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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.