This month we talk to Akbar Dhala and Tim Decker about what HSBC is doing in the SWIFT arena and other areas for the benefit of its corporate clients.
Tim Decker
Senior Product Manager, Head of e-Channels
Tim is the Head of e-Channels for Payments and Cash Management in Europe, with responsibility for managing the HSBCnet and HSBC Connect Products.
Previously he managed J.P. Morgan’s Global ACH business. He was also very involved in industry initiatives such as SEPA and also chaired a group of large banks, working on defining STP standards for payments. Prior to joining J.P. Morgan, Tim held a number of senior positions at Citigroup where he was responsible for the delivery of payments and client communications systems.
He originally trained as an electronics engineer in the British Army but has also worked in various technical roles in banking, insurance and local government. Tim has an MBA from Henley Management College.
Akbar Dhala
Head of Product Management, Payments and Cash Management
Akbar is Head of Product Management for Payments and Cash Management (Europe), responsible for the development and management of a portfolio of cash management products and services. Previously he managed the Payables and Receivables product portfolio, and has represented the Bank on a number of industry forums on both UK as well as European issues.
He is a cash management professional of many years’ experience in the European arena, having previously also held a number of senior positions in business management and strategy & development at Citigroup.
Prior to banking, Akbar worked in the telecommunications industry in a number of management roles.
Can we start by outlining HSBC’s strategy in the SWIFT arena with regard to its corporate clients?
Akbar Dhala: I would like to answer this question from an overall strategic position rather than focusing on SWIFT specifically because SWIFT, whilst an important component from a corporate perspective, is only part of the overall picture. Our strategy in the corporate space has remained consistent, but what I would say is that in the current environment the client relationship is very much ‘centre of plate’ for us. We are focused on three key themes right now:
- SEPA and how we harness its introduction for the benefit of our clients.
- The roll-out of our Global Liquidity Solution (GLS) will provide market leading solutions for multicurrency pooling and cash concentration.Customer Benefits include:
- Improved working capital management
- Treasury automation
- Global product consistency
- Visibility and control of cash
- Solutions for highly regulated markets
- SWIFT connectivity for corporates.
Essentially we continue to focus on our customers’ needs. We try to anticipate their objectives and aims around centralisation, increased automation and STP rates, integration with their back office systems, improved visibility of cash, re-engineering of processes, bank relationships and multi-bank connectivity.
We take ‘Voice Of Customer’ (VOC) very seriously at HSBC as evidenced by the establishment of our Strategic Visionary Forum (SVF), where selected clients are invited to share their visions and ambitions in the transaction banking arena. We then use the output of these forums to inform and drive our product development. We are also sponsoring the Corporate Access stream at this year’s SIBOS in Vienna and this will also be a major theme at EuroFinance in Barcelona in October.
Tim Decker: I would add that now is a good time for us, as a number of external factors such as SEPA and the Payment Services Directive (PSD) are acting as catalysts for change. We are pro-actively assisting our clients to harness the benefits of these initiatives. Many of our clients have already re-engineered, or are planning to re-engineer, their back offices and this in turn leads to a fundamental review of file formatting protocols and connectivity issues. These projects frequently require us to develop a suite of propositions in response.
As far as SWIFT is concerned, we are supporting the Treasury Counterparty (TRCO) access method, SCORE, MA-CUG, SWIFT bureau and Alliance Lite alongside both FIN and FileAct. This strategy enables us to satisfy the needs of our corporate clients in the SWIFT arena, whether they are a major Multinational Corporation (MNC), large corporation, non-bank financial institution or Mid Market Enterprise (MME)/Small Market Enterprise (SME) client.
It is often stated that SWIFT is only a viable solution for the very largest corporations and there are only a handful of companies actually accessing SWIFT today. Is this your view too or is HSBC seeing a different take up by its corporate clients?
TD: I alluded to this in my earlier answer but it is worth emphasising. We have taken a conscious decision to support a range of solutions which enable our clients to use SWIFT. This approach appeals to a large part of our customer base, not just the very large MNCs with huge transactional volumes. For this reason, we are seeing more and more of our clients considering SWIFT.
AD: I agree – we are seeing a growing number of companies actually accessing SWIFT today and our dialogue with existing and potential clients very often includes detailed discussions on the connectivity options, which inevitably includes SWIFT. As an example, many of our larger clients use our host-to-host solution to connect to the bank. This solution is now evolving into a direct access model using one of the methods Tim mentioned earlier.
TD: I would also like to add that certain external factors are helping to drive clients down the SWIFT road. One such example is the ETEBAC standard commonly adopted in France, which is being phased out and could be replaced with SWIFT.
Although the development of EBICs (Electronic Banking Internet Communication Standard) in Germany could provide a rival solution for the French Corporates.
Can you summarise HSBC’s approach to the various access options available to the corporate?
AD: Tim covered the various options we support earlier so I would like to pick up specifically on the SWIFT service bureau option because we are seeing huge potential here. We have developed a relationship with one of the major service bureaus and we are looking at ways of delivering real value to our clients. In essence we are focusing on addressing the connectivity issues mentioned earlier and developing ‘any-to-any’ mapping tools. However, our approach is to look beyond pure connectivity and use value-added technology solutions and the power of HSBC’s worldwide footprint to provide our customers with a global treasury, payables and receivables solution which can be integrated seamlessly into the back-office, delivering end-to-end straight through processing. The solution has been expanded to include elements such as AML filtering capabilities, MT940/942/900/910 feeds, as well as a reconciliations package that allows the client to migrate from individual transaction reconciliation to reporting by exception only.
TD: The decision taken by the client with regard to SWIFT access focuses on three key drivers:
- Cost.
- Volume.
- Complexity.
Because of our decision to support the full suite of access options, we can help our clients make an informed decision on which route is the most appropriate for them.
AD: No, absolutely not; quite the opposite in fact. HSBC, as one of the largest users of SWIFT globally, has an exceptional relationship with SWIFT and, as such, we work hand-in-glove with the people at SWIFT. We also sponsor Universwiftnet, a series of one day conferences for Corporates on how to use SWIFT and associated solutions, with events scheduled for 2009 in Paris, London, Germany, Madrid and Milan, with around 1000 delegates expected to attend. We see big opportunities rather than increased cost and/or threats and we continue to work with and lobby SWIFT for the benefit of the industry as a whole.
In the context of SEPA, we hear a lot about Additional Optional Services or AOS – what additional services around corporate access is HSBC providing as a means of competitive advantage?
AD: I mentioned the SWIFT bureau service earlier and it is in this space that we are focusing on developing competitive advantage, whether the corporate takes the MA-CUG or SCORE route.
We have developed an enhanced Application Service Provider (ASP) proposition within the bureau offering – a ‘one-stop’ shop with HSBC. We have already deployed the solution in the UK and have plans to commercialise this globally over the next year or so.
So, how does our approach add value beyond corporate access? In essence, I would say our solution puts connectivity to work for the client. Our modular approach, using best in class components, allows the client to build out from a foundation of SWIFT connectivity to include: data mapping from/to legacy back office formats; overnight, intraday or real-time reconciliations and exception reporting; filtering and capture of payments against AML check-lists; bulking of payments into cost-effective ACH-formatted files; use of SWIFTnet FIN and FileAct to connect to banking partners. We have even integrated a market-leading Treasury Management System into our solution, to enhance even further the already rich functionality of our SWIFT connectivity offering.
Commercially, all of this is offered as a bundled solution via a single contract with HSBC, whilst minimising absolutely the need for capital expenditure on the part of the client – I like to think of this as real insourcing in action. We are also devoting some considerable effort to the Alliance Lite proposition as we have a huge base of SME/MME clients for which this solution has attractions.
TD: I would add that our competitive advantage can be summarised as delivering technology integration, plus connectivity, plus core banking. This is a compelling argument and our clients are responding favourably to this approach. Our Payments Managed Service offered through our bureau highlights this approach, whereby we utilise ‘best of breed’ partners for back office payments processing and offer solutions ranging from file capture, billing, AML payments screening and high/low value payments to warehousing, SEPA compliance and liquidity management. We are offering a managed service as opposed to an installed solution so our solution is effectively ‘pay as you go’ and ‘pay as you grow’ and consequently cash flow positive.
The solution is future proof, SEPA compliant, scaleable, uses SWIFT as a secure delivery channel, has full transaction audit trails and all contracting is undertaken with HSBC. We view this as a real differentiator. If you would like to find out more please visit our exhibition stand at the EuroFinance Conference in Barcelona 1st–3rd October.
Finally, if we had a crystal ball here today, how would you see the corporate SWIFT landscape in say five years?
AD: I predict we will see even more technology integration and centralisation of processes, with connectivity continuing to be a major theme. I think we will see SWIFT drilling much deeper into the Middle Market space. I think we will also witness a major migration to the XML and ISO20022 standards.
The regulatory environment with SEPA and the PSD will continue to drive change and this will inevitably result in more corporates accessing SWIFT as they re-engineer in response. The return on investment (ROI) is compelling for corporates: 200–300% in some cases.
I think SWIFT will also evolve as an enabler for the financial supply chain and, for me, this can only result in a win-win situation.
TD: I agree and would also add that we will see an increase in demand for real-time information. SWIFT prides itself on its resilience and security and these are fundamental attributes when dealing with financial data. Might we see corporates transferring information between each other using SWIFT within the next five years? Why not!
