Transforming the business of banking
Exploring SWIFT's strategy for corporates
Providing a solution
Alain Raes, Chief Executive, EMEA and Asia Pacific, SWIFT, says: "Typically, we are seen as a solution for large corporates only, which is a misconception. We also offer small and medium enterprises tailor-made solutions and products. Around half of the corporates who have joined us since 2014 have a turnover of less than US$1 billion, and indeed 37% have a turnover of less than US$0.5 billion."
"We will be enriching our current offerings to extend messaging solutions in payments, treasury, trade finance, securities and regulatory reporting. We believe these steps will meet the growing demands of corporates who want a sophisticated solution underpinned by modern technology to facilitate their expansion in emerging markets. For the same reason, we also plan to grow relevant value-added services in the corporates segment by introducing BPO/TSU, 3SKey, SWIFTRef, MyStandards and Financial Crime Compliance Services."
One point often made is that SWIFT's footprint is highly concentrated in Europe and the US - so what needs to be done to increase global coverage?
"We are putting more emphasis on the growing APAC market," answers Raes. APAC represents a huge market of long standing, and often very well known, international corporates on one hand, and fast developing domestic or regional entities on the other. Both categories need to further streamline and automate their banking operations. We have already seen more than 16% year on year growth in new corporates joining SWIFT in APAC, but considering the size and potential of the region, I don't see any reason why this growth should not accelerate further."
He continues: "Our implementation plan will be complemented by an industrialisation effort across segments by improving bank readiness, increasing bank awareness within the banking community and further optimising SWIFT's on-boarding processes, with a dedicated corporate sales team in China, Hong Kong, Korea, Japan, Singapore, Australia and India."
"We will also be promoting the use of SWIFT certified application providers integrating Alliance Lite2 to offer easier access for corporates to connect to SWIFT. There are currently ten providers connecting 70+ new corporates."
Alliance Lite2 is a prime example of how SWIFT is evolving its proposition in line with the shifting and growing role of the corporate treasurer.
Raes explains: "It is a web-based solution designed for corporates with capabilities for straight-through processing and automation of financial process flows. It requires minimal infrastructure to maintain, low up-front costs, low monthly fees, and shorter implementation timelines. Going forward, we intend to enhance the features with an entry-level 'plug and play' functionality for treasurers to manage their multi-bank treasury and cash management operations, such as account balance dashboards, reporting and payment initiations."
Whilst multiple banking relationships are generally a necessity in an age of increased cross-border activity, there is a rising popularity of RTCs and in-house banks in Asia. How is SWIFT responding to this development?
"In the midst of this growing trend," says Raes, "corporates often find themselves needing to move liquidity rapidly between accounts, and this is where SWIFT is best placed to help. By using SWIFT, corporates can improve operational efficiency by implementing better workflow control, consolidating the financial transactions of their group companies and managing multiple banking partners. Ultimately, this achieves the most efficient use of working capital efficiency, instilling treasury management best practices. By connecting this centralised model to SWIFT, group treasury is able to implement standardised operations across the company with streamlined bank accounts, and improved transparency of cash flow."
Supporting the digital march
Trade digitisation is perhaps the most challenging issue for the corporate community today, given the number of players involved in trade processes.
According to Andre Casterman, who heads up development in the corporate and trade markets, SWIFT offers an ideal platform through which to build capabilities in transaction services in treasury and trade.
"Trade finance services are being increasingly digitised through corporate-to-corporate hubs, new entrants (such as alternative finance providers) and SWIFT/International Chamber of Commerce (ICC) standards," he says.
"It's key for exporters to be able to provide a better service for their clients (importers) by avoiding the inefficiencies related to paper-based practices. Businesses want to move away from Letters of Credit. Information gets the world economy moving, but if the information is only on paper, you cannot perform big data analysis, you cannott profile the data and find patterns which help to identify trade-based money laundering. Banks must move digital in this space too in order to become more agile, attract more trade flows and increase their compliance with trade-specific regulatory requirements."
"To this end, we are partnering with a number of third party platforms, such as essDOCS, to help better digitise trade information flows in the corporate-to-corporate space. This is very transformative - there is a huge business opportunity for banks to finance more trade flows, and technology is the primary enabler."
Shining a guiding light
SWIFT's ambitious plans in the corporate space are supported by the Corporate Advisory Group, which plays a central role in terms of strategy and governance.
The group, comprised of e-commerce leaders from major transaction banks and the main global banks, including Citi, JP Morgan and HSBC, meets twice yearly and influences the direction of SWIFT's thinking.
Chair of the Corporate Advisory Group and SWIFT Board member Marcus Treacher explains: "Every member of the group runs corporate-facing banking units - so they know exactly what the corporate world wants, and needs."
"We run in-depth focus groups on emerging requirements and market shifts, and then work on these issues with the SWIFT team. We get a sense of what is working, what the pain points are, and then feed this back to SWIFT's Board to help inform strategy, ensuring that what becomes product or policy is in parallel with corporate customer expectations."
He continues: "For example, the group was central to creating the bank readiness and certification programme. By joining this voluntary programme, banks experience clear benefits in publishing their SWIFT capabilities. They have the ability to respond to corporates' demands and focus on value-added services. Additionally, they have the opportunity to capture additional flows and clients and position themselves as an innovator."
The market is moving very quickly, and FinTech is becoming a massive force. Against this backdrop, it is important to develop new propositions at speed. The group works closely with the SWIFT Board to create a fluid process.
Treacher adds: "For SWIFT to maintain its central role for the long-term, it is vital that we enable smaller corporates to join the club. Alliance Lite2, with its innovative cloud system, allows smaller companies to more easily sign up and helps to increase the balance of corporates worldwide."
In a digitally-enabled world, enhancing SWIFT's connectivity is key. It must be a facilitator for corporate to corporate flows, ensuring that its services match emerging requirements. Find out more at this year's Corporate Forum on 14 & 15 October.