making sense of babbleStandards are a good thing fortreasury departments bent on automation and efficiency, but acascade of new standards and drawn-out migrations by variousplayers has left treasuries in a Tower of Babel. A banktransmission to or from an ERP system or treasury workstation mayno longer make sense. The more banks and internal systems involved,the worse the cacophony gets, requiring one emergency translationpatch after another. Now the treasury at Toyota Financial Services(TFS) in Torrance, Calif., has solved this problem by building asolution around SWIFT Alliance Integrator for version 7 ofSWIFT.

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“We were constantly wrestling with managing multiple bankingrelationships, connections and messaging formats,” says MarioDelfin, national manager of enterprise cash management and treasurysystems at TFS. “Our core business lines could not take advantageof the greater reliability, security and convenience of new bankingproducts if the formats didn't match.”

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Once the SWIFT AllianceIntegrator was fully integrated in February 2011, “we removedthe need for legacy systems to be reconfigured to meet changingstandards, since the middleware handles the transformation ofexisting and new bank interface files,” Delfin says. “It will lowerour cost for systems configurations and maintenance and it willallow us to quickly take advantage of new banking products andsolutions.”

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The Integrator is part of the SWIFT suite and wasn't built to bea universal data format bridge, explains Eileen Dignen, managingdirector of sales and market development for SWIFT Americas. But itlets SWIFT users “tie together all the SWIFT communication tools toback-office corporate systems.” For TFS, the Integrator 7 was “theright product at the right time to solve a problem,” Dignen notes,explaining that the Integrator is installed on corporateservers.

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Companies that use SWIFT need some kind of middleware to sitbetween SWIFT and the ERP or treasury system from which files willbe exported to banks or imported from banks, explains Anita Prasad,head of treasury capital management at Microsoft. Microsoft uses its own BizTalk product to intermediate between SWIFT and its SAP iDoc format. SWIFT hasthe Integrator.

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TFS,an automotive finance company with $91 billion in managed assets,is transaction-intensive and needs to be highly efficient in itsbank communication. To that end, it joined SWIFT in 2006, hosting its own SWIFTAlliance infrastructure, and began using SWIFT messages, SWIFTstandards and a FileAct interface extensively. TFS currently usesSWIFT with 13 banks in the U.S., Canada and Europe. A SWIFT datatransformation tool was a good fit for what was already a SWIFTshop.

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Here's how it works. On average, TFS processes more than 10,000wire transfers a year, which come out of Wallstreet Suite, itstreasury management system, and go into the Integrator system forformat validation of MT101 and MT103 messages, ensuring the wiretransfers are ready for processing at its banks.

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TFS also processes roughly 12,000 check payments a year fromToyota's commercial finance group via SWIFT FileAct. TFS uses theIntegrator to convert the SAP payment format into ISO 20022 XML andthen sends the payments to Bank of America for check printing anddistribution. Once this new check-printing outsourcing process isfully deployed, it will allow TFS to generate printing instructionsfor 700,000 checks a year, covering all of its retail, lease anddealer finance payments, while saving $2 million a year, Delfinestimates.

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By centralizing all the bank interface communication in onetreasury-managed solution, the company has reduced the time ittakes to bring up new or existing banking products and can remainflexible as bank messaging standards continue to migrate to ISO XMLstandards. It also reduced demand for internal IT resources, Delfinsays, and allowed individual business units to be bank-agnostic.Because of the Integrator solution, file message formats andstandards don't need to be updated frequently at the point ofemission, but can be formatted and validated in one place, removingthe burden of maintaining several interfaces and proprietarysolutions.

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With the ability to use 40 different plug-and-play adapters fromthe Integrator in its ERP systems, TFS is now able to takeunconverted transactional data files from any of those systems andconvert them to any bank proprietary format or the latest ISO 20022standard automatically, Delfin explains.

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The Integrator enabled TFS to replace legacy proprietary formatswith Bank of America with the new ISO 20022 payment initiation 001XML payment message standard. That opened the door to quickmigration from modem and FTP transmission technology to the moresecure SWIFT FileAct interface for exchanging non-payment data withbanks, according to Delfin.

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While the core product, the Integrator, ispackaged by SWIFT, TFS didn't just plug in a solution. It startedby forming a permanent treasury systems and projects group thatincludes treasury, cash management and IT experts. That teamput together an integrated solution and chose the AllianceIntegrator as a key software component.

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“We essentially created a new 'product' for our internalcustomers called Cash Management Integration Services (CMIS) thatcentralized the data transformation of bank messages in treasuryand shielded the rest of the company from the burden of updatinglegacy host systems to keep up with the evolving bank messaginglandscape,” Delfin says.

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Moving from multiple proprietary standards to a universalstandard is great, but “standard” is still a relative term, Prasadcautions. Message types and data fields may be standardized, buteach bank can still put its own little twist on how it uses astandardized field, and that can require customization of datatransformers. “You don't want to modify translation mapping forevery bank,” she notes. “That defeats the purpose.” The solution isfor treasuries to persuade banks to “agree to a singleimplementation,” something Microsoft has been able to accomplishwith seven of its primary banks, Prasad reports.

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In a major standards shift, translating data is a critical buttactical step, says Craig Jeffery, managing partner of consultancyStrategicTreasurer in Atlanta. He suggests that if companies simply takelimited data from a legacy standard and place it in a new format,they've wasted an opportunity to leverage enriched data.

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“How you construct your technology stack has everything to dowith how successful you will be,” he says. You need the brick, butJeffery advises concentrating on the architecture.

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For previous coverage of SWIFT, see ShapingeBAM Standards and Dell's SWIFT Global Connection.

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