Wednesday, October 03, 2007

Corporate access - banks have only taken 'baby steps'

By now you have probably gathered that Sibos has become a forum for corporates to tell banks what solutions they would like to see from them and for the banks to sit there, scratch their heads and do the exact opposite of what corporates have asked.

Guest blogger, Susan Feinberg of TowerGroup reminded us earlier about how diversified the SWIFT community has become particularly since Sibos was last held in Boston in the mid-1990s. Corporates now outweigh investment managers at Sibos and the likes of Shell and Microsoft are using their corporate 'muscle' to force banks to address their connectivity needs.

In a session this afternoon Shell, logistics company Safmarine and aeronautics provider EADS, told SWIFT and the banks what additional services (investment automation, trade document dematerialisation and automation of the bank account management process) beyond treasury and cash management they would like to see on SWIFTNet.

Now that they have had a taste, corporates are wanting to bite off a bigger chunk of SWIFT, but all of this presupposes that the banks who make up SWIFT want to move in the same direction as the corporates asking for these services and the SWIFT Board who appear eager to be everything to everybody.

When it comes to providing a cheaper and 'lighter' way to connect to SWIFT, the banking cooperative's new CEO Lazaro Campos is certainly thinking 'outside the box', finding inspiration in Steve Jobs of Apple and and his revolutionary iPod. (After all Campos did say in the opening plenary that SWIFT should be just another button on the fax machine, referring to investment managers' predilection for fax machines rather than SWIFT connectivity).

But one wonders if Campos' employers, the banks that make up the SWIFT community, are moving in the same direction as their enthusiastic new CEO. After all, despite all the rhetoric about doing more for corporates on SWIFT, corporates attending Sibos keep having to reassure the banks that they are not trying to 'disintermediate' them by wanting to connect to SWIFT.

"[Our single bank gateway] is not borne out of any vision to disintermediate our banking partners by commoditising payment transactions," Alex Harris, group treasurer, Virgin Atlantic told the banks.

As much as the banks like to think they have come a long way in terms of facilitating corporate access to the network, Harris reminded them that they had only taken 'baby steps'.

"SCORE may have simplified the enrollment process and reduced the cost and time to market [of SWIFT connectivity], but only for PLCs, which means medium-sized corporates that are not PLCs, must continue with the more cumbersome and time consuming MA-CUG model. SWIFT is only viable for large corporates with deep pockets and the rest have no real choice in how they connect.".

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