Published: March 01, 2009
HiFX Plc was first founded in 1998 in the United Kingdom to provide foreign exchange and cash deposit services to corporations and private individuals. Since then, it has expanded its operations across Europe, North America and Australasia, supporting around 2,500 corporate clients across 100 different industry sectors and over 30,000 private individuals. In 2008, HiFX advised on and executed over £20bn in foreign exchange and placed over £3 billion of funds on behalf of clients. The company has featured for three consecutive years in the Virgin Atlantic Sunday Times Fast Track 100.
When we started the business in 1998, our transaction processing requirements were relatively straightforward and we were able to use the systems provided by our banks for online banking, payments, statement retrieval etc. Today, our customer base extends across a very wide spectrum, from private individuals through to large corporate clients. A large proportion of our clients are, however, small and medium-sized enterprises (SMEs) with currency requirements of around £10m equivalent each year. For this type of client in particular, a high quality, well-priced and efficiently managed foreign exchange service is critical to maintaining their business competitiveness.
As our volumes have grown and the complexity of the business has expanded, our processes and technology had become increasingly cumbersome and larger numbers of transactions had required manual intervention. This inevitably created resourcing and control issues. Over recent years, we have been through major changes to improve our internal processes and use of technology. There have been various elements of this project. We were using an old treasury management system (TMS) and there were a large number of manual tasks. As we grew, we needed to take on additional staff to take on these activities, which was costly and reduced control and visibility. We replaced our TMS package, selecting a bank system which we then modified according to our own business requirements.
We also recognised that enhancing bank connectivity was key to efficient transaction processing. The way we work is that a client contacts us by telephone to arrange a transaction with a dealer at HiFX; for example, if a UK client needs to make a Û1m payment to a supplier in Germany, the client sends us a payment in the sold currency and we arrange payment to the beneficiary using settlement instructions, which the client has provided to us online. All transactions are delivery versus payment, so the foreign currency payment is only made after we receive payment from the client. Consequently, everything we can do to accelerate notification of collections and beneficiary payments, the better the service we can provide. For example, a project imperative was to extend cut-off times so that the transaction window was as long as possible. [[[PAGE]]]
We originally stumbled across SWIFT Corporate Access, really before most of the banks were selling it widely. We approached our 'hub' bank, Barclays, to discuss the options which would enable us to achieve the level of control and streamlining of our payment processes that we were seeking. We agreed with Barclays that SWIFT connectivity would give us the flexibility, control and process efficiency we were seeking, so we decided to connect our in-house system to SWIFT via a MA-CUG (Member Administered Closed User Group) for payments, collection notifications and account statement information.
Barclays then recommended SMA Financial to act as a service bureau. We briefly considered direct connectivity, but decided that it would not be cost-effective. Once we had made the decision to connect indirectly to SWIFT through Barclays' MA-CUG, the project was led by SMA Financial, taking advantage of their expertise and wide experience with SWIFT implementation and connectivity.
OutcomesWe have seen substantial benefits from our payment systems infrastructure, including SWIFT. In particular, there have been significant improvements in straight-through processing (STP) rates, from 90% to 99%. This results in direct savings which we can pass on to our customers. As many clients need to transact late in the day, the lag between sending the sold currency payment to us and transmitting the foreign currency payment can result in losing a day's value. We have achieved our objective of extending cut off times, so more transactions can be done for same-day value, again a major benefit to customers.
Connecting to our banks through SWIFT has resulted in better control over payments, particularly investigations. In the past, Barclays used to do this for us, whereas now we can handle it ourselves, which benefits both us and the bank!
Since joining SWIFT, our transaction volume has doubled year on year and we now process over 2,000 messages per day, a 1000% increase compared to when we joined SWIFT. We are now one of the world's largest corporate users of SWIFT, accounting for approximately 2% of the total Corporate SWIFT message traffic volume.
Although the ability to connect to multiple banks is typically seen as one of the benefits of SWIFT connectivity, currently this is not an issue for us and we are a member of only one MA-CUG. Looking ahead however, we will extend our SWIFT connectivity to connect to multiple banks as we expand our global footprint in Asia Pacific and the United States, for which we may need to join additional MA-CUGs.
The service bureau option with SMA Financial has proved an excellent choice and enables us to expand our SWIFT connectivity without significant resource implications. In addition to our corporate client base, we are also expanding our private client portfolio. Now that we have achieved a high degree of automation and tools for customer self-service, our capacity has increased dramatically whilst providing an optimal level of service to our customers.
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