The process of joining SWIFT should start with an internalcost/benefit analysis, says Bryan Kirkpatrick, vice president,senior product manager for treasury services and SWIFT expert atBank of New York Mellon. What do you want to use SWIFT for? Howmuch would it cost to do that? How much would you save? Some ofthose answers will come from talking with SWIFT sales or consultingpeople. Some may come from treasury peers. Together, you should beable to figure out if the business case is there.

Don't expect those triple-digit ROIs you may have heard about.Some of the earliest case studies claimed ROIs of several hundredpercent, but those were special cases. Routine ROIs have nowflattened out but are still attractive in many cases, says BrianWedge, executive director and global product manager for SWIFT atJ.P. Morgan Treasury Services.

When sizing up the business case for SWIFT membership, thinkenterprise-wide, not just about treasury. For pioneers like GeneralElectric, the interest always went beyond treasury because GE isboth a huge multinational industrial corporation and a financialinstitution. Both the industrial and financial segments would havereasons to join SWIFT, notes Tom Nelson, cash management specialistfor Wall Street Systems, about his client. Put the two segmentstogether and a single direct connection to serve both can makesense, he says.

There's plenty of information out there for companiesconsidering a move to SWIFT. Treasury staffers should attend SWIFTsessions at trade shows, read trade journal articles, talk to peerswho have joined already, and then talk to SWIFT.

“When we find a new prospect,” explains Eileen Dignen, SWIFT'smanaging director of banking accounts and initiatives for theAmericas, “we send in a sales person to explains all theoptions–direct connectivity, service bureaus, Alliance Lite–andhelp the prospect see which would work best for them. If it's aservice bureau, we give them a list of certified bureaus, but thedue diligence is up to them.”

If you decide to proceed, you have to pick whether to joindirectly, use a service bureau or start with Alliance Lite. If youchoose a service bureau, as many do, then it's time to assess thecandidates and conduct a formal or informal RFP to find the onethat offers the best fit, Kirkpatrick explains. Together with theservice bureau, you should approach the company's key banks andstart working out the details of how to exchange SWIFT messageswith them, he says.

Then it's on to testing. Start simply, Kirkpatrick advises. Sendpayment instructions and get credit and debit confirmations. Oncethe company masters that, it can move on to receiving accountstatements in FIN 940 messages. Once you're comfortable with that,try sending ACH files or positive pay files, using FileAct. Oncethe company has gotten high up the food chain, where the bigplayers are, it can start thinking about electronic bank accountmanagement (eBAM) and exceptions and inquiries (E&I). Companiescan also use FileAct to receive account analysis statements.FileAct is a standardized SWIFT envelope that can contain datafiles in a variety of formats.

Order is important. Too often a company commits to a technologyapproach before it has thought through its format and datarequirements and has to revisit technology or live with an inferiordata formatting solution, notes Mary Ellen Putnam, vice presidentof the international business unit at BankServ, a SWIFT servicebureau in Las Vegas, Nev.

Don't overlook the SWIFT functionality resident in the company'sERP system or treasury workstation, advises John Cowart, seniorproduct manager for global transaction banking at Deutsche Bank.Those systems, which have been upgraded to be in compliance withSarbanes-Oxley and Basel 2, will eventually lead many mid-marketand smaller businesses to SWIFT, he predicts. “They will have theinfrastructure to take advantage of SWIFT, and the consistentrecord-keeping required for compliance will encourage them to adoptSWIFT.”

It's good news that SWIFT has expanded its advising services forcorporates into a full-fledged consultancy business line. ItsProfessional Services Group has been renamed SWIFT ConsultingServices. “We have a large group of direct employees working asconsultants, and we may bring in some of our consulting partners inengagements,” Dignen says. “It has become a broader productoffering.”

Some corporations bring their own consultants into the mix,which is fine with SWIFT. “We are careful of existingrelationships,” Dignen says. “We will subcontract, but we stillmanage the project.”

Practitioners who have gone through the experience of joiningSWIFT testify that it is feasible and rewarding, but harder thanthey expected. BMC Software, a Houston-based, $1.9 billion softwarecompany, tried to move quickly to implement a SWIFT connection withseven banks, four of them primary, in 2008. The company found ithad to wait because not all of its banks could meet its deadlinesand because it was trying to do too many things at once, includingimplementing new treasury and ERP systems. Nevertheless, BMCachieved a single consolidated SWIFT protocol and system for allpayments, including treasury and AP payments. It also reduced laborand operations costs, speeded its execution of transactions, andgained visibility and control over its cash, according to its casestudy.

When John Emerick was treasurer of $631 million Fair IsaacCorp., before leaving the company last December, he had his twotreasury staffers connect to SWIFT through a service bureau,largely to do FX trading with its banks, he says. Picking a servicebureau meant issuing a standard RFP to a group of SWIFT-certifiedbureaus. While Emerick thinks the SWIFT connection probably savedthe company money through opportunity costs, Fair Isaac is a lightuser of SWIFT. Customer service was adequate, and the effort wasnot a major drain on staff time, says Emerick, who is now aprincipal and co-founder of consultancy Raven Road Advisors.

The setbacks don't lie in message transmission glitches.Actually transmitting standardized SWIFT messages is not all thatdifficult, says C.J. Wimley, executive vice president for corporatesolutions at SunGard AvantGard, the treasury software firm thatowns a SWIFT service bureau. The challenge comes in getting thecorporation set up and working with banks to make sure they canreceive and send the messages the company wants to use in the waythe company wants to use them. Then the issue becomes getting theright value-added services to keep the process as automated aspossible, Wimley says.

Companies that have waited until this year or next year to joinSWIFT are reaping the benefits of shared experience. Treasuryexecutives working to service bureaus to connect to SWIFT getsmarter every year, BankServ's Putnam reports. “SWIFT has done agood job of educating the market. We've seen steady progress.”

Will SWIFT Expand to Corporate-to-CorporateMessages?

In the quest for expedited financial communication, could SWIFTbecome a network for corporate-to-corporate communication and helpto automate supply chains radically? That is remotely possible. IfSWIFT gets enough corporations using its trade document messages,it could allow companies within a supply chain to start exchangingmessages with each other, but so far that remains taboo. For now,SWIFT is strictly a bank-to-bank and bank-to-corporate network,says Susan Feinberg, senior research director at Needham,Mass.-based consultancy Tower Group.

That could change. SWIFT is growing and already offers servicesfar beyond the payment and cash management activities that wereprojected just a few years ago, Feinberg points out.

But such a change remains unlikely. Bryan Kirkpatrick, vicepresident, senior product manager for treasury services and SWIFTexpert at Bank of New York Mellon, sees no immediate prospect thatSWIFT channels will be used for corporate-to-corporate messages.“You don't hear it discussed,” Kirkpatrick says. “The financialinstitutions that own SWIFT would have to approve it, and while Ican't speak for the shareholders, in my personal opinion gettingthe network's owners to grant such approval would be highlyunlikely at the present time.” –By Richard Gamble

For an indepth look at one company's implementation,see Dell's SWIFT Global Connection.