Corporate access: ready or not?

SWIFT wants to make it easier for corporates to communicate with their banks across the messaging platform, but first banks and vendors must become SWIFTNet-ready.
One of the pillars of Leonard SchrankÆs new 2010 strategy is to make it easier for corporates to connect with SWIFT. The CEO of SWIFT has made it very clear that in the next four years he wants to remove the cumbersome mechanisms that currently control the way treasurers communicate with their banks via the network û primarily the awkwardly named member-administered closed user groups (MA-CUGs).

The wheels are already in motion. In June this year the SWIFT board overwhelming voted in favour of a new corporate access mechanism called Score (or standardised corporate environment) which is currently being piloted. Unlike the MA-CUGs, Score will allow corporates to communicate with more than one bank through the same link. But the road from concept to implementation is likely to be long.

Nearly half of the attendees at a Sibos session on corporate access said that the biggest barrier to corporate access is ensuring that the banksÆ own legacy applications are SWIFTNet ready. ôBanks havenÆt made it easy for corporates to do business with them,ö says John Murphy, managing director of trade and transaction services at ANZ Banking Group, who was speaking on the panel. ôThey have created these multi-layered proprietary platforms that have turned into cumbersome legacy systems.ö He says it is no longer economical for banks to build bespoke communication links with customers, and that old attitudes of competing on technology platforms need to be jettisoned before Score can work.

Murphy says since SWIFTÆs positive vote in June, banks are obliged to foster and promote the SWIFT channel over and above their proprietary systems. ôBanks voted for greater corporate access at the last SWIFT AGM so they now have a responsibility to make this happen.ö

Michele Fitzpatrick, managing director of sales and account management for Wall Street Systems, says corporates might be more attracted to the network if fee structures were simplified. ôCorporates are charged fees by their banks and fees for using SWIFT which can be very confusing for them,ö says Fitzpatrick. ôPricing mechanisms need to be more transparent and there needs to be more options than currently exist.ö

The corporate representative on the panel, Mark Hodgkinson, general manager of ShellÆs treasury centre in Singapore, indicated that the SWIFT channel might be too expensive for low value payments. He says Shell uses the MA-CUG mechanism to process high value payments. ôI am always driven by cost,ö says Hodgkinson. ôAnd at the moment we have solved the issue of low value payments by using another platform. SWIFT just might be too costly for these types of payments.ö

The panel of speakers also put some pressure on software vendors to help reduce the amount of customisation that occurs when software is implemented. ôIt would be a lot better if vendors sat down with their corporate clients, discussed their business models and found out exactly what the corporates want to achieve,ö says Gianfranco Tabasso from the European Association of Corporate Treasurers. ôThis would ensure that a lot of customisation doesnÆt happen as a matter of course." Fitzpatrick says: ôToo many decisions are made by IT departments rather than the business users themselves.ö The panel agreed that vendors also have a long way to go to make their software packages SWIFTNet ready.

SWIFT is certain that if these difficulties can be overcome, Score will become the preferred method of corporate-to-bank communication. Schrank and his team see the great potential in this new member segment. Under the current MA-CUG mechanism, the network processes 30,000 FIN messages per day, and there are already 170-odd corporates using the messaging service. These figures equate to an annual growth rate of 150%.

Of course, the next logical step in this communication evolution is for corporates to communicate directly with each other. But with bankÆs controlling the SWIFT network itÆs hard to see when such a dialogue might be sanctioned.
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