Participation, Engagement and Influence in the SWIFT Community

Published: January 01, 2000

Participation, Engagement and Influence in the SWIFT Community

by Tom Durkin, Managing Director, Global Head of Integrated Channel Solutions, Bank of America Merrill Lynch

Enhancing the efficiency, security and convenience of corporate-to-bank communication has been a priority for corporate treasurers and their banks for many years. Despite substantial improvements over recent years in banks’ proprietary systems, standardisation initiatives and multi-bank channels, strong corporate attendance at the Sibos 2014 Corporate Forum illustrates that there is still substantial progress to be made. The ability for corporates to connect to their banks via SWIFT marks a major step forward in achieving these objectives, but, until relatively recently, SWIFT remained the domain of large multinational corporations. This is changing, with the introduction of Alliance Lite2 and initiatives by treasury management systems (TMS) and enterprise resource planning (ERP) vendors to embed multi-bank connectivity within their solutions. The impact of these changes extends beyond the channel strategies of individual organisations: corporations of all sizes are starting to take a more proactive role in shaping the transaction banking environment of the future, not least in bank connectivity, standards and adapting to the demands of a new business environment.

Expanding corporate participation in SWIFT

Corporates have been eligible to connect to the SWIFT network for more than a decade, bringing considerable benefits, such as secure, reliable transaction processing and the ability to communicate with multiple banks through a common channel. In the past, however, SWIFT connectivity was largely restricted to large multinational corporations. There have been a variety of reasons for this. Firstly, the cost and resource requirement for direct connectivity has been relatively onerous. While outsourced connectivity to service bureaus aimed to address this issue to some extent, service bureaus’ commercial and service model has typically been targeted at larger organisations. More significant, however, is that smaller and mid-sized companies’ business requirements have evolved substantially since SWIFT corporate access was first introduced. A decade ago, many companies’ international footprint was restricted to a few countries, which could be supported by working with one or two banks. Today, sales and sourcing in multiple countries and regions is a business reality for all but the smallest companies, which is resulting in a shift from single to multiple bank relationships.

As the demand for global multi-bank connectivity becomes more universal, the need for an easier, more cost-effective means of communicating with banking providers through SWIFT has become more compelling. The development of Alliance Lite2, SWIFT’s cloud-based connectivity solution, is a major milestone in making SWIFT more accessible to a wider spectrum of organisations. Alliance Lite2 has been designed to be more cost-effective than the more traditional direct or outsourced connectivity options, and is easy to deploy, giving mid-size corporates, in particular, an alternative to banks’ proprietary tools and outsourced connectivity. Furthermore, Alliance Lite2 is a valuable tool in addressing corporates’ security concerns. Online security is a major priority for corporates, but opinions about how best to manage this risk are changing. In the past, by outsourcing SWIFT connectivity to a service bureau, corporates effectively outsourced online security risk management. Today, some corporates are taking the view that the addition of a third party in their channel strategy represents an unnecessary security risk, prompting a growing number of organisations to adopt Alliance Lite2 and connect directly with SWIFT.

Changing industry models

So, what does the future hold for service bureaus that provide outsourced SWIFT connectivity? Some large companies, such as SunGard and Bottomline Technologies (both major providers of treasury and payments software to corporates), offer SWIFT connectivity as part of their wider solution offering to customers. In many cases, connectivity is becoming an integrated element of a cloud-based software-as-a-service offering, rather than a separate service, so it is more of an operational detail than a strategic issue whether this is delivered using Alliance Lite2 or via an in-house service bureau. Amongst smaller service bureaus that may lack the capacity to invest substantially in online security, we may see some industry consolidation. However, an important consideration for corporates when deciding whether to use a service bureau, or Alliance Lite2, to connect to SWIFT is how they would replicate the additional services that many service bureaus are able to provide on top of SWIFT connectivity.[[[PAGE]]]

From ‘big data’ to ‘better data’

One of these services is data management, which is becoming increasingly important for corporates of all sizes. There are numerous discussions about ‘big data’, but more important than ‘big data’ is ‘better data’. The ability to collect data is not sufficient unless it can be used to achieve specific corporate objectives, such as driving automated processes. Consequently, banks are increasingly tasked to provide richer, structured, standardised data. This data is not simply for presentation on-screen, or on paper as a report, but increasingly to drive processes and business intelligence. For example, straight-through reconciliation (STR) is now becoming a priority for corporate treasurers and finance managers and they expect that their banks, as well as their ERP and TMS vendors should be able to support this.

MyStandards, your standards, industry standards

Critical to automating processes, particularly for companies that use multiple banking providers, is standardisation. Without consistency across banks, it is impossible to define rules for automating processes and stipulating how data should be treated. SWIFT is playing an important role in promoting and defining standards across the industry by championing the CGI (Corporate Access Group) and introducing its collaborative platform for standards management, MyStandards, to encourage and enable industry participants to share and leverage common standards. By accessing a common repository of format information, clients have greater transparency over standards, making integration more straightforward and helping to identify and overcome differences between banks and service providers.

Building on the success of MyStandards, SWIFT has launched the Bank Readiness Portal this year. This is designed to ease the onboarding process between financial institutions and their clients by allowing users to test messages against specifications. This capability is invaluable to test data quality, integration and straight-through processing rates, helping to improve the speed and accuracy of onboarding processes. While larger international banks welcome the Readiness Portal, as it streamlines customer onboarding, this degree of commitment to standardisation and transparency will test smaller service bureaus as well as some local and regional banks.

The value of expertise

Bank-agnostic, multi-bank connectivity and standardisation are changing the corporate-to-bank relationship, resulting in corporate treasurers and finance managers demanding an ever higher level of commitment to transparency, standardisation and automation from their banks. While banks’ proprietary electronic banking channels will continue to be pivotal to many companies’ cash and treasury management strategy, a growing number of companies are looking to their banks for support and advice on how to implement a multi-bank connectivity strategy successfully. Consequently, treasurers and finance managers are starting to request more specific evidence of experience and expertise in SWIFT connectivity as part of their bank selection process. A valuable means of doing this is to find out how many bank employees have been certified through SWIFT’s certification programme. This provides clients with the assurance of quality and integrity of the advice that a bank offers, and also illustrates its commitment to supporting and engaging with the SWIFT corporate community. As companies become more aware of the value of this certification programme, we expect it to become a more important criterion when selecting banking providers.

Engagement and influence

The corporate community, using SWIFT for bank communication, continues to grow, not only in the number of organisations involved, but also the influence over the definition and priority of new standards, solutions and services. The Corporate Forum is a convenient and very effective means of engaging both with other corporates and the wider transaction banking industry, but is by no means the only opportunity for engagement. We anticipate, and encourage, corporate treasurers and finance managers of companies of all sizes to become more involved with SWIFT advisory boards and peer-to-peer networks to discuss evolving business challenges and requirements. By doing so, corporates can directly influence banks and the wider industry in developing and prioritising the solutions and services that will promote easier communication, higher quality data and greater process automation. 

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Article Last Updated: May 07, 2024

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