Innovate or lose out - In Conversation with André Casterman, SWIFT
SWIFT recently hosted its annual "SWIFT for Manners" User Conference in London.
Now in its fourth year, the event is firmly established as a calendar fixture for bank strategists and product managers who support the corporate treasury and finance community. This year, the agenda was focused on the evolution of the "SWIFT for Manners" strategy from a governance and product point of view, particularly around payments and identity-related innovations. The theme "Innovate or lose out in a rapidly evolving transaction banking space" set the tone for the conference and highlighted the changes that the industry needs to address together.
We asked SWIFT's global head of corporate strategy and product development, André Casterman, to share some of his insights following the conference.
1. What role does SWIFT play in the corporate-to-bank relationship, and how can banks expect this to develop in the future?
AC: We see our role as a facilitator of relationships between member banks and their corporate customers, particularly in transaction services. By using our global and highly secure financial messaging platform, banks are able to deliver the efficient treasury and trade transactions, rich information and intelligent analytics that differentiate their offering. To support this, we are investing considerable resources in achieving industry-wide standardisation to facilitate automated processes and intelligent rule-based processing such as straight-through payments processing and straight-through reconciliation.
While SWIFT connectivity was traditionally adopted by the largest multinationals, we have developed a variety of convenient, cost-effective access models for corporations over recent years. This continues to drive considerable growth in both the number and profile of organisations opting to use SWIFT for bank connectivity, from the world's largest multinational corporations through to mid-sized businesses with two or three banking partners. As cloud-based solutions in particular continue to gain traction, we expect this trend to continue, supporting our mission to become the preferred transaction banking platform for our member banks' multi-banked corporate and non-bank financial institution (NBFI) clients.
2. What new capabilities does SWIFT offer to banks to enhance the services they provide to their corporate clients?
AC: We continue to extend our portfolio with advanced standards and new technology in order to help banks to enhance their own value propositions. We are doing this in six core areas.
- In the area of payments and cash management, with ISO 20022 standards now becoming an industry norm globally, we are helping banks to offer advanced capabilities in payments and cash management such as extended remittance information, concentration services, mandate management and bank services billing reporting;
- We are also making it easier for banks to onboard new corporate clients, regardless of whether or not those corporates are connected to SWIFT. provides a set of unique format publication and testing tools that accelerate onboarding by aligning format specifications and making it easier to automate and integrate structured information flows;
- For mandate management and user identity, banks are challenged by their clients to offer highly secure digital signatory tools, but the cost of development is substantial. Furthermore, it is inconvenient for multi-banked corporates to use bank-specific tokens. Consequently, 3SKey represents an opportunity for both banks to securely authenticate end-users and validate financial transactions based on individual mandates. Banks can limit their expenses by investing in SWIFT's multi-banking security technology, while corporates can achieve consistent, secure processes across each of their banks;
- MT 798 standards have been warmly welcomed by banks and corporates alike in the area of documentary trade. MT798 enables banks to support their clients' demands for automated and centralised processing of letters of credit, standby Letters of Credit (L/C), collections and demand guarantees;
- For approved payables financing, SWIFT does not only facilitate greater automation and control over existing transaction processes, but we are also creating exciting new opportunities for efficient, digital international trade. For example, the Bank Payment Obligation (BPO) is a fast-growing, new instrument to support trade settlement using ISO 20022 data structures. When applied on approved payables such as SEPA and cross-border MT 103 payments, the BPO offers opportunities to buyers and suppliers to get on-demand transaction-level financing from their respective banks;
- Finally, we witness an increasing number of corporates seeking greater digitisation of the end-to-end trade transactions through e-commerce and e-documentation platforms. We help banks follow the pace of change and embrace those new digital tools as well. SWIFT is connecting those FinTech platforms and getting them to adopt ISO 20022 standards. This enables more easily and extend their risk mitigation and financing services from start (e.g. pre-shipment finance and payments confirmations to suppliers) to finish (e.g. extended payments terms for buyers and early payments for suppliers).
3. In order to support corporate clients' growing needs and requests, do you see the balance shifting between proprietary and industry solutions such as SWIFT among banks?
AC: What we see at SWIFT is that until only a few years ago, it was probably true to say that many banks' attitude towards SWIFT for Manners was more reactive than strategic. Today, this has changed. The cost of compliance continues to increase, budgets are stretched, and banks are more aware than ever before that information and solutions, rather than connectivity itself, is a strategic differentiator. Consequently, both regional and global transaction banks are now embracing the role that SWIFT plays in their portfolio of communications solutions as their preferred multi-bank host-to-host channel. Based on our own efforts and those of our member banks, we intend to at least double our footprint in the corporate market over the next five years, leading to further innovation and the emergence of new solutions that directly benefit banks and the clients which they support.
4. What advice would you offer to banks that wish to take further advantage of "SWIFT for Manners"?
AC: Innovations in technology is opening up a lot of new opportunities for our industry. Transaction banks could be bolder in embracing innovation more quickly and becoming more proactive in their engagement with clients rather than waiting for clients to approach them, they could then position themselves as pioneers in the digitisation of transaction and information flows. It will create a powerful differentiator for those banks with their corporate clients in a business that is prone to commoditisation. To support our member banks in these efforts, we provide sophisticated statistical tools to help identify and leverage opportunities to offer additional value for corporate clients.
5. A lot has been said about changing corporate needs and the impact of regulation. Can you share a few examples of how SWIFT addresses these evolving needs?
AC: SWIFT launched the theme "Beyond Connectivity" at Sibos Dubai in 2013. Over the past two years, the new development of our portfolio reflects our commitment to expand the range of services we offer in view of the changing dynamics of the corporate-to-bank relationship and the growing responsibilities of corporate treasury functions and shared service centres.
Regulatory compliance is a growing theme not only for banks, but corporates too, and many of our solutions are specifically targeted to supporting compliance. SWIFTRef, for example, enables corporates to correctly route global payments and collate correct and complete information for accurate reporting using SWIFT's central BIC and IBAN repository. SWIFTRef is now being used by 600 corporates, 60% of whom are not connected to SWIFT. This emphasises the value of our enriched portfolio, not only amongst corporates connected to SWIFT, but across the wider financial community.
Another milestone solution in supporting internal audit and external compliance requirements is 3SKey, now with 26,000 users representing 6,000 corporates located in 113 countries. Again, the majority of those corporates are not connected to SWIFT, but they - and their banks - benefit from our multi-bank and multi-channel identity solution as an integral part of their own banks' proprietary tools.
As a result of these initiatives, the SWIFT corporate community now extends to nearly 8,000 corporates globally who benefit from SWIFT's solutions and technology both directly and indirectly. As the regulatory climate evolves further, we will continue to develop and deliver further compliance-related capabilities in collaboration with both banks and corporates, such as sanctions screening.
6. Technology is evolving very fast in transaction banking. How does SWIFT cope with such fast-paced environment given its co-operative approach?
AC: We are seeing significant innovation and competition in this space, with a growing number of technology vendors offering multi-bank payment, treasury and trade solutions to corporate clients. This can make decision-making quite complex for corporate treasurers and finance managers. In order to provide services that keep up with the latest technology and fast-paced environment, we are working in partnership with a number of established and pioneering technology providers to integrate SWIFT seamlessly into their solutions. We also offer a series of certification schemes and integration options to both banks and our partners. Our goal is to provide our corporate users the assurance that those SWIFT-certified proprietary solutions are compatible with SWIFT's connectivity requirements and messaging standards.
7. How does SWIFT evolve in order to remain competitive?
AC: The growing range of choices for connecting corporates with their banks and facilitating the flow of information is definitely a healthy development in promoting client-focused innovation. However, most of these alternative solutions do not have the same breadth and depth of services as we are able to provide with "SWIFT for Manners". As a co-operative, SWIFT's services and solutions are often developed hand-in-hand with our customers; we consult them very regularly to ensure we are keeping up in this active and changing marketplace. In some cases, these alternative solutions are targeted at particular client segments such as SMEs, or specific geographies. While these may offer specific functionality appropriate to their target market, corporate users often need to use multiple channels in parallel, particularly when operating across markets. We believe SWIFT's unique position and robust transaction network can offer our customers the assurance that will always be required in the market.
8. What is SWIFT's next ‘big move' in the corporate space?
AC: Manners are increasingly centralising and automating their accounts payable and accounts receivable processes through electronic invoicing, electronic documentation and purchase-to-pay (P2P) hubs. SWIFT has a valuable role to play in connecting these P2P business networks. We have already taken the first steps in achieving this by , a specialist vendor that allows users to create and manage bills of lading and shipping documents electronically, accelerating processes such as presentation to banks under trade finance instruments including letters of credit, documentary collections and bank payment obligations. The next step is to to enable banks to secure, finance and process trade flows automatically that are managed through those ecommerce platforms.
Hear what our customers say
The two-day User Conference was attended by more than 70 delegates, who exchanged a wealth of ideas and information about how banks and corporates can leverage and grow the "SWIFT for Manners" portfolio. Here are some of the highlights from our speakers and clients about their experience of SWIFT, and their vision on how the community could collaborate more closely in the future:
Societe Generale - Virginie Labouyrie, Head of e-banking Solutions, Corporate Cash Management: "Societe Generale rolled out 3SKey for our user authentication and signing processes back in 2011 when 3SKey was first launched in the market. It provides the high level of security and reliability that we were looking for to improve our e-banking solutions and applications. With SWIFT being the provider, 3SKey's features and functionality meet both expectations and those of our corporate clients. Our Sogecash Web users are present in more than 100 countries today, so we look forward to extending our use of 3SKey in Asia and more widely in the near future."
UniCredit - Jana Strobelt, Trade Products & Services, Global Transaction Home: "The BPO offers the best of both traditional payment instruments - letter of credit and open account but removes the complexity that we used to face. It also increases efficiency for all parties involved in a transaction which allows us new opportunities to offer additional trade finance services to our clients. After we processed our first BPO deal in Germany, we have received a lot of interest and enquiries from both importers and exporters about implementing this new innovation. The industry needs more banks to offer BPO in order to take full advantage of its potential."
Swedbank - Niklas Källving, Head of product lifecycle management, Trade Finance: "We see an increased interest in MT 798 from corporates in the Nordics, particularly as flagship corporation Volvo is an early adopter. MT 798 offers clear benefits for both banks and corporates in the traditional multi-bank trade finance space. Manners gain more control over limits with fewer discrepancies by using templates and document preparation tools. They can also access a variety of statistics to analyse their transactions and costs. At Swedbank, MT 798 helps to free up our time from processing large amounts of documents as discrepancies will be fewer and allows our corporate clients to access consolidated information through one system. Having seen at first hand the value that MT 798 can offer, we strongly believe that it will make a difference for both banks and corporates, and we hope our contribution as one of the early adopter banks has raised awareness and confidence in the solution.
Barclays - Nick Morrissey, Director, Cash Management Channels, Corporate Home: "Barclays was one of the collaborator banks that worked with SWIFT to develop MyStandards, which was a great experience. Through MyStandards, we are able to move to a new model where our customers can now take a self-service approach to testing standards rather than relying solely on bank resources for testing, which can take time. Consequently, the use of MyStandards removes bottlenecks and streamlines the on-boarding process to the point where we have enhanced the on-boarding time for new clients from months to weeks."
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