Tuesday, October 27, 2009

More corporates are joining SWIFT, but some warn it could become an inflexible "monolith"

As corporates, particularly those that are multibanked, spend considerable time and money trying to integrate their systems with the multitude of proprietary banking platforms that are out there, Eurofinance's organisers felt it pertinent to ask whether banks should have developed a common non-proprietary solution.

Unsurprisingly 75% of corporates surveyed at the Eurofinance conference in Copenhagen last week favoured a common banking platform, while just over 50% of banks favoured a collective solution.  The truth is that banks continue to see their proprietary treasury management platforms as a key differentiator and continue to invest millions in these platforms.

Two good examples of this is Citi with its recent announcement at Sibos in Hong Kong of its next gen treasury management platform, CitiDirect Banking Evolution, and Bank of America Merrill Lynch's CashPro Online. Bothleverage Web 2.0 technologies and aim to set the standard for other banks to follow when it comes to the next generation of treasury management applications.

Both banks invested substantial sums in these solutions, so corporates telling them that they would prefer a common solution across all banks is not what the banks really want to hear, although they maintain that these platforms are where they can truly differentiate their service offerings in terms of delivering value-added services and that they can collaborate in other areas such as standards, electronic bank account management and SWIFT connectivity for corporates.

Marilyn Spearing, managing director, global head of trade finance and cash management, corporates, Deutsche Bank, believes banks need to do a lot more on SWIFT if they want to ease the complexities for their corporate customers.

However, Catherine Bessant, president, Global Corporate Banking, Bank of America Merrill Lynch USA, does not believe SWIFT is the be all and end all and warned of the problems that can stem from creating "monoliths" that are inflexible, not that innovative and have too much power. "I am a fan of what SWIFT has done," but she says we should not presume that SWIFT is the best collective solution.

Spearing, who is on the board of SWIFT, leapt to the banking network's defence, saying that it it is not a monolith as it would only be used for messaging and connectivity amongst corporates.

Historically, however, connecting to SWIFT has been the preserve of large Fortune 500 companies that have the patience, financial wherewithal and inhouse IT infrastructure to support such a mammoth undertaking. Yet, more recently SWIFT has targeted smaller companies that do not have the transaction or messaging volumes of the larger players but still want the STP benefits of connecting to SWIFT with its "SWIFT-on-a-USB-stick" solution.

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