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.".

Making history in Boston

Guest blogger Susan Feinberg, research director, wholesale banking, TowerGroup, applauds the growing diversification of the SWIFT community since banks last met in Boston back in 1994.

At the opening of the first ever Sibos Corporate Forum, Marilyn Spearing of Deutsche Bank pleaded with the delegates to make their voices heard and help SWIFT and its member banks better understand how to maximize the SWIFTNet Corporate Access value proposition.

With over 100 corporate delegates representing 65 different companies, the Corporate Forum is evidence that this is a very different Sibos community than the one that last met in Boston in 1994.

I was a banker back then, representing one of the venerable Boston institutions that have since gone the way of M&A. What I remember distinctly about my first Sibos was the lack of diversity - lots of men, mostly middle aged, wearing black or grey suits and except for a few technology sales reps., they were pretty much all bankers like me. Well, not that much like me, come to think of it. I also remember being shocked at seeing bottles of wine on the table at lunch time. Our Puritan forefathers would not have approved.

I think it's appropriate that Boston - with its rich historical legacy at the center of the American Revolution - is the location for another kind of revolution. The creation of a new community within SWIFT in which the corporates are encouraged to have a dialogue with their banks, with SWIFT and with the technology community to make SWIFTNet a viable solution for more corporates.

Make no mistake, those delegates are already heeding Marilyn's call and have spent two days expressing their views on everything from endorsing the "SWIFT button" concept that we heard about in the opening plenary, to the need for bank participation in the supply chain, to the need for true global standards.

This might sound like no big deal to some, but to me it is an indication of the diversification that has occurred within the SWIFT community since the last visit to Beantown.

The highlight of Sibos for me so far was a conversation with one of the corporate delegates from a Fortune 100 company when she shared her process for identifying those banks that will support SWIFTNet connectivity for the company starting next year. She said, "We asked our representative from each bank whether they could support us on SWIFT only once. If we didn't get the right answer the first time, we moved on.We don't have time to educate our bankers about SWIFTNet."

Ultimately for this industrial giant, it will be SWIFTNet connectivity or nothing. Wake up call to the banks: your client facing representatives better be equipped to provide the answer the client is looking for or you'll find yourself with at least one less major corporate client.

Oh, and one more thing, please join me in wishing the hometown team good luck in the playoffs starting tonight at Fenway Park. GO RED SOX.