Since the beginning of 2008 the payments landscape has changed considerably. The introduction of the Single Euro Payments Area (SEPA) and growing adoption of SWIFT for Corporates have had a significant impact. The focus on standardisation, centralisation and security in this area has also intensified.

As the payments environment has developed, so too has the role of the corporate treasurer. Treasurers are, now more than ever, responsible for ensuring that processes are as streamlined as possible, and of course, compliant.

Banks have echoed this trend by seeking to create global solutions for corporate customers that meet both industry requirements and treasurers’ needs. A forward-looking prototype of such a solution is UniCredit’s eBanking platform with SWIFT connectivity, as it will capture the benefits of both technologies.

SWIFT for Corporates

SWIFT is the banking industry-owned co-operative supplying secure, standardised messaging services and interface software to nearly 8,200 financial institutions in 208 countries worldwide. SWIFT has been a success story on the interbank side for the last 30 years and since 2001, it has been available to corporates as a means of communicating with their banks.

SWIFTNet, SWIFT’s latest communication protocol, provides corporates with the opportunity to exchange financial information (payments, securities orders, reporting) with their banks through one secure, standardised platform, as opposed to multiple connections through electronic banking SYSTEMS. There are currently three ways that a corporate customer can access SWIFTNet: as a TRCO (Treasury Counterparty), by joining one or more MA-CUGs (Member Administered Closed User Groups) and by utilising SCORE (Standardised Corporate Environment). UniCredit offers MA-CUG services and is registered in SCORE, giving corporates full connectivity to the SWIFTNet network and the capability to perform many different messaging services.

One of the primary reasons why UniCredit decided to offer SWIFTNet to corporates, large, medium and small was “the ability to offer a solution that is really global without (the corporate) needing the capability to develop or deploy that on their own.” There are also clear customer benefits in providing SWIFTNet to corporates as it:

• Provides a homogenised communication infrastructure with banks around the world.
• Meets the highest security and availability standards.
• Offers independence from proprietary country standards and single bank electronic-banking products.
• Simplifies implementation and auditing of statutory payment regulations with global impact (eg Sarbanes-Oxley).
• Streamlines centralised, worldwide payments, account information, FX confirmations, enquiries, bilateral data exchange in standard or local format.
• Can generate substantial savings in resources, for example: controlling, administrative processes, and documentation.

Markus Straußfeld, Managing Director, Cash Management and eBanking Sales, UniCredit comments: “UniCredit fully supports SWIFTNet for its corporate customers, enabling them to connect to any of their banking partners via one single access. A corporate treasurer’s dream come true.”

eBanking

Electronic banking has played a prominent role in changing the face of the financial services industry, in terms of environmental impact as well as technologically. Banks are offering an ever increasing range of online services and products as corporates continue to seek automation and strive to fall in line with green policies. Corporates are demanding integrated, real-time solutions to enhance straight through processing (STP) within their operations and processes so as to improve – and ideally lessen the burden of – cash management.

Although electronic banking platforms are state-of-the-art, the introduction of common standards, as with many technological developments, represents a significant obstacle. Often, the ability to transfer information across different platforms within an organisation is hard enough, let alone between banks in different geographic locations.

Tailor-made solution

In light of the challenges faced by corporates, and not content with offering an everyday SWIFT solution, UniCredit then proceeded to innovate and enhance its product offering by combining corporate access to SWIFT with its classic eBanking technology:

EuropeanGate is the payment platform used within the UniCredit Group.

Through a single entry point, payment instructions can be forwarded, payments can be routed and conversion services can be carried out.

EuropeanGate covers all countries within the group. By operating a single account through the platform, customers can have the equivalent of a local account in each country, if desired.

Key features and benefits

• Simplicity.

  Although the technology behind the platform is state-of-the art, UniCredit’s solution is purposely uncomplicated so that it is not hindered by the high daily volumes that are expected by corporate customers.

• Centralisation of payment traffic.

  The aim is for each corporate to have only one point of entry, ie one platform to handle all of its payment transactions, both domestic and international. In turn, standardisation of formats, together with same day processing, will reduce wastage of both time and money.

• Reliability.

  UniCredit chose to build upon existing, proven systems, ie their eBanking product and SWIFT, so that the platform would be robust and reliable. The aim was not to ‘reinvent the wheel’ but to innovate using trustworthy technologies.

• Compliance.

  The platform will be able to perform Single European Payments Area (SEPA) compliant functions as well as a range of international operations outside the scope of SEPA, thereby enhancing the global reach of the platform.

• Usage of electronic signature.

  Many countries now use digital signatures for their eBanking but SWIFT does not support the use of such electronic authorisations. Integrating SWIFT into an eBanking platform may mitigate the need for double authorisation and according to Franz Zahn, Head of Global eBanking Development, “This will make the ‘step in’ easier and also more attractive for smaller and non multinational corporate customers.”

• Advice/administration.

  To complement its offering, UniCredit is the first point of contact for any product related advice and will undertake any SWIFT related administration on behalf of the customer. UniCredit also carries out all the necessary SWIFT updates on behalf of customers, which highlights the user friendly nature of the solution.

• Cost.

  Corporates will not have to invest in any middleware for SWIFT connectivity or indeed purchase a SWIFT interface. Maintenance and updates will also be UniCredit’s responsibility, not the corporate’s. This removes a significant access barrier for many medium and smaller sized companies. The corporate does of course have to join the appropriate MACUGs or qualify as a SCORE user.

Why did UniCredit decide to introduce a combined eBanking and SWIFTNet service?

JL: UniCredit is a frontrunner in this area. With regard to corporate access to SWIFTNet, we are number three in the world in terms of volumes and with regard to filing services, expertise and customer contact we are one of the top banks in Europe.

This is a strategic product for UniCredit as we are constantly looking for improvements and enhancements to our services. The corporate side of SWIFT is too complex for corporates who don’t have the resources to cover a huge project or the IT structure, particularly those who are using SWIFT for the first time.

GH: Yes, the product is designed to ease SWIFT access for large customers who probably would have done it anyway and enable a midsized corporate that would not have been able to access SWIFT before to do so. With globalisation becoming more and more important and with even small companies no longer working in one country, it became imperative for us to offer a network which truly is worldwide.

What makes UniCredit’s platform unique?

GH: A corporate company is in a sense forced to invest in a complete SWIFT interface, even if they are only using a small share of its capability. Why do this, particularly when they have no eBanking functionality in that interface? They somehow have to connect to another system to give them the eBanking functionality they need. What we did is combine these so we give our customers the part of SWIFT that they need, not the lion’s share that they don’t need, and all that within an eBanking product so they get the best of both worlds.

JL: eBanking helps as SWIFT does not use electronic signatures, whereas local formats and standards might use these. Therefore one of the main challenges was to set up some kind of approval concept internally, not only in the ERP system but also for the connectivity to SWIFTNet. An eBanking platform such as ours could potentially cover that.

How do corporates access the platform?

JL: When a corporate wants to sign up we will set up an electronic banking agreement and then we add users, account numbers, order types for payment instructions etc and at the same time we will add to this a SWIFTNet agreement, so it is a bilateral request.

GH: In Phase I – the product is currently in prototype – the product will be installed at the customers’ premises and then accessed on site or through the internet, that way offering distributed signatures and log-ins. It is planned to offer the same solution from an internet based portal in Phase II.

Why, in your opinion, should corporates choose UniCredit’s solution over other solutions?

JL: It’s simpler in the sense that it is less complex and it also gives the customer more flexibility as they can still have access through local standards with other banks. It gives them more independence generally in the banking market because a corporate can contact another bank outside of the UniCredit Group and connect through SWIFTNet. It will be less time consuming and less expensive because corporates do not have to invest in a middleware platform, in extra IT or place processes with an outsourcing company.

What corporates are really complaining about right now is the complexity of accessing SWIFT and that it is too expensive, that’s why we built up this new development.

GH: In addition, we carried out extensive independent and anonymous research on the ground to ensure that our product exactly met our customers’ needs.

Security

In today’s environment, stringent security should not be seen as a key feature or benefit of a product – it should be viewed as essential. Many companies have learnt the hard way that a single breach in system security could give rise to sensitive data being disclosed, and ultimately, abused.

UniCredit has ensured a double layer of security for its new platform, with the tested security of its own eBanking platform layered over SWIFT’s secure and reliable network. SWIFT is renowned for its reliability and continuity planning, making the system virtually fail safe. With ‘risk management’ and ‘business continuity’ becoming core phrases in the treasurer’s vocabulary, this extra security is a distinct advantage.

Future developments

UniCredit is currently in talks with a local ERP provider with the aim of developing a seamless integration with existing ERP systems.

It is hoped that this will mitigate file-based cross-linking and thereby reduce any inherent security risk.

In addition, the direct integration of the ERP system into the eBanking platform with SWIFT connectivity could help corporates to improve their IT auditing, which is often a sensitive subject.

UniCredit is also looking to enhance this solution, not only through web-based portal access but also by including SWIFTNet InterAct (InterAct) usage. InterAct offers real-time messaging services. Based on XML standards, InterAct enables an automatic and immediate response to messages between two systems/parties and is therefore targeted at time-critical activities.

Conclusion

In a turbulent market, a treasurer should to adopt a ‘back to basics’ approach in order to maintain effective systems and controls as well as to meet the demands of an expanding role. UniCredit has thoroughly researched the challenges facing corporates today and has reacted to the broadening responsibilities of treasurers as well as industry requirements and regulations by integrating SWIFT into its eBanking platform. This simple solution has great potential to respond to current demands as well as future developments.

N.B. The eBanking platform with SWIFT connectivity will be piloted after being showcased at Sibos 2008 in September.

UniCredit Group

UniCredit Group is one of the largest banks in Europe with a network of over 9000 branches servicing 40 million clients in 23 countries. Global Transaction Banking (GTB) is enhancing the Group capabilities to serve its financial institutions and corporate customers by leveraging the international network and supporting local distribution with cutting-edge products and services.

In order to heighten its global capability and sustainability to growth, GTB covers trade finance and structured trade finance, as well as correspondent banking, and cash management and e-banking areas respectively.

Contact details:

Gisela Helms

UniCredit Group Global Transaction Banking/SWIFT Products

Gisela.Helms@unicreditgroup.de

Jürgen Lutz

UniCredit Group Global Transaction Banking/Cash Management Sales

Juergen.Lutz@unicreditgroup.de