Published: October 29, 2012
SWIFTNet is fast becoming the bank communication method of choice for large multinational corporations, particularly those with multiple banking relationships on a global scale. SWIFT’s potential is not restricted to the world’s largest corporations, however. There are now 1,000 corporates connected to their banks via SWIFTNet, with SWIFT announcing a target of 5,000 corporate customers by 2015. With new deployment methods and a growing range of services available, corporations of all sizes can leverage the benefits that SWIFT offers. Key to the success of any connectivity project, from mid-tier to large-cap corporate, is the quality of the implementation. At Barclays, we support over 100 of those corporates currently using SWIFT, with the second highest FIN traffic (the channel for high volume payments and other financial messaging) globally. Consequently, we have built up considerable experience in successfully implementing SWIFT and helping customers to take advantage of opportunities that it presents.
There are currently three ways to connect to SWIFT:
Direct connectivity: The corporation manages the SWIFT gateway and associated infrastructure directly. This was the approach taken by early adopters when service bureaus either did not exist or were still in the early stages of their development. Since then, service bureaus have matured and have often been acquired by larger businesses, such as the acquisition of SMA by Bottomline Technologies, which gives corporate users greater confidence in the stability of a potential connectivity partner. Consequently, while some very large multinationals continue to connect to SWIFT directly, this is rarely the case for new implementations and many early users have also migrated to service bureaus.
Service bureaus: The corporation outsources SWIFT connectivity to a specialist service bureau or member concentrator. This model has proved very successful as a cost-effective and efficient means for companies to leverage the expertise and infrastructure that the service bureau can provide. Most new implementations involve indirect connectivity to SWIFT via a service bureau.
Alliance Lite: In 2009, SWIFT launched Alliance Lite, a web-based connectivity solution for corporates with lower transaction volumes, which did not quite meet the needs of our clients owing to the volume restrictions and available cost models.
Recently, however, SWIFT has announced that Alliance Lite2 would be available by the end of 2012, which will offer ‘cloud-based’ connectivity to SWIFT, support higher message volumes, include all SWIFT message formats (MT and MX) and standards, provide enhanced integration capabilities and a more attractive pricing model. This represents a major step forward in enabling a wider spectrum of corporates to connect to their banks via SWIFT.
Alliance Lite2 is closely related to corporates’ familiar electronic banking systems, making it a solution which is more acceptable and easier to implement than other SWIFT connectivity models. Furthermore, Alliance Lite2 provides companies that have been uncomfortable with outsourcing their infrastructure to a third party with the assurance of a SWIFT-managed solution. Consequently, we expect to see considerable acceleration of corporate adoption of SWIFT through Alliance Lite2.[[[PAGE]]]
At Barclays, we have developed our service model to support all three connectivity options. When a company decides to connect to SWIFT, the resulting traffic is the same from a bank’s perspective, so our most important consideration is to support clients in finding the most appropriate means of connecting with their banks, meeting their specific technical, compliance, resourcing and security requirements.
Some banks offer an in-house service bureau, typically a white-labelled service from a third party company. This is rarely advantageous, however, as one of the key objectives of corporates implementing SWIFT is to achieve bank-neutrality. As a result, it is typically preferable to work with a third party service bureau or a SWIFT-supported solution such as Alliance Lite2.
In our view, it is more important that banks are able to offer dedicated support, utilising previous experience of implementation, as opposed to acting as a service bureau. We can either suggest a service bureau if necessary, or work closely with our clients’ chosen connectivity partner to deliver professionally-executed projects that precisely meet each client’s needs.
One of the outcomes of our approach is that Barclays was one of the first banks to receive SWIFT Bank Ready certification.
We take pride in the skills and experience of our team, and, as such, are also seeking independent accreditation for our team members. Not only are we investing in the skills and solutions related to SWIFT but we also recognise that a successful connectivity project often involves standardisation of file formats and financial messages.
Even if a company can communicate with their banks through a single channel, its efficiency will continue to be hindered if they need to exchange information in different formats with each one. There have been a variety of industry initiatives to try and address this challenge, most successfully the work of the Common Global Initiative (CGI) for defining and promoting the adoption of ISO 20022 standards for financial messaging. The third variant of CGI standards is now being rolled out, but it can take time for banks and vendors to upgrade the relevant systems.
At Barclays, we have a strong commitment to standardisation, and empowering our customers in bank connectivity. Consequently, we were one of the pilot banks on MyStandards, a recent SWIFT initiative to provide a central repository and reference point for those developing and adopting financial messaging standards.
Bank connectivity is a vital component of every treasury and finance function’s technology infrastructure. Few companies embark on a project solely dedicated to bank connectivity but there are frequently opportunities to extend the value of treasury and finance projects to include connectivity, allowing for bank rationalisation, treasury or payments centralisation, TMS or ERP implementations or updates. When defining the scope and objectives of these projects, it can be very valuable to consider rationalising bank connectivity through SWIFT, taking advantage of the bank neutrality, security and the standardisation that it offers. Companies need to have absolute confidence in the partners that they engage with to be assured of a high quality connectivity solution that will meet their current and future communication needs. As the number of successful case studies for SWIFT connectivity continues to increase, and banks and SWIFT alike focus on more proactive communication, we expect to see corporate adoption accelerate further, not just amongst large multinationals but also smaller companies with international banking requirements.
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