SWIFT has been handling financial messaging since 1977 yet it took another 24 years to announce the availability of corporate access. The bulk of its 1,400 corporate members signed up since 2001 still originate from Europe and the US, but Asia-based corporates have been following quickly.
During a plenary session at the 2007 SIBOS Conference, the then Virgin Atlantic Group Treasurer, Alex Harris (now at Al Muhaidib Group in Saudi Arabia), commented that while SWIFT had made progress in “lowering the barriers to entry”, the corporate access model was “weighted heavily in favour of the very large multinationals.”
Harris had a point: the few corporates that were interested in accessing SWIFT directly had to sign up to the cumbersome Member-Administered Closed User Group (MA-CUG) model and only the major multinationals could justify the effort and expense. The introduction of SWIFT’s Standardised Corporate Environment (SCORE) changed all that.
A wider audience
In recent years, SWIFT has also been trying to make it even easier for corporates to join and connect to the network. Its Alliance Lite2 proposition, which is being positioned as a cloud-based solution seems to be stimulating the market. And as the Treasury Management System (TMS) vendors continue to roll-out their own cloud-based offerings by putting the two together, a corporate can end up with almost nothing installed on its premises, the entire solution accessible through the web.
The first iteration of Alliance Lite was positioned as an entry-level system and bundled SWIFT membership with a limited usage of messaging (an average of 4,000 per month). For various reasons this didn’t quite hit the sweet-spot for many corporates considering SWIFT. In contrast, Lite2 is not in any way limited. Another lesson learnt from the original Lite venture is that corporates are no longer left to their own devices when it comes to set-up; SWIFT is now doing this for them (for a fee). Ongoing costs then include a monthly traffic (usage) fee and a banded subscription fee (based on the level of usage).
Today, the aim is very much on a broader sweep of commercial players. To SWIFT, this means opening up to companies with revenues of between £500m and £1bn as it increasingly looks to the mid-tier sector to swell the ranks.
Spreading the word
SWIFT is now offering a number of services and products aimed directly at corporates of all sizes – but especially those that are multi-banked – proof that it is trying to lower the barriers to entry and that its options for access are no longer weighted heavily in favour of the very large multi-national companies (MNCs). The slow but steady level of uptake of SWIFT corporate services in APAC is more a symptom of the level of awareness than a lack of suitable products. As is the case across the globe, SWIFT membership is not appropriate for every business, but what is certain is that if the level of understanding and knowledge is communicated at the right levels within the banks and the wider financial services industry, the interest of the corporate community is practically assured.
In simple terms, by joining SWIFT, corporates enjoy access to over 9,000 financial institutions spanning more than 200 countries.
Where are we going?
SWIFT’s recent developments have extended the value proposition to include multi-asset class matching, documentary trade, supply chain finance, end-of-period statements and regulatory reporting. As cloud-based solutions continue to grow, it is expected that more and more corporates will embrace the growing range of SWIFT connectivity options and solutions.
SWIFT is expanding its portfolio of products all the time to help the banks enhance their own transaction banking solutions for their clients. These developments focus mainly on the following core areas:
Payments and cash management
ISO 20022 is a key driver here and enables the banks to offer additional value-add services such as extended remittance information, concentration solutions, mandate management and bank billing reporting. SWIFT is also making it easier for the banks to on-board new corporates.
Mandate management and user identity
Secure digital signatory tools are a key requirement, so 3SKey provides an opportunity for the banks to securely authenticate end-users and validate the financial transactions based on individual mandates.
MT798 messaging standards have been welcomed by both the banks and corporates. These enable banks to support the automation and centralised processing of letters of credit (LCs), standby LCs, collections and demand guarantees.
Approved payables financing
Perhaps the biggest example here is SWIFT’s Bank Payment Obligation (BPO), a relatively new instrument to support trade settlement using ISO 20022 data structures.
Greater digitisation of end-to-end trade transactions
Again ISO 20022 is key here and SWIFT is connecting the emerging FinTech platforms and encouraging them to adopt ISO 20022 standards.
Finally, as companies continue to centralise and automate their payables/receivables processes through electronic invoicing, e-documentation and purchase-to-pay (P2P) models, SWIFT has an important role to play in connecting these P2P networks. The organisation has already taken steps by working with EssDOCS, a specialist vendor in the field. Next, it needs to connect the major P2P networks to SWIFT – a development the industry will watch closely.