October 29, 2012
The ability for corporates to access the SWIFT network (SWIFTNet) has existed for more than 10 years, but the opportunities available today compared with a decade ago have evolved substantially. Over this period too, costs have fallen considerably, and the ease with which corporates can connect to SWIFT has increased, with most corporates now outsourcing SWIFT connectivity to a specialist service bureau. Early adopters of SWIFT were formerly the world’s largest multinational corporations, but beyond this core group of companies, take-up was relatively slow, not least due to initial resistance by some banks that were concerned that a bank-agnostic connectivity platform would erode their competitive position. Today, however, corporate-to-bank connectivity through SWIFTNet represents a major opportunity for a wide variety of corporates to enhance their cash, trade and risk management.
Most banks have now embraced the potential that SWIFT offers to their customers to a greater or lesser degree, and in some cases placed it firmly within their portfolio of connectivity offerings. Deutsche Bank has been a pioneer of SWIFT corporate access for a number of years, and consequently, we were one of the first banks to be awarded SWIFT’s Bank Ready certification. This certification programme is important as it allows corporates to assess banks’ SWIFT capabilities in a consistent way. In addition to achieving certification, we have further enhanced the quality of service we deliver by embarking on a proactive training programme for our employees on corporate adoption of SWIFT. We now have around 90 professionals across our business who are trained on SWIFT corporate access, with a second wave of training to follow shortly. This helps us to enhance our customers’ implementation experience and share industry best practices. We have also hosted a number of joint events with SWIFT in various European cities to accentuate the advantages of SWIFT connectivity for our customers.
Increasing support for SWIFT by banks has contributed to more rapid adoption of SWIFT amongst a wider range of corporations, further fuelled by a growing number of successful corporate case studies, the development of service bureaus and more competitive pricing. Initially, large multinationals with significant technical bandwidth dominated the SWIFT corporate community, but latterly, the majority of corporates joining SWIFT access SWIFTNet through a service bureau, which has become a more cost-effective and convenient option. Today, a wide variety of organisations, particularly those with multiple banking partners, are embracing the opportunities that SWIFT connectivity offers, including mid-cap as well as large corporations. There are now nearly 1,000 registered corporate users of SWIFTNet, which comprises nearly 10% of SWIFT’s customer base.
Most corporations initially started using SWIFTNet for payments and cash management purposes, effectively replacing the functions of their bank proprietary electronic banking system. This included retrieving end-of-day and intra-day bank statements, and making payments. With the option of using either/both FIN and FileAct, there is considerable flexibility for exchanging both high value, low volume and high volume, low volume payments, satisfying the needs of treasury functions, payment hubs/ factories and shared service centres.
In addition to payments and cash management, corporates are beginning to exchange a wider range of messages through SWIFTNet, such as trade transactions. Furthermore, functionality offered through SWIFT is continuing to expand into new areas such as eBAM (electronic bank account management) and 3SKey, SWIFT’s digital signature capability. These developments are very important, not simply as they provide further opportunities for corporate users, but they in turn attract further adoption as companies seek to leverage the efficiency and security offered by SWIFT, in addition to its multi-bank capabilities. This is already starting to create a virtuous circle of greater adoption and increasing capabilities, including:
Trade finance
The MT798 message for letter of credit (LC) issuance will be an important new development to support corporates’ LC and guarantee requirements. This will be available in Q4, 2012, and will closely complement the cash management services offered through SWIFT, enabling corporates to leverage a single channel for trade and cash, across multiple banks. Deutsche Bank will be one of the early adopters of MT798 messaging, with considerable interest amongst our customer base. We have already identified pilot customers in Europe and Asia and the solution will be rolled out more widely in 2013.[[[PAGE]]]
eBAM
eBAM, which refers to the ability to manage bank accounts electronically, has considerable relevance to our customers, many of whom have a large number of bank accounts across different banks. They recognise the potential risk, as well as administrative effort involved, to maintain these accounts, not least to ensure that signatories are kept up to date, so we are seeing significant levels of interest in eBAM. Currently, eBAM is still ‘work in progress’ with new developments under way such as a central utility. We are still determining how to deliver an optimum eBAM solution to our customers, but we will be supporting the basic service initially and then enhance our offering further.
3SKey
3SKey effectively acts as a replacement for banks’ individual security keys that are used today, which can be inconvenient for corporates with multiple banks. Furthermore, SWIFT messaging before the introduction of 3SKey did not support the requirements of users in some countries, such as France, for personal digital signatures. We are very supportive of 3SKey and ongoing initiatives to enhance its security. In France, there are also proposals to use 3SKey with EBICS, the domestic payments channel, which will further enable us to employ a consistent security strategy across banks and platforms.
A related development, although not restricted to SWIFT, is the ongoing emphasis on standardisation and harmonisation of file formats, which is a key priority of the CGI (Common Global Implementation) group, leveraging XML-based standards. As SEPA payment instruments are based on XML, the mandatory implementation of SEPA is a catalyst for XML adoption, but the ability to use the same formats across banks and across countries has important global implications far beyond the reach of SEPA. This is an area in which Deutsche Bank is investing heavily, as we recognise the value of standardised XML-based formats not only for customers using SWIFT, but for all of our customers with international reach, irrespective of their choice of connectivity channel.
SWIFT connectivity does not represent a single solution but a growing portfolio of capabilities accessible through a common channel. Together, streamlined connectivity and standardisation of formats bring substantial benefits to corporate users, and we anticipate SWIFT adoption to continue accelerating. Deutsche Bank remains firmly committed and proactive in enhancing our customers’ connectivity experience through facilitating data exchange through customers’ chosen channel, including SWIFT and enhancing their experience both during implementation and beyond.
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