WOOING THE CORPORATE AUDIENCE
By Rebecca Brace
Going beyond connectivity is SWIFT’s mantra to corporates these days, but can the bank-owned organization be as fleet of foot as companies would like?
SWIFT’s corporate solutions were once limited to connecting companies with their banks, but that is changing. Whereas corporate members used to represent a very small minority of SWIFT’s membership, that minority has now grown to 10% of the total SWIFT community.
Corporate membership reached 1,000 in October 2012, but the true number may be much higher, according to Marcus Hughes, director of business development at Bottomline Technologies. “In reality, there are more like 15,000 corporate legal entities; in many cases they are part of multinational corporations; successfully using SWIFT to streamline payments and cash management on a multibank basis,” he says.
As the numbers continue to grow, SWIFT is developing its strategy to offer an ever-wider range of products to the corporate market. Although connectivity to banks remains the primary solution offered, a number of other solutions are available or in the pipeline.
"Connectivity is now only one of the four pillars that make up our full portfolio of capabilities for corporates."
– André Casterman, SWIFT
“Connectivity is now only one of the four pillars that make up our full portfolio of capabilities for corporates,” says André Casterman, head of corporate and supply chain markets at SWIFT. “The goal is to enrich the value proposition of the portfolio, really going beyond the basic connectivity proposition.”
Casterman, SWIFT: Alliance Lite2 is now the preferred connectivity option for corporates
Casterman says that the other three pillars relate to trouble-free payments and SEPA compliance, identity and mandate management, and certainty and efficiency in the supply chain. While connectivity remains relevant for corporates looking to implement multibank payments and cash management solutions, Casterman says that connectivity is not a prerequisite for corporates to benefit from other solutions offered by SWIFT, such as 3SKey and the Bank Payment Obligation (BPO).
“Beyond the 1,000 [corporate] users connected to the SWIFT network, it is important that we help banks continue to develop propositions which build on SWIFT standards, but which can be brought to the corporate market separately from connectivity—through banks’ proprietary portals, for instance,” he says.
SWIFT is certainly working to build its corporate offerings, but is it doing enough? Enrico Camerinelli, senior analyst at Aite Group, says that in some cases SWIFT’s origin as a bank-centric organization is slowing down product development for corporates. “In the banking world you want to take one step at a time, to make sure that everything is consistent with security and the restrictions that banks need to comply with,” he observes. “But when approaching corporates, you need to be much faster, nimbler and more agile.”
Camerinelli, Aite Group: When approaching corporates, you need to be more agile
IN WITH THE NEW
Nevertheless, for companies looking beyond connectivity from SWIFT, there are plenty of new products coming to market. Since 2010, SWIFT has introduced its digital identity solution 3SKey, its MyStandards platform and SWIFTRef, a global reference data utility.
Another of SWIFT’s latest developments is the BPO (Bank Payment Obligation), a new trade instrument comparable to a letter of credit, which uses SWIFT’s Trade Services Utility to match data electronically.
“The BPO uses corporate data flows to make it easier and faster for banks to provide payment assurance and access to a range of pre- and post-shipment finance solutions,” comments Hughes.
As a guarantee issued by banks in support of corporate trade, it should help banks provide supply chain risk mitigation and financing to their corporate customers.
Vollmer, Gilead Sciences: SWIFT Alliance Lite2 has exceeded our expectations
And the BPO is not only suitable for larger corporations. “This is a value proposition, which is available to small and medium-size enterprises, but that doesn’t mean that the SME needs to join SWIFT,” says Casterman. “They can benefit from this innovation through their banking portals and possibly through paper flows.”
Another interesting offering is SWIFT’s eStatements initiative, which was developed in collaboration with Bank of America Merrill Lynch and General Electric. The objective is to replace paper statements with electronic statements. “The goal is to save in terms of manual processes and physical delivery of paper, which always has a cost, and to provide access to the required information in the archive,” says Casterman.
The introduction of Alliance Lite2 last year brought a more attractive version of SWIFT’s newest connectivity solution onto the market. Casterman says, “Alliance Lite2 is now the preferred connectivity option for corporates joining SWIFT.”
Hughes, Bottomline Technologies: The BPO makes it easier for banks to provide payment assurance
Corporates are choosing it, according to Casterman, because of its simplicity in terms of contractual parties—they have SWIFT as one contractual party, and the cash management vendor as another—and many feel that they do not need a service bureau as a third contractual party.
This was certainly the case for Brad Vollmer, treasurer at Gilead Sciences. The biopharmaceutical company set up a connection to SWIFT last year as part of a larger treasury infrastructure project and opted to use Alliance Lite2.
“I was intrigued by the thought of having a direct connection to SWIFT and not having to go through a service bureau because it was one less relationship to manage,” says Vollmer. “I didn’t want to own the infrastructure because it changes so rapidly, but nor did I want to work with two vendors.
“My personal take is that the technology is at the point where we don’t really need any hardware. SWIFT is effectively an ASP [application service provider]; our treasury workstation is an ASP, and most of our other ancillary systems are ASPs.”
SWIFT may be expanding its portfolio to include solutions aside from connectivity, but as the arrival of Alliance Lite2 demonstrates, connectivity continues to be a major component of its corporate offering.
In addition to connectivity, SWIFT offers a range of other corporate solutions, which include the following:
• Bank Payment Obligation (BPO)—an undertaking from one bank to another that supports trade flows by guaranteeing that payment will be made once the relevant data has been matched electronically.
• eStatements—a solution allowing corporations to receive bank statements electronically.
• MyStandards—a central platform allowing banks to document their standards-related information. SWIFT is extending this tool from the bank-to-bank to the corporate-to-bank space.
• SWIFTRef—a utility providing payment reference data such as contact details, BIC (Bank Identifier Code), SEPA data and credit ratings in a format compatible with ERP systems.
• 3SKey—a digital identity solution allowing corporates to authenticate and approve transactions with multiple banks using a single token.