SWIFT Connectivity: Corporates Find Advantages in Two Options

Q (gtnews): What are your corporate treasurer clients looking for, in terms of connectivity? Are they looking to connect directly with SWIFT via Alliance Lite2 or are they using service bureaus?

A (Jordan M. Olack, KeyBank):
As we work closely with our clients, we are seeing a push to get more standardised into a simple, one-stop-shopping format. I think SWIFT is providing a really unique service for corporate treasurers to connect with financial institutions, enabling them to automate and integrate information in a more standardised format.

We are also seeing financial institutions realign their investment dollars and overall integration points into this space as well.  As these capabilities become more front-and-centre to our corporate treasurers, we are making it a priority to ensure that this process is seamless for our clients. So, to answer your question, the market still favours service bureaus. However, we are seeing more clients move to Alliance Lite2; in my discussions with SWIFT, this is becoming an increasingly popular connection method.

Are the institutional bank clients the ones who are favoring Alliance Lite2? Or is it the middle-market companies? Or both?

I can tell you it’s been coming from both.  We are seeing clients of all sizes weighing the complexity of their operations, the number of accounts they have and their over-arching ability to make the investment. Our role as a financial institution is to act as a trusted advisor to our clients by helping them kick-start the conversation with SWIFT and make the most informed decision on the right connectivity method that yields convenience and control, all while balancing costs.

What advice do you give your corporate clients when they are looking to improve their connectivity?

Generally speaking, it’s about making it easy for businesses to interact with their financial institutions.  We look at that on two fronts: First, what connection do you want? Do you want to do something via the web, or do you want to do a direct transmission where you can automate? Or perhaps SWIFT can provide the efficiencies to consolidate all banking connectivity.

Second, what is the investment and resource appetite? Institutions like KeyBank now make it much easier for clients to connect with the convenience of translation services. We’re getting away from being so strict with the type of format required, and we’re focused on providing open-ended alternatives.  So, the message to our clients is, the system that you’re using is not important. It’s about the data in the system and the ability to both send and receive that data for processing.  It’s all about making it easier for clients to exchange information.

As we have these interactions with our clients, the advice that we’re giving to them is focused around their processes. We are working to better understand their business processes so we can advise our clients on the right option that helps to increase their flexibility, provide better convenience and controls on the back end, and ultimately reduces costs. If fitting into a financial institution’s access protocol or standard is exceedingly costly, we suggest they seek partners who can help them reduce that overhead. Doing so ultimately leads to better working capital management. Clients then take greater control of their cash management and are in a stronger position to make their businesses run better every day.

What about your smaller clients? What trends are you seeing there?

We are starting to see some of our smaller clients get on board with exchanging files. Five years ago or so, these clients were perfectly content using Excel spreadsheets. Now they are embracing what direct connectivity can do for them, whether it’s sending an automated clearing house (ACH) file, or receiving account balance and activity information.

While online banking platforms typically are the primary connectivity channel, smaller companies are thinking about how they can become more efficient and best meet their requirements for secure, resilient and standardised message delivery by leveraging connectivity methods such as SWIFT.

 

Electronic bank account management (eBAM) has been another one of SWIFT’s key initiatives over the past several years, though they’ve had trouble getting it off the ground. Are more banks and corporates getting on board, particularly since SWIFT’s industry collaboration last year with Citi, JPMorgan, Bank of America, etc.?

Yes, we are certainly seeing the interest level and activity in the eBAM space picking up. The ability to streamline the management of bank accounts and associated documentary requirements can yield significant benefits for both corporates and banks. However, the talk about electronic bank account management has certainly outpaced the actual execution. The output from the collaboration among the banks you mentioned, SWIFT and others in the Global Rapid eBAM Adoption Team, or GReAT, has opened the door for more broad adoption based on the standards that have been established for the message exchange.

Clients are definitely starting to ask for eBAM, especially the institutional bank clients that are multinational and multibank. As we mobilize our activities and have these direct interactions with our clients, as well as keep up to speed with what others are doing, we view eBAM adoption by our clients as a mid-tier time horizon activity.

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