Bank of China promotes the Trade Services Utility

Banks' counterparties and customers encouraged to use TSU

SWIFT’s Trade Services Utility (TSU) recently reached an important milestone: more than 100 users globally.  In Asia it is really taking off. This is particularly the case in China, where the Bank of China and others have taken the lead in building their own open account services on top of SWIFT’s bank-to-bank service.

“Our earliest implementation of TSU was in our Shanghai branch at June, 2007, recalls Cheng Jun, director of the corporate banking unit (global trade services) at Bank of China’s head office.  “Now we have installed TSU in our branches in four major cities in China (Shanghai, Shenzhen, Qingdao, and Jinan)."

According to Cheng, they got started with TSU projects by drilling down to their customer base’s trade settlement transaction records as a starting point.  After that, “we turned to our customers’ counterparty’ bank (also a TSU bank) for mutual marketing of our TSU solution.” For this reason, he emphasises, “it really is important for us to find potential customer pairs for TSU pilot as quickly as possible.”

Connie Leung, head of supply chain management for the Asia-Pacific region at SWIFT, agrees that banks can benefit from partnering together over TSU. She notes that SWIFT held its second TSU Global User Conference at Sibos 2009 in Hong Kong this past September. The meeting brought together TSU users from around the globe to share their experiences with commercialisation of the TSU within their banks.  According to Leung, “They agreed that banks need to collaborate with their corporates and counterparty banks to help drive down costs, maximise efficiency gain and mitigate risks in offering comprehensive supply chain services.  Specific to Asia and especially China, where the SME market is particularly large, there is strong demand for supply chain financing services, and our customers are looking to TSU to meet these needs by matching open account data between the buyers and sellers.”

Intra-Asian trade becoming more important

Bank of China has already partnered with Bank of Tokyo-Mitsubishi UFJ (BTMU) in the first-ever interbank TSU agreement, announced earlier this year.  They also have signed a non-disclosure agreement with Korea Exchange Bank (KEB) regarding customer information exchange over TSU.  This focus in intra-Asian trade reflects the importance of trade within Asia as a growth market to complement the traditional markets in the west.

Taiwan, as another market for mainland Chinese goods, is also an interesting potential market for Chinese trade finance banks.  “More than 50% of mainland-Taiwan trade settlement is conducted by Bank of China. We believe that Taiwan will become more and more important in our trade finance business while economic relations between the mainland and Taiwan keep going forward.”

By providing a central matching and workflow engine that is accessed only by financial institutions, there is no doubt that - whether in Asia or beyond — the TSU is helping banks meet the supply chain challenge. To find out more, visit the Trade Services Utility page on swift.com.