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The Financial Professionals Forum 2012
Using SWIFT to Optimize Your Treasury
Using SWIFT to Optimize Your Treasury
Eileen Dignen
SWIFT - Managing Director
24 August 2012
Rene Schuurman
Citi - Product Manager Connectivity
The Financial Professionals Forum 2012
Table of Contents
1. Who is SWIFT? 1
2. Corporate Value proposition 9
3. Make your business case 12
4. Corporates @ SWIFT 17
5. Citi and SWIFT 21
6. Roadmap
Who is SWIFT?
The Financial Professionals Forum 2012
212
10k+
23
17.5m Messages
per day 4b
Messages per year
20m Peak day messages
11k IT changes
per year
5x9 Availability
SWIFT is the global provider of secure financial messaging services
1
The Financial Professionals Forum 2012
SWIFT founded 1973
First OPC
1976
1977 SWIFT goes
live
1979 US
OPC
Asian countries connect 1980
1986 Value-Added
services
Securities 1987
SWIFTNet 2001
2004 SWIFTNet migration
1970s
Distributed Architecture
2008
Gottfried Leibbrandt
CEO 2012
1992 Interbank
File Transfer
Alliance 1993
1978 First Sibos
1980s 1990s 2000s 2010s
2010 First
acquisition: Arkelis
2
A timeline
The Financial Professionals Forum 2012
You
Interface
Network
SIPN
Messaging Services
FIN
InterAct
FileAct
Browse
Business Applications
Market
Infrastructures
Service Providers
Correspondents
Platform
3
The Financial Professionals Forum 2012
Secure, reliable and resilient platform
Directories &
Information Services
Secure IP Network (SIPN)
Interfaces
Messaging services
Standards Rules
Testing Services
Treasury Trade Securities Payments
Platform
4
The Financial Professionals Forum 2012
Standards
5
Corporate Value Proposition
The Financial Professionals Forum 2012
What issues are treasurers faced with ?
Commodity risk
Liquidity
Working capital
Currency risk
Security
Supplier risk
Counterparty risk
Cost
e.g. • Implementation of a
TMS • Matching System
e.g. • Centralise treasury
operations • Revisit security
procedures
e.g. • Establish more bank relations • Set up supplier
financing schemes
Technology
Business
Organisation
6
The Financial Professionals Forum 2012
Supporting financial services
Treasury and Risk
management
Cash management
Trade finance
• Monitor accounts and obtain global visibility on cash • Manage liquidity and pool cash company-wide • Invest surplus cash • Manage financial risk (FX and interest rate)
• Sent account payable files (e.g. pay suppliers/salaries, debit customers) • Manage reporting through account statements
• Send application for L/C or Guarantees (import/export) • Receive advice of L/C
EBAM • Manage bank accounts : opening, maintenance, closing and reporting
FIN MT940/942
FIN MT101
FIN MT3xx
FIN MT798
or
FileAct
FileAct (ISO20022
or domestic
format)
FileAct (ISO20022)
7
The Financial Professionals Forum 2012
Corporate business case
Security ↑ Risk ↓
Visibility ↑
Costs TCO* ↓
Business case
Quantitative Qualitative (More difficult to quantify)
Operational benefit
Financial benefit
Additional benefits
8
Corporates on SWIFT
The Financial Professionals Forum 2012
Where do we stand today ?
≈ 25.000 legal entities
Breakdown by region Number of registered corporates
9
The Financial Professionals Forum 2012
Profile of SWIFT registered corporates
Top 5 of industry sectors
Automobiles & Parts e.g. Daimler, Renault, Volkswagen,
Food producers e.g. Barilla, Ferrero, Nestle
Software and Computer Services
General Industrials
Personal Goods
e.g. Microsoft
e.g. Louis Dreyfus
e.g.Henkel, Unilever, Yves Rocher
Corporates by annual turnover (USD)
Corporates by # banking relationships (corporates registered more than 1 year ago)
10
Citi and SWIFT
The Financial Professionals Forum 2012
Citi and SWIFT – A Unique Partnership
Citi is
– the single largest user of SWIFT, globally
– A founding members of SWIFT
– Chairman of the Board (Mr. Yawar Shah)
Citi works closely with SWIFT on governance, and is collaborator and innovator of many SWIFT solutions/initiatives (i.e. Corporate Advisory Group, National Member Groups)
Citi representatives speak at SWIFT Business Forums as well as key speaking engagements at Sibos each year to demonstrate thought leadership across all markets/regions
SWIFT regularly participates in Citi Client Forums in Greece, Zurich, Miami, Bangkok, etc
11
The Financial Professionals Forum 2012
CitiConnect® for SWIFT
Facts 280+ clients globally use CitiConnect for SWIFT Citi is #1 bank for volumes of messages and files delivered
through SWIFT network, in both Corporate and Bank markets 18% market share of SWIFT Corporate market Citi is #1 in geographical coverage, with 90+ countries certified
for offering SWIFT for Corporates
Reduces cost of implementation, integration and support
True STP in all countries of operation
Detailed and automated response messages
Statement data aggregation capabilities
File format choices through SWIFT FileAct, including ISO 20022 XML – leveraging CitiConnect for Files
A single connection for multi-bank transaction initiation via other banks
ERP Integrator
SWIFT
Files
Benefits:
A secure connection to Citi via industry-standard SWIFT™ network
Support MT messages through SWIFTNet FIN, and batched files through SWIFTNet FileAct service
An integrated and real-time connection for initiating payments, receiving information, and accessing services directly from your treasury management system
Single BIC leveraging any of Citi's branches for a global access for sending messages
12
The Financial Professionals Forum 2012
Support of industry standards for
communications and custom
formats
Unparalleled global reach with TTS and
SFS capabilities
covered worldwide
Single Connectivity
Window to Citi’s Investor Services,
Intermediary, Cash, Trade, and Card
products
Cash & Trade
Wholesale Cards
Issuer Services
Investor Services
Statements & Reporting
Security
Processing/Routing
Tracking
FTP SFTP HTTP
HTTPS AS2 VAN
MQ Series ConnectDirect
SWIFT
ERP Integrator
Communication Protocols
A multitude of connectivity options
Entrust TD Comm Press
S/MIME SWIFTNET Security
PGP
Enrichment Transformation Bundling/Un-
Bundling Multi-Destination-
Routing
SLA Monitoring File/Msg Monitoring
Runtime ID Reconciliation
CitiConnect® – The Architecture
13
The Financial Professionals Forum 2012
Proprietary Connectivity vs. SWIFT
Internet or
VPN
VPN
Bank 3
Bank 2
VPN
VPN
Bank proprietary host-to-host connectivity solutions
Pros ▲ Once investment made, lower service and usage
fees ▲ No extensive agreements ▲ Fewer hops make connectivity troubleshooting
easier Cons ▼ Multiple bank connections result in higher
maintenance costs ▼ May need to maintain multiple standards in
connectivity, security
Pros ▲ One connection. Service Bureau manages
connectivity via SWIFT to banks ▲ Cost efficient on-boarding and migration of banks ▲ Proven reliability: over 99.99% availability Cons ▼ Agreements required by banks, SWIFT and
Service Bureau ▼ Initial cost of migrating to SWIFT /Service Bureau ▼ Additional intermediary charges by Service
Bureau and SWIFT
Service Bureau
Internet or
VPN
VPN
Bank 3
Bank 2
SWIFTNet (via Service Bureau)
VPN
VPN
VPN
14
The Financial Professionals Forum 2012
SWIFT Service Bureaux
Check here: www.swift.com/corporates/partners.htm
Accredited Partners have a proven track record of
assisting Corporates to do business with banks worldwide using the SWIFT network
These service bureaux will organise the corporate’s project end-to-end, including: – Project definition – Implementation plan with banks – Connectivity and message formats – System integration for SWIFT connectivity – Running and monitoring your services
Citi maintain working relationship with leading Service Bureaux, for smoother client on-boarding for mutual clients
15
The Financial Professionals Forum 2012
The SWIFT Road to Efficiency
Joining SWIFT – FIN services are often chosen as the first step
Most popular combination of FIN messages: – MT101 for treasury payments & MT199 for rejects / validation status – MT940 for EOD statements & MT942 for Intraday updates – MT300/320 for confirmations of treasury deals
Phase 1 Treasury centralisation
Phase 2 Payment Factories & Shared Service Centres
Addition of FileAct service – Move of batch Payments and Direct Debits flows follows to
SWIFTNet follows as the next step Often limited to only a channel migration at this stage - does not
involve change of adopted file formats
Phase 3 Further standardisation and move to strategic formats
Harmonisation of SWIFT-enabled Treasury and Shared Service Centres business processes
Adoption of ISO20022 XML standard
16
Roadmap
The Financial Professionals Forum 2012
Fax
Paper
Today Tomorrow
• Faster/cheaper • Standardised • Dematerialised • Automated/STP
XML messages Supporting documents
Personal Digital Signature
• Slow • Expensive
• Low integration • Low satisfaction
Electronic Bank Account Management (EBAM)
17
The Financial Professionals Forum 2012
Service
Auto-mation
Security Control
Audit
Checking of signatures’ entitlements delegated to
the bank
Dematerialisation of approvals through digital signatures
Tracking of WHAT, WHEN and WHO
approved transactions
Authorize financial data at the level of one or multiple individuals
Major responsibility for banks and
corporates
3Skey: Some of the drivers for personal digital identity
18
The Financial Professionals Forum 2012
Challenges for the corporate users
No uniform mechanism Different system per bank Costly & difficult to maintain
ONE token ONE password ONE process
Multiple devices Multiple passwords Mutliple systems
• Multi-Bank • Multi-Network • Mutli-Application • Multi-Country
19
The Financial Professionals Forum 2012
Key benefits
For Vendors
Benefit from interoperable solution, easy to integrate and can be used across banks globally
For Banks
Cost effective use of shared infrastructure whilst keeping control over the user identity
For Corporates
One token, one process, one password across banks, networks and countries
20
The Financial Professionals Forum 2012
Thank you
21
efficiency, renewable energy & mitigation
In January 2007, Citi released a Climate Change Position Statement, the first US financial institution to do so. As a sustainability leader in the financial sector, Citi has taken concrete steps to address this important issue of climate change by: (a) targeting $50 billion over 10 years to address global climate change: includes significant increases in investment and financing of alternative energy, clean technology, and other carbon-emission reduction activities; (b) committing to reduce GHG emissions of all Citi owned and leased properties around the world by 10% by 2011; (c) purchasing more than 52,000 MWh of green (carbon neutral) power for our operations in 2006; (d) creating Sustainable Development Investments (SDI) that makes private equity investments in renewable energy and clean technologies; (e) providing lending and investing services to clients for renewable energy development and projects; (f) producing equity research related to climate issues that helps to inform investors on risks and opportunities associated with the issue; and (g) engaging with a broad range of stakeholders on the issue of climate change to help advance understanding and solutions.
Citi works with its clients in greenhouse gas intensive industries to evaluate emerging risks from climate change and, where appropriate, to mitigate those risks.
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