New Developments in Corporate Access to SWIFT

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New Developments in Corporate Access to SWIFT
Luc MeurantHead of Corporate Access
Programme Limerick, 13 September 2006
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Agenda

• Current offering in corporate-to-bank space
• Developments for 2006 and beyond

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Typical corporate-to-bank messaging landscape
Customer
Accounts payable
host to host X
Leased line
Accounts receivable
e-banking Y
Treasury
Other
e-banking Z
PSTN
fax-banking
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Corporates wish to access their banks over a
highly secure and standardised channel
Customer
Accounts payable
Accounts receivable
Treasury
Single gateway
Other

• Standard platform
• Standard communication
• Standard security
• Standard messaging

• Lower costs
• Higher STP
• Improved control /compliance
• Reduced risk

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Two models currently available for corporates to
connect to SWIFT

• Introduced in 1998
• Principle sponsored corporates can talk to all
  banks, for treasury confirmation deals
• Introduced in 2001
• Principle Each bank sets up its own environment
  to talk to its corporates. Corporate can join the
  MA-CUGs of each of its banks

TRCO(Treasury Counterparty)
MA-CUG(Member Administered Closed User Group)
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General Electric SWIFTNet case study

• GE was reaching the limits of its existing
  e-banking systems and was looking for an
  efficient scalable platform with global reach. GE
  was also looking to further improve
• Security
• Reliability
• Control
• Funds visibility
• With SWIFTNet, GE Treasury will achieve a 400
  ROI and an IRR of around 60 in the first five
  years. Forecasted cumulative net savings will
  exceed 10 million over 5 years vs. former
  solutions

Adoption drivers
Financials
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Arcelor/Mittal SWIFTNet case study

• In 2002, Arcelor Corporate Treasury decided to
  streamline its infrastructure to achieve greater
  visibility. Arcelor was also looking to increase
• Security
• Reliability
• Straight through processing (STP)
• With SWIFTNet, Arcelor will achieve a 600 ROI
  and an IRR of around 120 in the first five
  years.
• Forecasted cumulative net savings will exceed 8
  MEUR over 5 years vs. former solution

Adoption drivers
Financials
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SWIFTNet benefits go beyond pure cost savings
GENERAL ELECTRICARCELOR/MITTALCASE STUDIES
Reduced connection failures. From 50 pre-SWIFTNet
to none after SWIFTNet
GeneralElectric
100 improvement
Better Repair. Cash movement failures not
addressed same day dropped by over 86
86 improvement
Better funds visibility. Borrowing requirements
decreased by almost MEUR 10 per bank
ArcelorMittal
66 improvement
Borrowingper bank
Higher automation. The current 6000 paper wires
per year will become electronic
Paper wires
6000
100 improvement
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Corporate entities on SWIFTEvolution and profile
Total 150 corporates
150
Asia Pacific
108
ROW
7
55
13
22
57
16
23
NorthAmerica
Europe
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Corporates on SWIFTNetBreakdown by industry
sector
of SWIFT registered corporate entities Q2 2006
YTD
35
9
8
19
6
6
6
61
28 industry sectors
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Business drivers for financial institutions

• Respond to clear customer demand
• Unlock cost savings
• Reduction in customisation efforts for largest
  corporates
• Reduction in proprietary system
  costs/investments, if broad adoption
• Focus energy on value-added services, not
  commoditised connectivity

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Banks continue to deploy their offering
registered banks offering SWIFTNet services for
corporates Q2 2006 YTD
116
107
100
69
41
21
366 branches or affiliates YTD
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Agenda

• Current offering in corporate-to-bank space
• Developments for 2006 and beyond

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2006 Beyond Better addressing the needs of
corporates

• 1. Fostering standardisation
• 2. Simplifying back-office integration
• 3. Introducing easier model for corporate access
• 4. Supporting a broader spectrum of services
• 5. Simplifying on-boarding process

Corporates are key priority for SWIFT
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1. Fostering standardisation in corporate-to-bank
space

• Consistency will be further enforced by
  developing Usage Guidelines
• Additional increase in standardisation expected,
  as from early 2007
• Key area of attention
• Pilot is starting with 13 banks, 6 corporates and
  4 vendors on cash management
• Implementation targeted second half of 2007
• Additional efforts foreseen on remittance
  information

Current SWIFTNet messaging
XML
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2. Simplifying back-office integration

• Broad and increasing support from vendors
• On-going initiatives with most corporate-to-bank
  vendors to support SWIFTNet integration
• Treasury Application vendors
• Middleware providers
• ERPs
• Specific initiatives with some vendors to ensure
  complete end-to-end integration, e.g.
• SAP fully integrated SAP solution for SWIFT
  (incl. software installation, consulting, etc.)

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3. New model January 2007
Bank A
Bank A
Corporate A
Bank B
Bank B
Corporate
Corporate B
Bank C
Bank C

• Easier access Connect once
• Stronger standardisation opportunities
• Listed corporates in FATF countries are eligible.
  All others can still join through MA-CUG or TRCO

MA-CUG remains available
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3. New model broad community support

• 98,6 support at last SWIFT AGM

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4. Offering a broader spectrum of services
PHASE 2 Enrichvalue proposition
PHASE 1 Focus on cash and treasury management
Timing Key banks services available through
SWIFT

• Up to 2007
• Cash liquidity management(incl., e.g., ACCORD,
  CLS third party)

• 2008-2009
• Securities services
• Exception investigation
• Trade services
• Secure e-mail

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5. Simplifying on-boarding process

• Company-wide Make it easier to work with SWIFT
  programme, with clear benefits for corporates,
  e.g.
• Corporate on-boarding and implementation roadmap
  (October 2006)
• Faster network activation of corporate users
  (January 2007)
• Corporate product bundle SWIFTNet Kit for
  corporates (March 2007)