Published: November 01, 2008
ABB is a global leader in power and automation technologies that enable utility and industry customers to improve their performance while lowering environmental impact. ABB operates in more than 100 countries and has offices in 87 of those countries with 115,000 employees to give its global and local customers the support they need to develop and conduct their business successfully.
We recognised some time ago that accessing our banks via SWIFTNet would be beneficial to our business by replacing our systems with a single, secure channel.
Since 2002, ABB has had a highly centralised treasury function within a relatively decentralised company. Group Treasury is located in Zurich, Switzerland and we have regional treasury centres in the United States and Singapore. Our SWIFT connectivity project has initially been focused only on treasury payments (FIN - high value, urgent payments) rather than supplier/vendor payments, although this is a potential future development. Treasury payments are a crucial area for ABB, with over $300bn each year in payments originating from Group Treasury alone, plus payments initiated from our regional treasury centres.
We currently use three proprietary e-banking solutions in Group Treasury, one of which is used on a multi-banking basis using MT101 forwarding. Our treasury management system (TMS), WallStreet Suite, produces different payment files that are then imported and approved within these payment systems. Although these applications adequately support our payment requirements, we wanted to implement a standardised approach to payment security. In reality, a company’s payment security is only as good as the weakest part in the payments process, which becomes more problematic when multiple systems are in place. We have been concerned that each of our e-banking solutions had different security tools. In addition, there is potentially a weak link between the file being released from our TMS and being uploaded into our e-banking systems where a file could be altered outside the security restrictions of the originating or receiving system.
We recognised some time ago that accessing our banks via SWIFTNet would be beneficial to our business by replacing our systems with a single, secure channel, but it took a while to develop the business case. We made the decision to connect to SWIFT during the first quarter of 2008, based primarily on our security requirements but we also recognised the potential to access other services from our banks through SWIFTNet in the future, such as bank statements, confirmations and trade finance services (e.g. letters of credit and guarantees). Furthermore, the next release of our TMS will have full integration with SWIFTNet.
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ABB outsources its IT support to external providers so it was consistent with our policy to access SWIFT via a service bureau. However, even without a general policy to outsource, we felt that a service bureau was the best route to achieve SWIFT connectivity. The connection to SWIFT from our three treasury locations around the globe is a business-critical function requiring 24 hour support. A service bureau is equipped to provide both the infrastructure and the necessary level of support. In addition, they have staff with the specialist skills and experience with SWIFT which we believed would make the initial implementation and ongoing use of SWIFTNet more straightforward. We issued an RFP to various service bureaux accredited by SWIFT. We wanted to work with a service bureau based in Switzerland and which had experience with a wide range of companies. Consequently, we selected BBP, a subsidiary of Fundtech. Another significant advantage we found with BBP was that an independent audit of their security infrastructure had been conducted. This was a highly detailed process, equivalent or better than SAS70, which gave us a high degree of confidence in BBP as a potential business partner supporting a business-critical function.
Our implementation of FIN payments through SWIFTNet has been quite a straightforward experience. BBP and SWIFT have both provided us with considerable support and advice. While some of the early companies that have implemented SWIFTNet have experienced challenges when trying to access the necessary information from their banks, we have had the advantage that the major banks now have the relevant experience in supporting SWIFT Corporate Access. Since making our decision, following an RFP process earlier this year, we went live with our first bank in October 2008 with the remaining two banks to come in before the end of 2008.
The connection to SWIFT from our three treasury locations around the globe is a business-critical function requiring 24 hour support.
More challenging than the SWIFT connection itself has been the interface to our internal system, although use of BBP’s converter has made it easier. Part of the complexity of this, however, was due to our wish to improve our processes as part of the project, which made the integration more elaborate.
A considerable challenge in the project, however, has been the legal documentation process with each bank. While the contract with SWIFT is a boilerplate agreement, which can be concluded swiftly, the legal documentation with the banks can be lengthy and cumbersome. Each bank has its own set of agreements and there is no uniformity between them. This is even more surprising when Group Treasury already has contracts in place with banks relating to payment services. As SWIFTNet is simply another access channel to a bank, it would be very valuable for corporates seeking to access their banks via SWIFTNet, if the banks and a corporate representative group like TWIST could agree on simple documentation that is balanced and non-negotiable by either party, in a similar way to the SWIFT agreement. Due to the complexities and time taken to negotiate the legal documentation, we anticipate that we will still use MT 101 forwarding to access some of our banks with lower transaction volumes for the time being.
Looking ahead, the SWIFTNet connection is a very valuable platform that we can leverage to exchange a wide range of information with our banking partners. The next phase of our project will be to connect our regional treasury centres in the United States and Singapore. Once our TMS has been upgraded and integrated with SWIFTNet, we intend to expand the range of messages we exchange, including confirmations etc. In the future, we see the opportunity to extend from FIN payments to FileAct so that we can make our supplier/vendor payments on behalf of group companies.
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