Trade finance banks applaud SWIFTNet TSU

Trade finance messaging platform to go live before the end of 2006.
As the global trade finance community continues to adopt open account relationships, the right solutions are required to get both banks and customers up to speed. At an institution level, massive technology investments in infrastructure have been made, but for all participants in the trade finance world, few initiatives will have the impact of the SWIFTNet trade services utility (TSU).

Marketed by SWIFT as a collaborative centralised matching utility that is designed to help banks meet the supply chain challenge, trade finance banks and suppliers and vendors have reacted very positively to the development of TSU, which is anticipated to go live by the end of 2006. Presently, the new messaging service has drawn in 19 pilot banks globally and 18 early adopters, with the strong prospect of more to come before full implementation.

ôOnce we are satisfied with our stringent set of pilot criteria, we will go live,ö says Jackie Keogh, head supply chain management, banking industry division at SWIFT and moderator of the main conference session at Sibos devoted to TSU. ôWe see it as a key tool to help trade finance banks to both increase revenue and opportunities in the open account space.ö

With TSU going live soon, the question remains whether this messaging platform will succeed when others have failed. The answer, according to the panel at Sibos, is an overwhelming yes.

The speakers say TSU will succeed because of the growing adoption of open account principles and the gap it will close between the banks and their customers on the vendor and supplier sides.

Antonio Bizzo Lima, general manager of foreign trade and exchange products at Banco do Brazil, believes that adoption of TSU will benefit many participants. He stresses it will have massive implications for both importers and exporters into Brasil, and will help to reduce the reliance on paper intensive letters of credit (LCs).

ôTSU will be extremely useful for importers. It will aggregate the value and reduce costs of documentation checks,ö he says. ôWe see TSU as an evolution from the current product suite which is reliant on paper. It will change the entire trade process.ö

Closer to home, trade finance banks operating in Asia were equally positive on the imminent impact of TSU on supply chain and trade flows.

Speaking from an Asian perspective and in particular, a financial institution business perspective, Kah Chye Tan, global head of trade finance at Standard Chartered Bank, believes that TSU will greatly benefit his business at the supply chain financing level.

ôTSU will change the entire trade finance landscape and will be a revolution for our business,ö says Tan. ôNot only will it allow for things such as standard messages for shipping and for invoices, it will allow us to scale up our business.ö

In particular, Tan stresses that the adoption of TSU will allow for standard messaging between Standard Chartered and its correspondent banks around the world, while also widening the range of open account trades with corporate clients.

ôWe have a lot of financial institution customers approaching us to do supplier and buyer finance for their corporate clients, and through TSU, we will be able to receive messages directly with these clients on a common platform,ö says Tan. ôCurrently, we use our proprietary message type and this is a challenge with some customers who use a different messaging system. TSU will change this.ö

Also lauding the TSU proposal for its Asian business was Frederic Tollu, head of global trade services, Asia-Pacific at BNP Paribas.

ôWe have tried a lot of solutions in the past and we have every confidence that TSU will be the best of the lot,ö says Tollu. ôA growth in client sophistication has meant that this job is not as easy as it once was. Trade finance is at a crossroads, being characterised by traditional skills and innovative solutions, and TSU is an excellent opportunity for banks to recreate themselves to serve our customers.ö

From Tollu, SWIFTNetÆs TSU function will address entrenched problems and create new efficiencies such as establishing common standards, maximising transaction monitoring, further mitigating risk and addressing the lack of supply chain integration.

ôTSU gives us a consistant workable backbone utility and in our mind, it will succeed,ö he says. ôIt needs to be the standard and as it will go live soon, it is not a dream for us anymore.ö
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