From the November 2007 issue of Treasury & Risk magazine

SWIFT Finally Scores

Once almost exclusively the domain of banks, SWIFT has garnered the interest of corporations and technology providers who see opportunity in new product lines to support SWIFT interfaces.

In October, Brad Volmer, assistant treasurer of Sun Microsystems Inc. in Santa Clara, Calif., attended his first SWIFT International Banking Operations Seminar (SIBOS). He had plenty of corporate treasury company. More than 285 corporates attended SIBOS in September, up from just 80 a year earlier--and even that number was unprecedented for what had long been a gathering of international banks. This year, a special two-day forum featured corporate uses of SWIFT--and "most corporate sessions were standing-room only," Volmer reports.

Anyone who doubted that throwing open SWIFT (the Society for Worldwide International Financial Telecommunication) to direct membership by nonfinancial companies was a revolutionary move, would have seen clear evidence at SIBOS of the sea change in thinking it has spawned. "We went to talk to banks about our services for them," reports Jonathan Eber, director of product management at New York-based ACI Worldwide, "but we ended up talking about services for corporate treasuries. They challenged us to extend our product set beyond financial institutions."

It's not just large multinationals either, notes Colin Day, vice president of market insights for SunGard's banks and corporations business. "Middle market and purely domestic companies are showing interest. It seems to depend more on the number of bank accounts than on revenue size."

The big technology players used SIBOS as a springboard to launch new products that could directly or indirectly serve corporate treasuries. For example, SunGard is taking its SWIFT service bureau, called SunGard Transaction Network for SWIFT, to the next level by making it a member concentrator.

The benefit for corporate clients, Day explains, is that with a service bureau, clients still have to communicate with SWIFT about some matters. A member concentrator acts as an agent on behalf of its clients, who only have to communicate with the concentrator. "Basically, it simplifies administration," Day explains. The cost is about the same. No companies are using SunGard's concentrator service yet, but two deals are in the pipeline. SWIFT surveys show that 85% of the corporates expecting to join SWIFT want indirect connectivity through a third party, rather than building and hosting the infrastructure themselves, according to Day. Of the 18 firms listed by SWIFT as member concentrators, most are large global banks. "We appeal to some corporate treasuries because we are not a bank," he says. "Some treasury staffs don't want a bank to have all their company's proprietary information."

SunGard was one of the first vendors to see that SWIFT for corporates would be big, and it tipped its hand with its October 2006 acquisition of Trax. The deal gave the dominant provider of treasury workstations a proprietary SWIFT service bureau. "AvantGard Trax sits on top of the SWIFT infrastructure and links back to the treasury workstation and the ERP systems," explains Hans Cobben, chief operating officer of AvantGard Payments and former Trax CEO. "The treasury workstation uses Trax to communi- cate with banks. Trax also collects payment instructions from ERP systems and sends them out to banks via SWIFT. It's the unifying layer. It can also consolidate ERP information and feed it directly to the workstation. And it's useful for automating reconciliation."

One happy Trax user is PGGM, a Dutch pension company that uses only three banks and has little exposure to currency risk outside the euro. PGGM makes a lot of payments--225,000 a month--and uses AvantGard Trax to house its evolving payment factory. "I want one point of authorization for all payments going through all banks, and Trax is that point," insists Roelof van der Struik, team manager for payments and settlements. "That leaves our back-side applications clean and standard."


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