perfecting bank connectivity: understanding the choices
DESCRIPTION
Global cash visibility remains a hot topic and critical objective of many corporate treasuries. However, there remains much confusion over the best methods to optimize connectivity for both bank reporting and payments. In this presentation, the speaker panel reviewed the different choices a corporation has as well as the specific advantages and disadvantages of different solutions for all sorts of different scenarios (e.g. global, domestic, high volume, low activity). Key topics included: • cost/benefit of different connectivity solutions • when SWIFT connectivity does and doesn't makes sense • different options for SWIFT access • questions you need to ask during the process Featured Speakers: Simone Bernardelli, Manager, Global Bank Connectivity – Kyriba Corporation As Kyriba's head of bank connectivity, Simone manages the global team responsible for managing and implementing global bank reporting and payment projects, including direct host to host connections and a variety of SWIFT deployment choices. He previously held a number of technical roles at Kyriba, product management, technical implementations, and product support. Prior to joining Kyriba in 2005, Simone spent eight years at XRT, splitting time between the company’s European and U.S. offices, where he was an electronic banking, IT, programming and ERP integration consultant. Simone has a degree in statistics from the Università Cattolica del Sacro Cuore in Milan. He is based in Kyriba’s Rio de Janeiro office. Ken Ketchum, Director, Account Management - Kyriba Corporation As Director of Account Management, Ken oversees Kyriba’s North American Accounts team responsible for customer relationship management and monitoring client satisfaction. In this role, Ken works with clients to optimize the usage and value they get from the Kyriba solution. Ken has over 25 years of experience working with treasury software. He joined Kyriba in 2003 and has worked with key clientsand Kyriba stakeholders to expand Kyriba’s offering and presence in North America.Prior to Kyriba, Ken worked in business development with then startup ByAllAccounts, a financial data aggregator. While at ByAllAccounts, Ken helped establish many of the firms early stage clients. Other experience includes sales and implementation roles with Thomson Financial’s treasury software group and managing the FX and Money Markets backoffice operations for a high volume trading operation at State Street in Boston. Bob Stark, VP Product Strategy - Kyriba Corporation Bob Stark is responsible for global product strategy and market development at Kyriba. Bob is a 15 year veteran in the treasury technology industry having served in multiple roles at Wall Street Systems, Thomson Reuters, and Selkirk Financial Technologies including product management and strategy. Bob is a regular guest speaker at treasury conferences and an active member of the Association for Financial Professionals.TRANSCRIPT
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Bank Connectivity: Perfecting the ChoicesJune 20, 2013
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Simone BernardelliManager, Global Bank [email protected]
Ken KetchumDirector, Account [email protected]
Bob StarkVice President, [email protected]
Today’s presenters
• Manages global bank connectivity implementation team
• Host to Host, SWIFT, EBICS etc. connectivity choices
• Manages team for all US, Canada Kyriba clients
• Extensive work with bank connectivity, including SWIFTNet
• Product and business strategy, including bank connectivity strategy and alliances
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1) Bank connectivity: sorting out the vocabulary
2) Choices for bank connectivity
3) What is best for me? Perfecting the choices…
4) Detailed Q&A
Agenda
“I just want to give my list of banks to my service provider and let them take care of the rest”
- Almost every treasurer in the world
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Domestic Banks
Vendor manages formats and connections for you
International Banks
Corporate Client
Service providers manage domestic and internal connectivity for bank reporting, payments, and (once available) electronic bank account management
Service Provider
Connectivity defined
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Connectivity defined
Connectivity is…
Connectivity Element Examples1) Network protocol Network IP, VPN, MQ, AS2
2) Connectivity method FTP, SWIFT, EBICS, internet-based
3) File format BAI, EDI820, MT940, XML 20022
4) Security Encryption via PGP or PKCS7, S/MIME, 3SKey
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1) FTP• Host-to-host connections
• Directly to/from the bank using a custom script developed and maintained by vendor
• Access and security dictated by the bank
• Used frequently around the world
Connectivity defined
Connectivity Methods
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2) SWIFT• Confusing because both a network and an author
of formats/standards
• The ‘network’ requires membership and allows communication of messages between members SWIFT (or BIC) addresses
• Different membership types -> different services (e.g. Member-Concentrator vs. SWIFTNet)
Connectivity defined
Connectivity Methods
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3) EBICS (and regional protocols)• Certain countries have protocols to connect
directly to banks in that country (e.g. France, Germany, Austria)
• Simplifies connectivity for the vendor, although likely require a vendor to get connected
4) “Creative methods”• Typically Internet-based methods
Connectivity defined
Connectivity Methods
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Connectivity defined
Connectivity is…
Connectivity Element Examples1) Network protocol Network IP, VPN, MQ, AS2
2) Connectivity method FTP, SWIFT, EBICS, internet-based
3) File format BAI, EDI820, MT940, XML 20022
4) Security Encryption via PGP or PKCS7, S/MIME, 3SKey
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Connectivity defined
File Formats
Primary File Formats DescriptionBAI2 Bank balance and transaction reporting (North
America)
EDI 820 High and low value payments (North America)
SWIFT MT.xxx Primarily for non-US reporting and payments• MT940 = prior day• MT942 = current day• MT101/103 = high value payments
XML 20022 XML CAMT = bank reporting e.g. <camt.053.001.03) XML PAIN = payments message formats e.g. <pain.001.001.03>
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Connectivity defined
Connectivity is…
Connectivity Element Examples1) Network protocol Network IP, VPN, MQ, AS2
2) Connectivity method FTP, SWIFT, EBICS, internet-based
3) File format BAI, EDI820, MT940, XML 20022
4) Security Encryption via PGP or PKCS7, S/MIME, 3SKey
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1) Authentication/Authorization• Bank knows payment originated from my company
and was authorized to be sent (e.g. digital signature)
2) Confidentiality• Payment file is encrypted and only the bank can read the data
3) Integrity• Payment has been sealed (bank can tell if ‘seal’ was tampered with)
4) Non-repudiation• (for certain protocols) Bank cannot deny receiving payment message
that organization can prove was sent
Connectivity defined
Security
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Who can offer bank connectivity?
1) Treasury Management Systems (TMS)
2) ERP
3) Banks
4) Service bureaus
5) SWIFT
Bank connectivity options
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Is one provider better than another?
Key questions you want to ask:• Cost• Experience
“Inventory” of connectivity Expertise with onboarding banks
• Ease (cost) of integration• Ability to support multiple methods/protocols
Bank connectivity options
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Most popular connectivity choices (in US/Canada)
1) Direct connectivity• Host-to-host connection (e.g. FTP)
2) SWIFT Member-Concentrator• Shared BIC address• Priced per account/transaction
3) SWIFTNet• Your own SWIFT/BIC address
Bank connectivity options
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What about my situation affects the choice?
Variables: # of banks Who/where they are # of accounts # of transactions Types of transactions (e.g. payments)
Bank connectivity options
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What’s best for me?
Connectivity Method Ideal ScenarioFTP High volume of activity at domestic banks
Regional Protocol Connecting with banks in those regions (e.g. France, Germany for EBICS)
SWIFT Member-Concentrator
Outside North AmericaLarge number of banks; small volume of activity
SWIFTNet Lots of everything
Bank connectivity options
● Often a combination of methods may be best ●
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Scenario Recommendation: FTP$5 Billion Revenue Domestic treasury
FTP most common in North America
3 Large US Banks Most US Banks offer BAI reporting via FTP
Balance Reporting and Payments
FTP will deliver BAI files for bank reportingFTP will transmit EDI and similar files for
payments110 Bank Accounts No ‘traffic’ charges for number of accounts or
transactions
Bank connectivity options
What’s best for me?
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Scenario Recommendation: FTP + SWIFT$5 Billion Revenue International Treasury
International activity means FTP alone won’t be sufficient
1 Large US Bank1 Large CDN Bank8 International Banks
US and CDN banks can be served with FTP connections and domestic formats
International banks likely require SWIFT
Balance Reporting and Payments
FTP & SWIFT can serve both activitiesSWIFT Member-Concentrator = high value
payments50 Accounts (US)10 Accounts (Canada)50 Accounts (INTL)
60 Accounts can be served with FTP and domestic formats it supports
50 Accounts likely isn’t enough to pursue dedicated BIC/SWIFT Address
Bank connectivity options
What’s best for me?
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Scenario Recommendation: FTP + SWIFTNet$10 Billion Revenue International Treasury
Dedicated BIC will be useful for expanse of banks, accounts, and transactions
5 Large US Banks1 Large CDN Bank50 International Banks
US and CDN banks may still be served with FTP connections, despite SWIFT abilities
Many banks (and accounts) lead to SWIFTNet
Balance Reporting and Payments
FTP & SWIFT can serve both activitiesSWIFTNet allows high and low value payments
(FIN and FileACT messages)100 Accounts (US)10 Accounts (Canada)400 Accounts (INTL)
110 Accounts can be served with FTP and domestic formats it supports
400 Accounts is easily enough to pursue dedicated BIC/SWIFT Address
Bank connectivity options
What’s best for me?
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Summary
Scope of Bank ConnectivityBank Reporting
Payments(hopefully) eBAM
Connectivity MethodsFTP
SWIFTRegional Protocols
File Transfer FormatsBAI
SWIFT MTxxxXML ISO20022 (Pain/CMT)
Best solution depends on:Banks
Type of ActivityVolumes
Evaluating Service ProvidersCost
ExperienceFlexibility
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Questions?
Kyriba offers:• Choice – more connectivity options than any other provider
• Experience –Kyriba processes 1,000,000 transactions per day
• Expertise - Kyriba onboarded more SWIFTNet customers than any third party provider
• Monitoring – Kyriba’s dashboards allow proactive monitoring of all bank connectivity, including SWIFT traffic
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