Published: September 19, 2011
Many of our multinational corporate clients are looking to leverage a secure and robust bank-neutral channel to help them to connect to multiple banks. As such we have seen a noticeable acceleration in corporates accessing SWIFT to communicate with banking partners globally. There are a number of new initiatives under way that are enhancing the experience of SWIFT for these corporations, and, with proven expertise and support available from banks such as Barclays, SWIFT has taken its place as a valid alternative to the proprietary connectivity tools provided by the major banks.
As one of the pioneers in facilitating SWIFT connectivity for our corporate clients, we have built up a wealth of expertise to help our clients get the best from SWIFT.
SWIFT connectivity will continue to bring a strong value proposition in the future.
SWIFT connectivity can be complex and resource-intensive without the right expert support: in the early days of SWIFT Corporate Access, we formed a relationship with leading SWIFT service bureau SMA Financial, so that together, we could provide a cohesive SWIFT implementation, integration and rollout service to our clients. Following SMA’s acquisition by Bottomline Technologies in October 2010, we reconfirmed and strengthened this relationship to give our clients the quality of experience they can expect to receive, both during the initial implementation of SWIFT and on an ongoing basis.
Clients are not obliged to use Bottomline as their service bureau. Some companies prefer to connect directly, and therefore maintain SWIFT gateway software internally; however, working with a credible, experienced service bureau is often a key enabler of SWIFT connectivity for corporate clients who find it difficult to maintain tools and resources for SWIFT that may be outside the company’s core competences.
It remains the case that SWIFT connectivity is preferred by a number of large multinational corporations with a variety of global banking partners. Indeed, while these companies were seeking to reduce the number of banking partners before the financial crisis, often with a view to appointing a single global bank, this trend has shifted. We are now seeing that companies operating internationally prefer to appoint a panel of banks in order to manage their counterparty risk and benefit from best in class capabilities in each country or region. Consequently, SWIFT connectivity will continue to bring a strong value proposition in the future.
Although there are potential benefits to large domestic organisations, or smaller ones with fewer banks, particularly in the security and reliability of the service, at this stage the cost benefit is not compelling for smaller or single-banked organisations. These companies typically prefer our proprietary host-to-host or web-based systems, enabling them to benefit from seamless integration, and robust security and comprehensive functionality. While it is possible that these companies will consider SWIFT in the future, it is likely that the SWIFT service bureau model will need to develop further, and overall costs reduce further to create a realistic value proposition for smaller or large domestic companies.
Although SWIFT is typically only adopted by a limited proportion of corporate users, the experiences of these users are indirectly bringing benefits to the wider corporate community. One such example is 3SKey, SWIFT’s personal digital identity initiative that is now live. This was originally conceived to address the needs of the French market where electronic signatures at a personal rather than organisational level are mandatory. Consequently, it was essential to develop this capability to enable SWIFT to be used in France. Corporations globally recognise the value of this facility and in addition to 3SKey being available through SWIFT, we are also seeing this functionality being rolled out to clients through banks’ proprietary web-based and host-to-host channels so that companies of all sizes can benefit. [[[PAGE]]]
Another such initiative is eBAM (electronic bank account management) for the electronic exchange of instructions for account opening, closing and maintenance of signatories on accounts. Although this has been in progress for some time now, eBAM is now taking a more distinct shape as banks determine how they will adopt it into their own applications. There have also been some regulatory and workflow challenges. For example, while it was considered at one stage that a Know Your Customer (KYC) utility would facilitate electronic account opening, many banks with a strong commitment to KYC validation, such as Barclays, would not accept a third party process for this. This concept has since been discarded. The eBAM messaging standards will permit electronic account opening for existing clients with whom a KYC process has already been conducted, as well as online signatory management and a global, consolidated view of accounts across multiple banks.
eBAM is now taking a more distinct shape as banks determine how they will adopt it into their own applications.
With SEPA migration now progressing at greater speed, the mechanism may also prove to be a catalyst for some companies to review their bank connectivity, which could include implementing SWIFT. For example, with SEPA Direct Debits now live, direct debit information can be transmitted through FileAct; furthermore, SEPA payment products use XML ISO 20022. Others will choose to retain their existing connectivity channel or change to another bank-proprietary tool that meets their needs whilst still gaining the benefit of standardised payment instruments and formats across Europe.
It is important to remember that however efficient the bank connectivity is, this is only one element in the corporate’s financial operations, and in many ways, the channel between corporate and bank is isolated from the corporate and the networks. Consequently, focusing on bank connectivity alone does not result in integrated financial methodology for purchase-to-pay, order-to-cash or supply chain finance. In these situations, most of the interactions required for an efficient information and transaction cycle are within an organisation or with its suppliers and customers, as opposed to with its banks. Corporates therefore need to consider their financial processes on a holistic basis, not only on bank connectivity, in order to achieve the degree of visibility and control they require.
At Barclays Corporate, we are committed to supporting our clients in their efforts to automate and optimise their entire financial supply chain. One element of this is bank connectivity, and supporting and facilitating SWIFT connectivity remains a pivotal element of our strategy for servicing the needs of our large multinational client base. This commitment sits alongside the ongoing development of our proprietary channels, which also remains a crucial strategic focus. There are various initiatives, such as SWIFT service bureau relationships, 3SKey, eBAM and closer integration between SWIFT and ERP vendors, that will make SWIFT connectivity more attractive to many larger companies with multiple banking relationships, a trend we expect to continue. In many cases, Barclays Corporate will continue to play a prominent part in the design and development of these initiatives where we see direct benefit to our clients.
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