Published: January 01, 2000
Corporations connecting to SWIFT are now outnumbering those adopting legacy host-to-host connections by two to one. As such, SWIFT for Corporates is no longer a niche solution, but is becoming increasingly viewed as a mainstream offering – prompting companies to take a more sophisticated approach when deciding whether and how they should connect to SWIFT. Companies which have already invested in SWIFT connectivity are also beginning to look beyond the basic offering and ask what more they can do to benefit from their investment in SWIFT.
The connectivity landscape continues to evolve. Vendor consolidation is becoming more common among service providers as regulatory changes and the cost of investing in up-to-date security measures take their toll on smaller players. Meanwhile, ERP provider SAP has recently entered the market with last year’s launch of its Financial Services Network (FSN). While it is early days, banks are looking to support this initiative, which aims to provide another avenue for corporates looking for a multi-bank interface.
Where standardisation is concerned, the completion of SEPA migration is contributing to an increase in adoption of ISO 20022 XML among corporate clients. This is likely to continue to grow in the next couple of years as companies currently relying on third-party conversion services look to adopt ISO 20022 as their standard bank interface.
Against this backdrop, the benefits of SWIFT are becoming more widely understood – and the reasons why companies choose to connect to SWIFT are expanding. In the past, companies typically opted for SWIFT connectivity because they were in the process of centralising their treasury operations and wanted to establish a single interface with all of their banks. Data security might have been factored into the decision, but was unlikely to be one of the top three drivers. This is now changing: while the traditional reasons for connecting to SWIFT still apply, we expect to see more companies looking at data security and the benefits that SWIFT’s highly secure channel offers in this regard.
Once companies have chosen to connect to SWIFT, choosing the right service provider is critical. Companies are paying closer attention to the level of experience that different providers have in this market and want to understand how actively providers are supporting standardisation within the industry. As part of the RFP selection process, corporates are asking about topics such as SWIFT certification and training among their banking providers. They are also beginning to ask potential providers about their level of leadership in industry initiatives such as the common global implementation (CGI), and are differentiating between providers who are simply participants in such initiatives and those that are actively driving them.
As banks look to add more value, one of the areas they are focusing on is reporting.
Putting a SWIFT connection in place may be a big step for corporations, but it is not the end of the story. As adoption levels grow, companies which have previously focused their attention on whether or how they should connect to SWIFT are now beginning to ask how they can harness more value from the investment they have already made. Increasingly, they are pushing the boundaries of the offering by challenging their banks – and SWIFT – to develop additional functionalities.
As banks look to add more value, one of the areas they are focusing on is reporting. As well as supporting standard MT940 or ISO CAMT reporting, banks are considering how they can differentiate themselves in this space, with some looking to do so by offering their corporate clients effective data. For example, additional data may enable corporations to accelerate reconciliation by subsidiary or business units. Banks can also leverage SWIFT offerings such as MyStandards to streamline their output, improve their testing experience and deliver more detailed data for their clients. This can significantly decrease implementation timelines.[[[PAGE]]]
Aside from SWIFT connectivity, other initiatives are underway which aim to help corporates interact with their banks in a more standardised manner. Banks are continuing to invest in electronic bank account management (eBAM), with the first implementations now live in the market. Rather than simply focusing on the ability to open and close accounts, companies are increasingly looking at eBAM as a way of gaining better transparency and visibility over information on their legal entities, account status and signer information. As adoption levels grow, it is likely that corporations will continue to demand additional services via eBAM, for example, visibility across their treasury services, online account structures, and service requests. Additional initiatives, including common digital identity solutions and know your customer efforts, are underway helping to achieve common best practices in the industry.
The area of connectivity is developing rapidly. As companies become more comfortable with the existing offerings, they are beginning to challenge their banks to provide additional functionalities – and are looking to work with the banks that are best positioned to take connectivity to the next level.
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