SWIFT for Corporates in 2014: Moving Beyond the Service Bureau

Stacy Rosenthal, Head of Corporate and Payments Strategy Americas for SWIFT, said that a treasurer asked her recently why anyone would opt to use a third party to connect to SWIFT now that Alliance Lite2 is available. She agreed that there is really no substitute for direct connectivity.

“You’re introducing another potential point of failure,” said Rosenthal. “You’re using another connection to get SWIFT. You’re eventually on SWIFT, but you’ve outsourced and put your data somewhere else to get to us. Why take an off-ramp, when you can go directly on the highway?”

Moving On from Third-Party Vendors

Danny Smedley, Director of Customer Support, Americas for SWIFT, agreed that more and more corporate treasurers are moving away from service bureaux to direct solutions. “If you’re going to deal with multiple people, eventually the message is going to go through SWIFT,” he said. “When you’re dealing with SWIFT directly through an Alliance Lite2 connection, there’s not a ‘person in the middle.’ There’s not someone else providing connectivity. Lite2 is user-friendly.”

Smedley provided an example of how connecting to SWIFT through a third party could create numerous headaches for corporates. “Let’s say you’re having connectivity problems,” said Smedley. “If there’s a third party in there, who are they calling? Who are they talking to? Those are the types of issues with the network provider. SWIFT is interfacing directly with those people. What I’ve seen is, we’re able to get in and get those issues resolved. We have strong relationships with the providers that we deal with. We’re able to put a lot of force behind when we make a call on behalf of a customer.”

Matteo Monaco, Head of Corporate Sales North America at SWIFT, has also observed many of SWIFT’s corporate clients moving to direct connection. “It probably was the other way around just a few years ago. Currently, close to 50 percent of corporates joining SWIFT opt for Lite2.”

Added Monaco:  “If we are certifying the service bureau, corporates expect that we have gone through their infrastructure and approved it. So that’s why we have to up it another level. We’re taking responsibility on behalf of the service bureaus.”

Corporate Trends

SWIFT added 173 new corporate groups in 2013, bring its grand total to 1,250 in the Americas, EMEA (Europe, the Middle East and Africa) and Asia. That includes 31 percent of Fortune global 500 companies.

Corporates have been making heavy use of SWIFT’s bank on-boarding services. “They are leveraging these services to onboard their various banking partners across countries and across disciplines,” Rosenthal said. “It’s really challenging for corporates to understand what formats to use in certain countries; when to use SWIFT standards, when to use traditional FIN messaging, versus the ISO 20022 messaging.”

SWIFT’s consulting services have also nearly doubled over the past year. Monaco sees this as the result of SWIFT providing more of “a turn-key solution” for its corporate clients. “We’re not only providing connectivity to the network, but all of the integration that the service bureaux were providing now can be more done through the SWIFT channel itself,” he said.

Customer support has also been a key cog in that process, Smedley explained. “SWIFT’s Customer Support is truly 24/7, 365 days a year,” he said. “I oversee a team that responsible for North America, South America, and the Caribbean Islands. SWIFT has Customer Support teams in Asia and Europe and together there are 20 different languages that our engineers speak, and they’re all trained—most of them have engineering degrees and are trained extensively on our products and services.”

Security Concerns

Cyber security, and the reputational risk that goes along with it, are top-of-mind for SWIFT’s corporate and banking clients. Rosenthal noted that banks have recommended SWIFT to their corporate customers, given the current risks in the payments landscape. “I think [current threats] have definitely created more industry awareness and definitely led to more adoption of SWIFT,” she said.

Monaco agreed. “Cyber threats are definitely causing more and more organisations to look at SWIFT and the security around it,” he said. “I think that at the end of the day, nobody gets fired for connecting through SWIFT and using SWIFT as the primary network. We take cyber threats very seriously.”

SWIFT’s 3SKey technology, which provides secure authentication by allowing corporates to sign financial messages and files sent to their banks with a single signing device, has gradually seen more and more interest both in Europe and the US. “We’re definitely seeing more organisations interested in having that additional layer of security,” Rosenthal said.

Additionally, Rosenthal believes that SWIFT’s non-vendor status has helped it build trust with both corporate and banking clients. “We’re an industry-owned cooperative,” she said. “I think that gives people peace of mind and a level of comfort that they didn’t have before.”

Matteo added that for SWIFT, it’s “not about” the bottom line. “Vendors go in and out of different markets, but that’s not the way that SWIFT operates,” he said. “We operate for the benefit of the community.”

New Services

SWIFT has gradually been introducing more services to benefit its corporate users. “Now what we’ve really done is put together not only the connectivity piece of the puzzle, but how to handle things like reference data,” Rosenthal said. “We also have things that go beyond the SWIFT network that are offered to non-SWIFT connected participants.”

Over the past year, SWIFT has rolled out two transformation applications that allow corporates to convert messages to their back office application, regardless of what application they have. “It’s an application-neutral solution, as well as being bank-neutral,” said Monaco.

Another one of SWIFT’s new services is its BICPlusIBAN directory. The directory contains the full list of ISO9362 Bank Identifier Codes (BICs) with the national bank/branch identifiers, as well as information such as the codes used in International Bank Account Numbers (IBANs) and the corresponding BICs that the account holding banks issue to their customers with the IBANs.

“So if a client is sending a payment into the SEPA zone, they can then match up the BIC and IBAN with that payment,” said Monaco. “This is something corporates need to make payments. And this is the first time we’re offering a service that a client can buy that is outside of membership.”

Rosenthal added that the directory can be a crucial tool for organisations aiming to become SEPA-ready ahead of the 1 August 2014 deadline, as well as those trying to minimise payment exceptions. “If it’s a late payment, how is it going to impact a shipped good? How is it going to impact that contract?” she asked.

Interestingly, the majority of corporates who have adopted the directory have been ones who are not connected to the SWIFT network. “I think that’s just a really good example of SWIFT as a cooperative helping the industry mitigate risk, improve automation and lower the total cost of ownership as a process,” Rosenthal said.

Conclusion


SWIFT’s corporate clients, once so reliant on service bureaux, are now far more interested in direct connection and those numbers are only expected to grow. Recognising this trend, SWIFT has begun phasing out third parties and is aiming to get clients connected through the cloud on Alliance Lite2.

Additionally, SWIFT is moving beyond simply being a secure network to help corporates get cash visibility; the organisation positioning itself to be core to treasury operations. “We find that almost every treasury project that involves technology, people are definitely talking to us and understand that we are linked into the process,” Rosenthal said.

This article was featured in the 2014 gtnews SWIFT Buyer’s Guide. Download the full guide here.

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