From the November 2009 issue of Treasury & Risk magazine

Bronze AHA Winner in Technology Excellence

On an average day, General Electric's treasury workstation processes about 7,500 wire transfers. When things heat up at the end of a quarter, that number doubles. The importance of wire transfers to the $182.5 billion company had led treasury to mull what would happen if one of its primary banking partners experienced a money transfer system failure. Then, the unthinkable occurred. "It was a Monday morning in June 2008," recalls GE deputy treasurer Dennis Sweeney.

The previous weekend, the money transfer bank had upgraded its software. Something was amiss, however. "When we got to the office we realized a predicament--a queue of wire transfers we had sent the bank via SWIFT were stuck in the funds transfer complex," Sweeney says. "We halted sending wires to the bank, so as not to exacerbate the problem while the bank tried to bring its systems online. However, they could not confidently predict when or if they could bring their system back up, and the clock was ticking."

GE's treasury had to decide whether to get the fund transfers--involving 3,600 payments--to customers via some other means. It had already contacted Bank of New York Mellon about acting as a backup. "First we pulled together a team of IT and cash management subject matter experts and brainstormed for a while; then we decided on the redirection approach we had originally considered," Sweeney says.

GE and Bank of New York Mellon worked out the details in conference calls. They came up with a method to route all of GE's SWIFT-enabled messages to debit a designated omnibus account, essentially redirecting funds transfers from the primary bank to Bank of New York Mellon. "We took the extracts from our treasury management system and edited them so only one account would be debited at Bank of New York Mellon," Sweeney says.

GE's financial services customers were funded, albeit a little later in the day than normal. Problems continued all week as GE successfully redirected 3,600 payments to its backup partner. Since then, GE has established procedures to deal with such an event, Sweeney says. "We had a conceptual plan and enacted it during a crisis, learning from it at the same time."

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