The OPEC Fund for International Development (OFID) is on a global mission to provide development assistance in developing countries, that involves conducting payments transactions in 134 countries worldwide – and in some 122 currencies, including many smaller currencies that are not easily tradeable or convertible. Initially, 30% of the firm’s payments were managed manually, through faxes and simple tools such as Microsoft Excel and Access. In order to improve efficiency, and reduce complexity, cost and risk, the institution took on a project to improve its existing payments processes and technology. In less than three months it implemented D+H’s SWIFT service bureau solution. Since then, it has realized significant benefits including savings in time and cost, which are conservatively estimated at a 20% to 25% return-on-investment in the first year alone.

The OPEC Fund for International Development (OFID) is the development finance institution established by the Member States of OPEC – the Organization of Petroleum Exporting Countries – as a collective channel of aid to emerging nations worldwide. Founded in 1976, OFID works in cooperation with developing country partners and the international donor community to stimulate economic growth and alleviate poverty in disadvantaged regions of the world. It does this by providing financing to build essential infrastructure, strengthen social services delivery and promote productivity, competitiveness and trade.

OFID’s work is people-centered, focusing on projects that meet basic needs – such as food, energy, clean water and sanitation, healthcare and education – with the aim of encouraging self-reliance and inspiring hope for the future. The ten years up to 2013 represented a decade of dramatic change and transformation at OFID, as the institution implemented a process of strategic repositioning, organizational strengthening and financial

CASE STUDY

Streamlining and Transforming Payments Through SWIFT Connectivity at the OPEC Fund for International Development

“ In some cases it might make sense to have the infrastructure in house. But for OFID, moving to a SWIFT service bureau was definitely the right choice. We have no doubts at all about that.” Jacobs Edo, OFID’s SAP Systems Coordinator

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realignment. These activities enabled OFID to substantially enhance the execution of its mandate, and to consolidate its standing as a prominent and respected player in the global development arena.

The large scale, geographical spread and critical importance of OFID’s mission in countries around the world mean efficient and effective payments processes are imperative for fulfilling its goals. OFID conducts payments transactions in 145 countries globally – and in some 122 currencies, including many exotic currencies that are not easily tradeable or convertible. This high number of currencies reflects the way OFID operates as a global agency but on a local level.

Jacobs Edo, OFID’s SAP Systems Coordinator, explains: “If OFID lends to a country to build an airport, then we will often become part of the procurement process, paying directly to local contractors, either in US dollars or local currency. About 80% of the time, because of the local regulations, contracts are denominated in the local currency. So when it comes to making disbursements, there can be challenges when currencies are not traded on international markets.” Also, because OFID places no restrictions on which countries it operates in, there may be international sanctions in place.

In the past, OFID relied on short-term fixes to work around these challenges, using a mix of global, local, intermediary and correspondent banking relationships around the world to handle payments. However, in recent years it had found that the costs of taking this approach were increasing rapidly. This impact was increased by the high degree of manual processing involved: while over 60% of OFID’s payments used to go through various banks’ proprietary online banking platforms, some 30% still involved using faxes for correspondence and trading tickets. And, until recently, OFID’s primary treasury support tools were Microsoft Excel and Access. “Essentially, we had a treasury system where the costs of payments were rising by the day, and we didn’t have complete visibility into our cash position,” says Edo. “We decided we had to take a new approach.”

The technology journey that took OFID from an opaque and largely manual in-house payments process to the implementation of a new state-of-the-art SWIFT service bureau solution for all its payments started several years ago. The initial conceptualization of a new technology base for OFID

began at senior management levels as long ago as 2006. The momentum really started to build from 2009, when OFID began to implement new technologies across many areas of its operations – including defining new procurement systems and processes, and testing out greater automation in its accounting and human resources functions.

As OFID turned its attention towards improving its existing payments processes and technology, it could see that radical change would deliver major benefits – with a new way to connect to SWIFT quickly rising to the top of the organization’s agenda. “We understand technology is an enabler for change,” says Edo. “And when we looked at payments, there were four key things that we wanted to address through technology. These were: first, financial risk management; second, bank communication management with straight-through processing (STP); third, governance, risk and compliance (GRC) requirements and standardization; and fourth, integrating treasury data with OFID’s core operational enterprise data.”

In 2012 OFID launched a comprehensive blueprinting exercise for a new payments system, and mapped out the system reengineering that would be required. By 2014 OFID was ready to begin implementation, based on two principles: all payments would be unified via a single system; and SWIFT would be the platform for payments communication. “We were looking for a best-in-class SWIFT connectivity solution for availability, security, resilience, non-repudiation and guaranteed message deliveries,” recalls Edo. “The only question was how to put this into effect.” Edo continues: “We held some workshops and comparative analyses, and we found it would be more efficient to go through a SWIFT service bureau. One of the main reasons for this was that we didn’t have the manpower and skills in-house to support this kind of payments system on our own. Another reason for choosing a service bureau was that we wanted a speedy implementation – and this was the best way to achieve both.”

With the decision to adopt a SWIFT service bureau having been made, OFID set about identifying the optimal vendor and solution for its needs. In evaluating the various offerings, the key criteria that OFID was seeking included a strong and proven track record in implementing similar solutions – including integration with SAP ERP systems – and a well-demonstrated ability to meet OFID’s specific requirements, both on the

Streamlining and Transforming Payments Through SWIFT Connectivity at the OPEC Fund for International Development

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technical side and in terms of pricing. “In April 2015, D+H came out top in our assessment and we signed the contract,” says Edo. “And in May 2015 we gave the green light for the implementation to begin.”

The D+H SWIFT Service Bureau (SSB) solution that OFID decided to adopt included SWIFT connectivity via virtual private network (VPN), straight-through processing (STP), delivery of SWIFT messages, and ongoing support. “The benefits were clear,” comments Edo. “We were getting a unified payments platform that was bank-agnostic. So all payments processing – irrespective of the house bank behind it – would use the same technology and processes. This meant we would no longer be constrained by having to use different message formats and different means of communication for different banks.”

Edo continues: “One of the quick wins with the unified SWIFT connectivity platforms was that we would gain a streamlined payments process with all banks that would be completely uniform in-house. Also, wherever SWIFT operates we know we can pay direct to the live beneficiary along the line. So that enables us to further reduce costs and eliminate delays while fulfilling our noble mandate.”

At the same time, the round-the-clock support available from D+H throughout the implementation and into the live operation phase, coupled with company’s proven high rates of network availability, meant that OFID could be sure of having access to the right help and support whenever it needed it. “Sometimes our payments are very urgent – particularly trade financing, which can often be time-critical,” explains Edo. “So we wanted a provider that was very reliable, had proven infrastructure, and could support us 24x7.”

Less than three months on from the launch of the implementation program, OFID’s SWIFT connectivity via the D+H SSB was up and running, following a smooth migration

that involved no disruption to OFID’s ongoing activities. As a result, OFID now has complete integration of its financial operations with the support of STP payments processing for its global clients located in all 145 countries where it makes disbursements. According to Edo, the three-month implementation of the SBB solution could have been delivered even more quickly by the D+H team, but OFID needed to integrate the bureau’s back-end into its own enterprise systems. “We will put the two halves together so that both were up and running at the same time,” says Edo.

OFID is already seeing the returns on its investment in the service bureau solution start to flow through, especially in terms of saved time and costs. On the commercial side, OFID expects to generate a guaranteed return-on-investment of 20% to 25% in the first year. Edo comments: “We’re on track to achieve that level of return, and it could even be considerably more, given the positive impacts we’re already seeing in terms of efficiency and speed.”

A further benefit is that OFID is not having to spend heavily on re-skilling its staff to work with the new system, since the service bureau’s operations are transparent to the user. “In the back end, we don’t care what’s behind the engine,” explains Edo. “That’s all taken care of by D+H. So another cost benefit is that we don’t need to retrain our people – which can clearly be a major expense.”

Asked whether he would recommend a SWIFT service bureau solution such as D+H SSB to other organizations facing similar challenges to OFID, Edo says he would. “Clearly the right choice of payments platform depends on each organization’s specific needs – it’s not one-size-fits-all,” he comments. “In some cases it might make sense to have the infrastructure in house. But for OFID, moving to a SWIFT service bureau was definitely the right choice. We have no doubts at all about that.”

“ We’re on track to achieve that level of return, and it could even be considerably more, given the positive impacts we’re already seeing in terms of efficiency and speed.

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