6Agenda What is SWIFT? What's in it for a corporate? How to connect and what do you pay?What need banks to do to get ready?Case studies?
7What corporates say on SWIFT value “… run a central platform with a single standard for every country and every bank”VP Finance & Treasury, T-Mobile International“… achieve all objectives of our treasury centralization project”Head of Treasury and Risk Management, Iberia“We took SWIFT to …“… build one central ‘source of truth’ for banking data”Group Manager, Treasury, Microsoft“… have a standard and reliable process with all our banks” Group Treasury, Petronas“… reach all our banks directly, with the highest security”Head of Treasury Control and Reporting, Novartis
8Corporate Treasury Drivers COMPLIANCERegulators (SOX, SEPA)Internal controlsSub heading if requiredCOSTSFTEInfrastructureRISKOperationalSecurityAutomationStandardisationCentralisationLIQUIDITYMANAGEMENTWhere is my cash?
10SWIFT: A secure, standardised global single window to the financial industry CORPHUHBAccountspayableMiddlewareAccountsreceivableSWIFTNetTreasuryOther
11SWIFTNet messaging services offering FIN:Store & Forward messaging (e.g. MT101, MT940)FileAct:Real-time or S&F file transfer for structured or free format filesInterAct:Real-time or S&F messaging forquery / response and transaction inputBrowse:Online information visualisation
12Banking services Cash Management High value/urgent payments and reportingLow value/non urgent payments and reportingHigh value payments are carried over FIN, using MT101 (Request for Transfer) and reporting on transactions or on cash positions can be done using MT942 (Interim Transaction Report) or the end of day MT940 (Customer Statement)Low value payments are typically bulked and are carried in files using FileAct. Reporting on such payments can also be done over FileAct as well as disbursement files, check files …Payments files (e.g. ISO 20022, EDIFACT)Reporting files (e.g. ISO 20022, EDIFACT)
13Banking services Treasury Management Liquidity ManagementFinancial Risk ManagementLiquidity Management (e.g. pooling of account) involves payments which are urgent and of high value. Such payments are carried over FIN using the MT101 (Request for Transfer)Foreign exchange deals (e.g. spots, forwards) are confirmed with MT300 (FX confirmation), for money market deals, use the MT 320 (Fixed Load/Deposit Confirmation)
14Banking services Trade Finance Import Letter of CreditExport Letter of CreditApplicant can use the MT 798 (Trade Envelope) over FIN to apply for a L/C, Guarantees and Standby Letters or amend information. Bank can advise applicant about the issuance or amendment of a L/CFor export L/C, as the advising bank to the beneficiary you can offer FIN to exchange trade data using the MT 798 (Trade Envelope)
15Electronic bank account management (eBAM) PaperYesterdayTodayXML messagesSupporting documentsFaxSlowLow integrationExpensiveLow satisfactionAutomatedDematerialisedStandardisedFaster/cheaperScope: account opening, maintenance, closing + reporting on account features (e.g. auditor requests).Key benefits: time and cost savings from improved control, reduced errors and increased STP; improved customer satisfaction (for banks)Timeline: SWIFT solution and ISO since end 2009TODAYManaging bank accounts involve physical transfer of documents and person to person communication. It therefore results in manual processing (which is costly, slow and subject to human error) within Banks and Corporates who have to rekey exchanged information into their back office systems and/or ERP’s.Moreover, corporates working with different banks have to adapt to each bank process/set of documents. Very little harmonisation exists between banks. This statement remains also partially valid between banks from a same Banking Group.Process steps coverOpening accounts: supporting doc’s are numerous and process can take up to 3 weeks to completion as mainly paper based today. Frustration is high on the corporate side, what banks are willing to fixAccount maintenance: in terms of volumes, the most important and mainly refers to maintenance of mandates and signatories. On average, volume of activities is 4 times more than account opening. Today can take up to 2 weeks to complete.Account closing: not to be under estimated as closing an account may impact existing bank accounts structure such as pooling. Volume wise, about the same as account opening. Can take up to 1.5 weeks to complete. Main issue here is lack of confirmation by the banks the account is properly closed
16Exceptions and investigations Beneficiary claims non receiptMissing information on BeneficiaryCannot apply paymentPayment initiationPayment ProcessingSettlementReconciliationExceptions & InvestigationsScope: modification/cancellation, claim non receipt, unable to applyKey components: ISO standards on InterActKey benefits: reduced enquiry cost, improved STP, faster reconciliation, improved treasury management1st presentation - date
17Homogenous authentication beyond SWIFT channel – 3SKey solution ALL BANKSMulti-BankMulti-ApplicationMulti-NetworkMulti-CountryIn practice, banks and their corporate clients must often manage and use multiple and different types of personal signing mechanisms (for example, multiple tokens or smartcards with different passwords). Using and maintaining different authentication methods in parallel adds to the complexity and leads to higher operational risk and cost.No uniform mechanismDifferent system per bankCostly & difficult to maintain
18The 3SKey solution in detail (1a+b)1aCorporate user obtains an inactive token from a bank2User activates the token on 3SKey portal(2)John = 4567834Token associated (registered) with several banks(3) (4)5CRL checkToken used to sign messages – bank verifies signature and revocation status(5)(6)6Operates PKI and portal, issues certificatesActivates token, associates with bank, signsDistributes token, associates user, verifies signaturesJohn
19Agenda What is SWIFT? What's in it for a corporate? How to connect and what do you pay?What need banks to do to get ready?Case studies?
20SWIFT Connecting the financial community Banks (Founding )Payment systems (1987)SCORE (2007)MA-CUG (2001)Clearing &Settlement systems (1987)Insurance IMI's (2001)Broker-dealers (1987)Governmentinstitutions (2001)Stock Exchanges (1987)Securities MI's (2000)Depositories (1987)Treasury Counterparties (1998)Trustees(1990)Payments MI's (1998)IMI's (1992)
21How to connect to SWIFTNet? Overview of Options UsersPrivate infrastructureSWIFTNet connectivity infrastructure owned and operated by the customerSWIFTNetVPNAppsShared infrastructureSWIFTNet connectivity infrastructure owned and operated by third partyAppsSWIFTNetUsersService BureauVPNUsersSWIFTNetInternetAlliance LiteSWIFTNet connectivity infrastructure owned and operated by SWIFTApps
22How to connect to SWIFTNet? 1) Private Infrastructure SWIFTNet connectivity infrastructure owned and operated by the customerAppsSWIFTNetUsersVPNInfrastructure:SWIFT Entry Kit (One-time EUR, recurring EUR/year)Registration Fees:1,250 EUR for BIC2.000 EUR for SWIFT Closed User GroupsMA-Traffic:FIN: between (reporting) and EUR (international, non-reporting) per chargeable unitFile Transfer: max EUR per paymentminimum traffic fee = 166 EUR / month
23How to connect to SWIFTNet How to connect to SWIFTNet? 2) Shared Infrastructure (via Service Bureau)Shared infrastructureSWIFTNet connectivity infrastructure owned and operated by third partyAppsSWIFTNetUsersService BureauVPNVPNInfrastructure:SWIFT Essential Kit (One-time EUR, recurring EUR/year)Costs for 3rd party connectivityRegistration Fees:1,250 EUR for BIC2.000 EUR for SWIFT Closed User Groups MA-Traffic:FIN: between (reporting) and EUR (international, non-reporting) per chargeable unitFile Transfer: max EUR per paymentminimum traffic fee = 166 EUR / month
24How to connect to SWIFTNet? 3) Alliance LiteUsersSWIFTNetInternetAlliance LiteSWIFTNet connectivity infrastructure owned and operated by SWIFTVPNAppsInfrastructure, Registration and Traffic combined2 available Pricing models:Flat fee: 850 EUR/month (including 4000 msg.*/month sent & received) EUR/additional messagePay as you go: 200 EUR/month EUR/message* 1 message = 1 FIN MT or 1 FileAct chunk of 100 Kb
25Agenda What is SWIFT? What's in it for a corporate? How to connect and what do you pay?What need banks to do to get ready?Case studies?
26Bank Readiness - Internal Bank Operational Readiness Guide:
28Agenda What is SWIFT? What's in it for a corporate? How to connect and what do you pay?What need banks to do to get ready?Case studies?
29Making your business case Additional benefitsProject typically paid back 2 x by operational benefitsFinancial benefits?Business caseOperational benefitsBetter security, more control, … difficult to quantify but can be key driverCosts
31Corporates on SWIFT Where do we stand today ? # registered corporate entitiesGeographical split779726Asia Pacific57910%Americas40218%72%EMEA
32Annual growth 75% # Mbytes exchanged over FileAct (live and pilot) Received by corporates26,763Sent by corporates+ 26%21,16618,484+ 14,5%16,905+ 9%15,304+ 10%
33Breakdown by region and annual revenues <500M500M-1BCAGmeeting_v4.pptx
34Corporates on SWIFT Breakdown by industry sector* Connected subsidiaries are counted individually160514039292827242230637 industry sectorsCAGmeeting_v4.pptx(*) Using the Industry Classification Benchmark (ICB)