Innovation gathers momentum for treasurers

Laurence Neville
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Visibility and control are crucial for the treasury, while the pressure to reduce costs, improve efficiency and enhance resilience remains great. In response, banks and technology firms are innovating in areas from connectivity to bank account management, writes Laurence Neville.


Corporates remain under growing pressure to achieve better visibility of global cash, tighter control on working capital and enhanced efficiencies in risk management. One way to achieve this is by improving bank connectivity, says Gautam Jain, global head of client access at Standard Chartered. The main development in connectivity over the past decade has been the increasing importance of bank-agnostic standards and platforms. This trend has accelerated in 2012, driven by the need to cut costs as well as regulatory initiatives such as the Single Euro Payment Area (SEPA).

Hemant Gada, Citi Transaction Services
“Over the past year, there has been a maturing of the new global message standard, XML ISO 20022, which has greatly improved the quality and reliability of information exchanged between banks and their corporate customers,” explains Marcus Treacher, global head of eCommerce for payments and cash management at HSBC. By standardizing messages using XML, opportunities exist to improve connectivity between enterprise resource planning (ERP) and bank systems, make multi-banking simpler and facilitate electronic bank account management (eBAM) services, says Treacher.

While XML is a global standard, one of the challenges facing corporates is that banks and countries have implemented different versions of it. For example, the data fields for the urgency of a payment may vary. This can be annoying for corporates (although much less so than using multiple formats). However, efforts by the Common Global Implementation (CGI) initiative to define a standard XML format are gaining ground. For example, Citi rolled out XML version 3 (2009 ISO maintenance release), aligned with CGI guidelines, across its global footprint of more than 90 countries last year, according to Hemant Gada, head of channel services at Citi Transaction Services. “Adoption of ISO 20022 XML continues to grow rapidly, with Citi crossing the 1 million XML transactions per month milestone in 2012,” he says.

Why SWIFT is gaining ground

XML is also a factor in another major change – the growth in the use of SWIFT for bank to corporate connectivity. In 2012 the number of corporates connected to the global SWIFT network passed 1,000, which is 10% of the total user base globally. “Corporates require multi-bank connectivity and standardization of their treasury flows in order to establish greater control over who they bank with by making it simpler to switch volume and transaction traffic among supplier banks,” explains Treacher at HSBC. “This increased flexibility and more open competition is a key feature of the current global corporate banking landscape as companies make constant and ongoing assessments as to the strength of their banks as counterparties.”

The opening of the SWIFT network for corporate customers sets up a wide range of opportunities for payment optimization, especially for companies with global operations, no matter whether they have centralized or local structures, according to Gisela Helms, global head of product development, eBanking at UniCredit. “The exchange of cross-border and cross-bank data in the SWIFT network enjoys the highest standards of security and availability,” she adds. “This provides the chance to exchange payment messages and files over a single infrastructure as well as use other services for FX or money market operations.”

UniCredit offers corporate customers full connectivity to the SWIFTNet network for many different messaging services demanded for communication between a corporate and their corresponding financial institutions, including messages for payments, treasury, reporting and securities. To increase efficiency and simplify customers' use of FileAct with UniCredit banks, a single access point for the entire group has been created for all SWIFTNet FileAct for corporates traffic. This enables corporate customers to use SWIFTNet FileAct as an additional communications channel for eBanking.

Filipe Simao, head of client advisory at BNP Paribas, notes that bank connectivity is an obvious area for corporates to focus on improving efficiency through greater centralisation, as it has few organisational implications. “Companies can benefit from lower technology costs and improved control even if other financial activities such as payment initiation continue to be performed on a decentralized basis.” His colleague Jean-François Denis, head of payments and local offers, points out that the bank has “undertaken the largest number of SWIFT implementation projects”. He adds: “But, it’s not just client-facing technology that we have invested in. For example, at the back end, we have made some very structural choices with a shared SEPA platform which provides a comprehensive and coherent offer.”

Meanwhile, RBS is seeing growing interest from companies in SWIFT's MT798 messaging. “Under the SWIFT for corporates programme, corporate SWIFT members may execute trade transactions via SWIFT with their banks that are MT798 enabled,” explains Ken Deveaux, global head of channels at RBS. “Import, standby and export letters of credit and guarantees may be executed through either Fin or FileAct. This enables a company that is multi-banked to use one trade portal and consolidate all trade transactions in one location. This benefit is similar to using a treasury workstation where all bank account information is accessible.”