Q&A SWIFT for Corporates: The State of Play

Q (gtnews): Over the past year, what trends have you seen in the relative take-up of the different SWIFT for Corporates connectivity methods – direct access, Alliance Lite and service bureaus for corporates?

A (Jon Ashton, global head of e-channels, Barclays Corporate): When the SWIFT for corporate ‘pioneers’ originally wanted to connect to SWIFT, they had little choice but to build private infrastructures; and some outsourcing-averse organisations continue to do so today.

It remains challenging however for all but the most technologically savvy corporates to connect directly to SWIFT and using a bureau remains the most common way for multinational corporations (MNCs) to link into the network. We believe that this will continue to be the growth area by way of ‘connectivity methods’. Solutions such as Alliance Lite, which is a quick start option by way of a SWIFT front end, are available, but we are not seeing any real traction by organisations to adopt it. We believe its use will evolve as the client segments that see benefits in using SWIFT evolve, and may find its niche, possibly as a contingent solution to the SWIFT bureau connection.

Q (gtnews):What are the main drivers for corporates to join SWIFT in some form today?

A (Ashton): Corporates joining SWIFT are still driven by needing to operate in a multi-bank environment and wanting to make that experience as seamless and as simple as possible. At the outset, they would also be looking to reduce costs by rationalising solutions that are bespoke to particular banks. The message standards that SWIFT provide is also key to corporates with anticipated benefits around improved payment processing and bank statement reconciliation.

The introduction of new services driven by SWIFT, such as electronic bank account management (eBAM), is also playing a part in encouraging corporates to join SWIFT.

Q (gtnews):Do you think that SWIFT connectivity offers corporates additional benefits than it did, say, 18 months ago? If so, are these particularly found through one of the connectivity methods mentioned earlier, or are they universal?

A (Ashton): SWIFT connectivity is not changing, but the models around supporting it are evolving, hence bureau services have much better defined service level agreements (SLAs) and associated pricing. They are also very transparent around what a corporate can expect from them. The interaction between the client, bureau, SWIFT and bank has also evolved to the point where the underlying workflows and service models are now fully understood and supported accordingly.

Developments in FileAct, particularly around the use of XML (ISO 20022) has begun to spark the interest of corporates. This opens up opportunities for additional consolidation of cash management requirements, e.g. access to VocaLink for bacs submissions in the UK (allowing the user to switch from a BACSTEL-IP infrastructure).

Service bureaus are well positioned to support such developments.

Q (gtnews):Corporates can bank in some exotic places around the world – will they find that SWIFT for corporates offers them the same benefits everywhere, or are there certain areas where banks find it difficult to, or just don’t, support the SWIFT for corporates model?

A (Ashton): This is perhaps more of a bank specific limitation as opposed to one of jurisdiction or geography. Some banks will not support SWIFT for corporates at all, whereas, others, perhaps smaller banks, may have surprisingly sophisticated solutions.

The benefits therefore of using SWIFT will be influenced by what is available locally. Looking at a corporate linking into SWIFT in a country such as in Germany, they will decide the merits of using SWIFT over the multi-bank capability electronic banking internet communication standard (EBICS).

How that corporate then interacts with the myriad of countries around the world will be a combination of direct access to those banks via SWIFT or indirect access via a preferred banking provider that has connectivity into the more exotic places. Corporates can then be supported in countries where SWIFT is not fully enabled via banks’ own internal routing and networks.

Q (gtnews):Corporates looking to outsource their SWIFT connectivity have a huge number of service bureaus to choose from. What are the main factors you believe corporates should take into account when selecting a bureau partner today?

A (Ashton): The use of a service bureau ultimately will be driven by quality of service and location. Location means for example that the French corporate market in combination with their banks will see benefits in using certain bureaus that may be locally located and these bureaus could easily be different to those in the UK or Germany.

Due to the importance of SWIFT in a client’s workflo, i.e. they are making payments via the SWIFT network, the quality of service will be paramount. Pricing also has to be competitive but it isn’t a true differentiator.

SWIFT requires all bureaus to submit their solutions for scrutiny and assessment under their SWIFT ready accreditation programme – this allows corporates to view all accredited bureaus and their capability.

Q (gtnews):How are service bureaus addressing any security worries that corporates may have about outsourcing their SWIFT connectivity?

A (Ashton): The underlying security of the ‘links’ between the client, the bureau and SWIFT are all managed to the same standards of security that would apply if a corporate sent instructions to their banks directly.

The main area of concern could be more to do with the privacy of data when sent to the bureau.

This issue is a very generic concern regardless of what is being outsourced, hence it isn’t a challenge that would sit solely with the bureau service but is one that they need to address and can influence the location and company registration of a bureau.

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