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 THE VALUE OF SWIFT FOr bAnkS                                                                                                             ISSUE 4 Q3 2011




                                                                   Editorial
   Contents                                                                    Common solutions to common problems
                                                                               Across a range of diverse business challenges, SWIFT is
                         Editorial
                          Common solutions to common
                                                                               working with banks to identify areas of collaboration that
                           problems                                            meet end-clients’ needs more cost-effectively.
                              page 1




                                                                               T
                                                                                       he growing importance of Asia’s economic superpowers is
                            Interview                                                  perhaps most evident in the widespread use of China’s renminbi
                            renminbi
                                                                                       (RMB) as a currency for settlement of international trade. In a
                           international-
                                                                               short period, use of RMB has accelerated from a strictly controlled
                         isation brings
                       offshore                                                pilot to a global phenomenon. In this issue, Thomas Poon, head of
                    opportunities                                              business planning and strategy at HSBC, asserts that all banks involved
   Thomas Poon, head of business planning                                      in international trade will be impacted sooner or later. The underlying
   and strategy at HSBC, believes the pace                                     message is that banks should consider their strategies now. Poon also
   of RMB business in Hong Kong and
   further afield is set to accelerate rapidly.                                suggests a role for SWIFT in enhancing RMB currency flows through
   page 2                                                                      increased automation. To this end, in September we will deliver a white
                                                                               paper in conjunction with Bank of China, Citi, Deutsche Bank, HSBC,
   Perspectives
                                                                               ICBC and Standard Chartered. Interested parties should also attend the
   Aligning financial services with the real economy
   SWIFT actively engaged with key industry issues at the 12th                 Sibos session, ‘Payments to China: Internationalisation of the RMB and
   Asian Banker Summit.                                                        the Rules of the Road for Cross-border Settlement’.
   page 3
                                                                                 One illuminating source of data on RMB trade flows is SWIFT’s Watch
   Value                                                                       product range which has been extended to further leverage SWIFT
   business Intelligence to improve decision-making                            message traffic data (page 4). These services provide new insights into
   SWIFT enhances its Watch products to meet evolving business                 banks’ correspondent banking activities based on granular analysis
   needs.
             page 4                                                            of transaction volumes and currency flows. Further, SWIFT’s Business
                                                                               Intelligence tool can be used to support strategic and product level
                         Solutions                                             decision-making as well as identifying risks and operational efficiencies.
                          Promoting integrated solutions                         New challenges for banks often demand new solutions. An example
                           for remittances                                     highlighted when SWIFT brought Innotribe to Mumbai in early June is
                              SWIFT Workers’ Remittances Day
                              in Dubai confirmed strong industry               the National Payments Corporation of India, which has launched a pilot
                              interest in standardisation and                  mobile payments system – the Interbank Mobile Payments Service
                              interoperability.
                              page 5
                                                                               – through which its member banks can provide banking services to
                                                                               India’s many millions of mobile phone users. Cooperation on this scale
                    Value                                                      is rare but shows the value to customers of banks working together to
                   SWIFT Sanctions                                             build a common platform. For those keen to learn, the Sibos session,
               Screening service to debut                                      ‘Mobile payments – Is it too late for banks?’, should prove informative.
   in early 2012
   Centralised screening will provide a cost-
                                                                                 The increasing importance of person-to-person payments was also
   effective approach to sanctions compliance.                                 confirmed at SWIFT’s Workers’ Remittances Business Day in Dubai.
   page 6                                                                      Interoperability is an imperative and a number of banks made the case
                                                                               for replacing bilateral arrangements with use of SWIFTRemit – SWIFT’s
   News
   Data management issues delay liquidity                                      solution for workers’ remittances; we have already experienced an
   risk progress                                                               increase in bank certification to participate in the scheme.
   A new SWIFT white paper confirms that collaborative                           Collaboration is also on the agenda in the liquidity risk management
   solutions are needed to resolve data problems and enable
                                                                               space. The latest SWIFT survey on liquidity management has found
   compliance with new liquidity management regulations.
   page 7                                                                      that data management issues are hampering the development of
                                                                               effective strategies and respondents called for collaborative solutions
                                                                               such as industry best practice for intraday cash reporting and common
                      Interview                                                reporting standards and liquidity monitoring and control standards for
                         bPO: Mitigating risks in
                                                                               use across high-value payments systems. The challenges are explored
                          international trade
                             Banks on SWIFT spoke to Sharyn                    further in our new white paper – ‘Managing liquidity risk: Collaborative
                             Trainor, Director, Global Financial               solutions to improve position management and analytics’ - and at
                             Supply Chain Product Management,                  Sibos, in ‘Liquidity Risk – Have we learned lessons from the last crisis?’
                             Deutsche Bank about the bank’s
                            approach to the opportunities that                   Common solutions to common problems may just catch on.
                            TSU and BPO present.                               Wim Raymaekers, head of banking market, SWIFT
                          page 8
            Renminbi internationalisation
Interview


                                                                                                                                            2009, it didn’t really take off then because of
                                                                                                                                            the restrictions under which it operated,” says

            brings offshore opportunities                                                                                                   Poon. Over the past eight or nine months,
                                                                                                                                            however, since the People’s bank of China
                                                                                                                                            (PbOC) introduced a number of relaxations in

            Thomas Poon, head of business planning and                                                                                      the regulations, there has been considerable
                                                                                                                                            movement. “now 7.5% of China’s global
            strategy at HSBC, believes the pace of RMB                                                                                      trade is denominated in rMb,” says Poon. “In

            business in Hong Kong and further afield is set to                                                                              Hong kong, we have also seen a significant
                                                                                                                                            increase in rMb deposits as well as in
            accelerate rapidly.                                                                                                             rMb business and revenue flow.” While
                                                                                                                                            Hong kong is leading the way, Poon sees
                                                                                                                                            other financial centres, such as Singapore
                                                                                                                                            and London, beginning to wake up to the




               A
                                ccording to recent figures             an increasing number of cross-border trades                          opportunities. “banks in Hong kong are the
                                from the Hong kong                     being done in rMb and, as a result, a lot of                         first to realise the potential of offshore rMb
                                Monetary Authority (HkMA),             what might have been considered captive                              business, because Hong kong has always
                                total Chinese currency                 onshore business will now be open for banks                          been very close to China, but other markets
                                deposits in Hong kong were             offshore to enter.                                                   and banks will come to realise the business
            rMb 510 billion (USD 79 billion) at the end of               “The reason we at HSbC are so excited                              opportunities that are unfolding,” says Poon.
            April, representing a fivefold increase in under           about this opportunity is that a lot of things
            a year. The increase in deposits reflects a                that we as foreign banks cannot do in China                          Enhancing currency flows
            significant increase in corporate activity, which          can now be done offshore using the offshore                          Poon sees an important role for SWIFT in
            accounted for two-thirds of total deposits.                rMb market,” says Poon. “In aggregate                                facilitating an efficient rMb market over the
              Thomas Poon, head of business planning                   terms, foreign banks altogether account                              longer term. “We would look to SWIFT to
            and strategy at HSbC in Hong kong, sees                    for less that 2% of market share within the                          enhance rMb currency flow and automation
            significant room for growth in rMb business                domestic Chinese banking sector. That’s as                           opportunities,” he says. “In the near term,
            globally. “In due course, I think most banks               much as the foreign banks could get their                            I understand SWIFT has formed a number
            involved in global trade, both Chinese and                 hands on domestically. Internationalisation                          of small working groups to explore the
            non-Chinese, are going to feel the impact                  will, for example, allow activities such as                          operational requirements for rMb flows.”
            of rMb internationalisation on their own                   rMb hedging to be done by banks like                                   HSbC for its part has established a
            business,” he says. At the moment, Poon                    HSbC in Hong kong or other parts of the                              dedicated team in Hong kong to promote,
            suggests, Chinese banks are still living within            world. We see tremendous opportunities                               coordinate and facilitate the development
            their traditional comfort zone. “The rMb is                for foreign banks. This will obviously impact                        of all rMb-related service developments
            mainly traded onshore within China; it is still            Chinese banks as well. They have to rethink                          and product suites. “We have to take a
            a closed market to a large extent. Exchange                their overall business model and strategy to                         longer term view, says Poon. “There is a
            rates and interest rates are regulated,” he                sustain market share.”                                               balance to be struck between short-term
            says. rMb internationalisation will result in                                                                                   cannibalisation of existing business and
                                                                       Timeframe                                                            the longer term strategic goal of generating
            Thomas Poon, HSBC
                                                                       How rapidly does Poon see rMb                                        a sizeable future revenue stream. It’s also
                                                                       internationalisation developing? He suggests                         important that ownership of this process
                                                                       that after an initially slow start, business                         should be vested in a business and product
                                                                       opportunities are accelerating rapidly.                              group within the bank. It’s not just one
                                                                       “Although the concept was launched in July                           person’s mission.” l




                                                                       Internationalisation will, for example, allow activities such
                                                                       as RMB hedging to be done by banks like HSBC in Hong
                                                                       Kong or other parts of the world. We see tremendous
                                                                       opportunities for foreign banks.
                                                                       Thomas Poon, HSBC




2           Banks on SWIFT             Visit swift.com/banks for more information about SWIFT and its portfolio. Join the dialogue at www.swiftcommunity.net/banks or email us at swiftforbanks@swift.com
               Aligning financial services
Perspectives


                                                                                                                                              profit, customers, regulators and the industry
                                                                                                                                              coming together in the transaction banking

               with the real economy                                                                                                          space to deliver innovative, next generation
                                                                                                                                              services to new customers coming into the
                                                                                                                                              system.”

               SWIFT actively engaged with key industry issues                                                                                Mobile banking
               at the 12th Asian Banker Summit.                                                                                               In a session entitled, “How are mobile
                                                                                                                                              challenges changing how we do business?”
                                                                                                                                              Alex Lee, together with Suresh Sethi, group
                                                                                                                                              president, transaction banking group,




                 T
                                  he Asian banker Summit                 management,” he told participants. Today,                            YES bank, and Chakrapani Gk, director –
                                  2011 took place in Hong                more than 700 major corporations have signed                         emerging markets, nokia Financial Services,
                                  kong on 6-8 April attracting           up directly to SWIFT to connect to the many                          looked at the entrance of non-banking
                                  over 800 senior bankers,               banks around the globe with which they work.                         financial and telecommunications companies
                                  regulators and service                    John Wong, managing director, head,                               and their impact on trade banking.
               providers and featuring prestigious speakers              transaction banking, Global Wholesale                                   Panellists discussed the offerings by MnOs
               such as norman Chan, chief executive of the               bank, Maybank, agreed. “Every CFO, every                             and how interconnectivity could leave the
               Hong kong Monetary Authority (HkMA), He                   corporate, is different and we as individual                         banks out of the picture. “Is there a space for
               Guangbei, chairman, Hong kong Association                 institutions need to focus on meeting their very                     cooperation between the two industries?”
               of banks, Muthukrishnan ramaswami,                        specific needs,” he said. “no single solution,                       asked Lee. In an ideal model of cooperation,
               president of Singapore Exchange and José                  proprietary or otherwise, can cater on a mass                        panellists agreed, stakeholders could leverage
               María roldán, director general for banking                scale to these customers’ needs and for this                         existing processes and industry bodies, but
               regulation, banco de España and chair of the              reason the industry needs to agree where it                          the unanswered question remained: “who can
               Standards Implementation Group of the basel               can on common solutions to be able to focus                          take the lead and bring everyone to the table?”
               Committee.                                                on delivering our own value-add.”
                 representing SWIFT on several panels                       He told the audience that local banks in                          Intraday liquidity
               were Gottfried Leibbrandt, head of marketing;             Asia are waking up to transaction banking.                           Wim raymaekers represented SWIFT in
               Patrick de Courcy, head of markets; Wim                   “It’s a line of business, it’s not the back office,”                 a session on “Prioritising bank liquidity
               raymaekers, head of banking market; Alex                  he explained. Wong shared experiences                                – The crucial role of transaction banking
               Lee, director, payments markets, Asia Pacific;            with banks wanting to have correspondent                             departments in measuring and monitoring
               Adam Wilson, director, securities markets, Asia           relationships, but fighting over whose                               intraday liquidity risk”. “The main points raised
               Pacific; and Matteo rizzi, innovation leader.             proprietary system to use to deliver to the                          during the panel session showed that the
                 Leibbrandt looked at how the banking                    customer. “now that they use SWIFT, these                            issue of intraday liquidity is definitely on the
               community has evolved to accept corporates                discussions become moot,” he said.                                   agenda of banks as it has been put forward
               connecting directly to SWIFT. “Our customers                 “If our clients look at a single channel only,                    by basel III and more recently by the HkMA,”
               are no longer competing on the infrastructure             they are limited across the entire liquidity                         said raymaekers.
               to deliver services, but on the value-added               chain,” noted Faisal Ameen, managing                                   Panellists – randy White, corporate
               services that they can deliver over a                     director, global transaction services, Asia                          treasurer for Asia, JP Morgan, Martin Maurer,
               common platform, such as lending and cash                 Pacific, bank of America Merrill Lynch. He                           secretary general, Association of Foreign
                                                                         pointed to the example of Vietnam, which                             banks in Switzerland, and Mark Taylor,
                                                                         represents tremendous opportunity as only                            strategic accounts director, SmartStream
                                                                         27% of the population of 87 million have                             Asia Pacific – agreed that transactions
               Our customers are no                                      a bank account. The growth potential is                              departments could play an important role in
               longer competing on the                                   exciting for the banking industry, given the                         collecting better information (from internal
                                                                         Vietnamese government’s responsiveness                               systems, branches, correspondent banks
               infrastructure to deliver                                 and commitment to building out the country’s                         and settlement systems) and build a data
               services, but on the                                      infrastructure, as the industry “can only be as                      warehouse for liquidity analytics and decision
               value-added services that                                 successful as the infrastructure available.”                         reporting. “This was a great opportunity for
               they can deliver over a                                      Patrick de Courcy pointed to the creation of                      us to demonstrate the value of our FIninform
               common platform.                                          the national Payments Council of India (nPCI)                        copy services, Watch Analyser and integration
               Gottfried Leibbrandt,                                     as a great example of collaborative innovation                       consulting services as these can help with
               SWIFT                                                     by the industry. “nPCI is a perfect example of                       intraday messaging,” said raymaekers. l




3              Banks on SWIFT            Visit swift.com/banks for more information about SWIFT and its portfolio. Join the dialogue at www.swiftcommunity.net/banks or email us at swiftforbanks@swift.com
        Business Intelligence
Value


                                                                                                       Example 1

        to improve
                                                                                                                                          Market share based on currency usage per value/volume

                                                                                                                                                       Market share in MT 103 outbound France
                                                                                                                       60%




        decision-making                                                                                                50%



                                                                                                                       40%

        SWIFT Watch products meet



                                                                                                        Market share
        evolving business needs.
                                                                                                                       30%



                                                                                                                       20%



                                                                                                                       10%
                            usiness Intelligence is becoming increasingly



           B
                            important to banks as they look for insights into                                          0%
                                                                                                                                      Euro               Us Dollar           Pound Sterling       Swiss Franc      Swedish Krona            Yen
                            customer, market and correspondent network
                                                                                                                                                                             Volume outbond             Value outbond
                            behaviour and seek to improve profitability and
                            market share.
          SWIFT’s Watch products provide that intelligence by offering access to
        a wealth of information from messages sent over the SWIFT network.                             Example 2
          The Watch portfolio was extended in December 2010 with Value
                                                                                                                                                     Reciprocity gap in volume and value
        Analyser, which enables customers to understand the value of their
                                                                                                                                           Top 5 USD counterparties – MT103
        transactional activity and analyse currency flows.
                                                                                                                                                        % Reciprocity gap by volume / amount
          Together with Traffic Analyser, it provides business insights into
                                                                                                                                                       % Reciprocity gap (amount)
        correspondent banking activities, including payments and cash                                                            IN
        management, trade finance and network management. The                                                                100,0
        combination enables customers to take strategic and operational
        decisions based on data on messages exchanged by volume and                                                             50,0
        value, at group or institution level, for a region or a specific corridor.
          SWIFT’s business Intelligence can be leveraged to define strategies
                                                                                                                                 0,0
        to grow and maintain market share, enhance product portfolios and
        develop and monitor your footprint, identify exposure, manage risk,
                                                                                                                                -50,0
        and improve efficiency.
          Alongside the Analysers, Watch also provides reports. SWIFT is
                                                                                                                             -100,0
        revamping these reports to provide insights into specific business                                                                          Bank 1              Bank 2                 Bank 3             Bank 4           Bank 5
                                                                                                                                 OUT
        domains; in particular, correspondent banking.
          To shape these new dynamic reports, SWIFT is undertaking a
        consultation exercise, among Watch and non-Watch users, to identify
        requirements for functionality (market comparison, filters for drill-                         Example 3
        down, report frequency and delivery methods), content (message
        types to include, correspondents to cover), and smart visualisation.                                                                                    Trade evolution (inflows/outflows with Africa)

          If you are interested in participating in this consultation, please
        contact Watch@swift.com.                                                                                                                                                     Austria
                                                                                                                                                             United States                               Bangladesh
          In addition, SWIFT offers business Intelligence Services to provide                                                     United Kingdom                                                                               Bahrain

        reports and customised views for specific businesses needs and
                                                                                                                                                                                                                                         Belgium
        insights beyond the standard Analysers and report data – such as                                                 UAE


        peer benchmarking or macro-economic comparisons of GDP or
                                                                                                                        Spain                                                       Africa                                                    China
        international trade.
          A session at Sibos, ‘Define the future of your correspondent                                                    Saudi Arabia                                                                                                    France

        banking business with SWIFT business Intelligence’ will take place on
                                                                                                                                                                                                                           India
        Wednesday 21 September from 10:00-10:45 in the SWIFT auditorium.                                                                 Portugal

                                                                                                                                                             Netherlands                                Ireland
        Do not hesitate to contact us if you would like to meet us at Sibos to                                                                                                      Japan


        learn more about our evolving Watch product portfolio. l




4       Banks on SWIFT             Visit swift.com/banks for more information about SWIFT and its portfolio. Join the dialogue at www.swiftcommunity.net/banks or email us at swiftforbanks@swift.com
            Promoting integrated
Solutions


                                                                                                                                               In the afternoon, SWIFT facilitated roundtable
                                                                                                                                            sessions organised by senders (mainly Middle

            solutions for remittances                                                                                                       East) and receivers (mainly South Asia) to explain
                                                                                                                                            their specific requirements and start a dialogue
                                                                                                                                            with their counterparties. both senders and

            SWIFT Workers’ Remittances Day in                                                                                               receivers agreed that interoperability is key as
                                                                                                                                            traffic increases and more and more financial
            Dubai confirmed strong industry interest in                                                                                     institutions enter the remittance market. The lack

            standardisation and interoperability.                                                                                           of interoperability is seen as a major issue as it
                                                                                                                                            prevents financial institutions (FIs) from scaling
                                                                                                                                            up their business. Hence the interest of most FIs
                                                                                                                                            in SWIFTremit, SWIFT’s solution for workers’
                                                                                                                                            remittances. “The growing involvement of




                S
                              WIFT held its Workers’                   Activity is on the rise again after a slowdown                       financial institutions in remittances calls for higher
                              remittances business Day                 due to the economic crisis. The World bank                           standardisation of inter-bank processes which
                              in Dubai on 19 April 2011.               has forecasted that in 2011 remittances into                         is the core business of SWIFT,” said nicolas
                              Over 65 people from 35                   South Asia will amount to USD 83 billion,                            Willard, head of remittances, EMEA, SWIFT.
                              financial institutions and               some 5% up from 2010.                                                   Picking up on this, Cesar Santos, Jr, senior
            software companies from the remittance                       The day began with presentations by some                           vice president and group head, Global Filipino
            industry gathered for the event which                      of the major regional players: Al rajhi (Saudi                       banking Group, Philippine national bank
            was hosted at the Jumeirah Emirates                        Arabia), ICICI (India), Eastnets (UAE), Habib                        argued that, “We need to be on SWIFTremit
            Towers Hotel. The event was attended by                    bank (Pakistan), Citi bank and Al Fardan                             sooner rather than later… At this point in
            participants from 15 different Middle East                 Exchange (UAE). They shared their views on                           time, the current bilateral arrangements
            and South Asian countries. “The fact that 65               market trends in both South Asia and the                             are working fine but as the normal cycle of
            people attended the event shows the role                   Middle East, explained the biggest challenges                        technology updates happen across most
            that SWIFT can play to help its customers                  for them and their customers and set out                             institutions, these bilateral arrangements will
            grow their business and foster dialogue,”                  where the business opportunities lie.                                be challenged by the elegance of having only
            noted khaled Moharem, account manager,                       One of the main messages from the                                  one messaging standard across all partners.”
            SWIFT Dubai office.                                        morning session was that person-to-person                               “The SWIFT solution will allow us to reach
              In the remittance market, the Middle East                remittances is the fastest growing segment                           a large number of FIs with a common way
            – South Asia corridor is one of the busiest in             in the payment market – a trend set continue                         of working and set a path for a standardised
            the world in terms of number of transactions.              with the increasing number of Asian migrants                         approach which results in efficiency, risk
                                                                       who live and work in the Middle East,                                mitigation and speed,” commented Osama
                                                                       especially in the Gulf countries.                                    H. Al rahma, director, Al Fardan Exchange. l




                                                                       The SWIFT solution will allow us to reach a large number
                                                                       of FIs with a common way of working and set a path for
                                                                       a standardised approach which results in efficiency, risk
                                                                       mitigation and speed.
                                                                       Osama H. Al Rahma,
                                                                       Al Fardan Exchange




              Sibos 2011 in Toronto – 19-23 September

             T
                     here is a comprehensive line-up of sessions for banks at Sibos in                   (risk) management and the rapidly evolving regulatory environment of
                     Toronto. Check out www.sibos.com for more details of sessions                       sanctions and AML, harness business intelligence to support better
                     on how to: exploit new developments such as mobile technology                       decision making about the future of your correspondent banking
              and the internationalisation of the RMB, address the changing face                         business, leverage the opportunities and manage the challenges of the
              of trade and finance with the next generation of rules and tools,                          Single European Payments Area, and analyse and use “big data” to
              discover collaborative initiatives to support compliance on liquidity                      make correlations and even predict trends.




5           Banks on SWIFT             Visit swift.com/banks for more information about SWIFT and its portfolio. Join the dialogue at www.swiftcommunity.net/banks or email us at swiftforbanks@swift.com
        SWIFT Sanctions Screening
Value



                                                                                                                                        Sanctions and AML
        service to debut in early 2012                                                                                                  at Sibos 2011

                                                                                                                                        S
                                                                                                                                                anctions and anti-money

        Centralised screening will provide a cost-effective                                                                                     laundering will once again be in
                                                                                                                                                the spotlight at Sibos with the
        approach to sanctions compliance.                                                                                               conference session, ‘Sanctions & AML
                                                                                                                                        – complying with requirements without
                                                                                                                                        breaking the bank.’
                                                                                                                                          Make plans to join this session for
                                                                                                                                        a discussion of recent regulatory
                                                                                                                                        developments, the benefits and challenges
                         conomic sanctions are an                footprint’ and essentially ‘subscribe and



           E
                                                                                                                                        of industry collaboration, tools, sharing of
                         instrument of choice for                comply’.                                                               practices and common standards to meet
                         governments looking to                    Development of SWIFT’s Sanctions                                     the increasing expectations of regulators.
                            implement foreign policy             Screening service is well under way, with                              The session takes place on Monday,
                            and fight financial crime            pilot testing scheduled to start in October.                           19 September from 16:00 – 17.00 to
        and terrorist groups. keeping up-to-date                 Groups from the Uk, Italy, the netherlands                             Conference Room 3.
        and compliant with ever-changing sanctions               and Finland took part in a recent workshop                             For more information on this
        lists and requirements represents a common               to validate the service description, including                         topic, please contact:
        challenge to the banking industry. The burden            functionality, roles and responsibilities and the                      brigitte.dewilde@swift.com.
        is particularly great for small to midsize               legal framework.
        banks, which often lack internal sanctions                                                                                    as a whole, explains brigitte De Wilde, head
        compliance resources.                                    How SWIFT Sanctions Screening works                                  of AML & sanctions initiatives at SWIFT.
           Enter SWIFT’s new centralised Sanctions               As a user of the new Sanctions Screening                             “Global banks are also interested in how
        Screening service – a unique, cost-effective             service, you will be able to request that                            the service could help their correspondents
        solution in this area of growing concern and             selected SWIFT FIn messages be routed to                             perform their own transaction screening and
        workload. Currently under development with               the centralised screening application, where                         compliance activities,” she says. “SWIFT
        FircoSoft and scheduled to go live in early              they will be filtered in real time, and checked                      Sanctions Screening is an easy and cost-
        2012, Sanctions Screening over SWIFT will                against your selected sanctions lists.                               effective solution that they might want to
        combine FircoSoft’s market-leading filtering               If there is no match to the sanctions list, the                    encourage their correspondents to subscribe
        application and list update service with the             message will be delivered as usual. If there is                      to. Providing the international banking
        security and resilience of SWIFT. If you work            a match, you will be asked to instruct SWIFT                         community with a secure, standardised
        at a smaller financial institution, Sanctions            whether to release, abort or flag the message                        service that supports sanctions compliance
        Screening will help you comply with evolving             via an alert management system. It’s that                            is another way SWIFT is fulfilling its mission of
        sanctions regulations. And, you don’t have               simple.                                                              delivering standardised approaches that help
        to worry about a costly and complex set-up                                                                                    our customers increase their efficiency and
        and implementation process or expensive                  A win-win for the industry                                           reduce costs and operational risk.”
        systems maintenance – the service is ‘zero               As a result of recent regulatory evolutions,                           Although global clearing organisations are
                                                                 institutions are increasingly focusing on                            less likely to use the new SWIFT service, they
                                                                 the financial crime controls applied by their                        will still benefit from it indirectly by getting
                                                                 correspondents. The new service is designed                          assurance that their correspondents are
                                                                 to increase compliance in the community                              screening transactions before sending them. l




                                                                 SWIFT Sanctions Screening is an easy and cost-effective
                                                                 solution that [global banks] might want to encourage their
                                                                 correspondents to subscribe to.
                                                                 Brigitte De Wilde, SWIFT




6       Banks on SWIFT           Visit swift.com/banks for more information about SWIFT and its portfolio. Join the dialogue at www.swiftcommunity.net/banks or email us at swiftforbanks@swift.com
       Data management issues
News


                                                                                                                                        Delivering real savings
                                                                                                                                        While regulation is a leading driver for

       delay liquidity risk progress                                                                                                    improved management of liquidity risk, the
                                                                                                                                        business case to invest in real-time liquidity
                                                                                                                                        management goes beyond regulatory

       A new SWIFT white paper confirms that                                                                                            compliance and risk mitigation. Getting it right
                                                                                                                                        can save banks a lot of money, too. Lack of
       collaborative solutions are needed to resolve                                                                                    intraday data can lead to late identification

       data problems and enable compliance with new                                                                                     of gaps between forecast and real inflows,
                                                                                                                                        outflows and positions, resulting in substantial
       liquidity management regulations.                                                                                                financial costs – due to over-collateralisation,
                                                                                                                                        intraday credit line costs, higher funding costs,
                                                                                                                                        overdraft charges and higher liquidity buffers.
                                                                                                                                           Collaborative efforts to develop industry
                            inancial institutions continue         banneux, senior market manager, SWIFT, “but                          standards – an area of leadership and



           F
                            to struggle with the                   until the right data is readily available at the                     expertise for SWIFT – could deliver real
                            implementation of effective            right time, progress will be difficult. At SWIFT,                    savings for the industry.
                            liquidity risk management              we can help our customers by leading and
                            strategies, according to               supporting collaborative efforts within the                          Five top priorities
       a survey of industry experts. The key to                    industry, namely by driving standardisation.”                        The good news is that survey respondents
       overcoming these challenges is developing                                                                                        also identified five top-priority collaborative
       collaborative solutions to data management                  Six key data challenges                                              developments that will address these
       issues, according to a new SWIFT white paper                SWIFT’s survey of 40 cash, liquidity and                             challenges, some of which could be
       entitled ‘Managing liquidity risk: Collaborative            liquidity risk managers at financial institutions                    implemented in a relatively short timeframe.
       solutions to improve position management and                around the world identified six key areas in                         They are:
       analytics’ that analyses the survey’s findings.             which data management needs to improve,                                    industry best practice for intraday cash
          A previous SWIFT whitepaper and survey                   to create:                                                                 reporting;
       in 2010 concluded that effective liquidity risk                  a view on intraday cash position across                               common reporting standards and liquidity
       management requires a top-down and bottom-                       currencies (93%);                                                     monitoring and control standards for use
       up approach. Strategy, principles and objectives                 ready-made liquidity risk analytics and                               across high-value payments systems;
       must be set at management and board level,                       business intelligence (91%);                                          a standard margin call solution to support
       while the liquidity dashboard and analytics must                 advanced interactive cash and collateral                              the implementation of intraday feeds in
       be obtained at the operational level. However,                   management functionalities within                                     liquidity management applications;
       the 2011survey found that data management                        payments infrastructures (89%);                                       industry best practice for collateral
       challenges holding up progress in addressing                     an ability to build predictive positions (88%);                       reporting for liquidity management
       liquidity risk issues have not yet been solved.                  an intraday view of unencumbered                                      purposes;
          “Managing liquidity risk is a complex process                 collateral positions including margin calls                           a central ‘payment tracker/adviser’
       that involves having the right monitoring                        (88%);                                                                platform providing transactional status.
       and controls in place, as well as quantitative                   an ability to manage and report liquidity                       SWIFT is ideally positioned to help customers
       measures and reporting,” says Catherine                          positions at a firm-wide level (82%).                           address these challenges. “The business and
                                                                                                                                        regulatory pressure for financial institutions
                                                                                                                                        to improve their liquidity risk management
                                                                                                                                        can’t be ignored,” says Luc Meurant, head of
         Liquidity management
                                                                   The business and regulatory                                          banking, supply chain and corporate markets
         at Sibos 2011                                             pressure for financial                                               at SWIFT. “The industry has to find solutions
                                                                                                                                        to the data management challenges. In


        E
                xplore the topic of liquidity risk                 institutions to improve their                                        addition to internal integration projects, the
                further at Sibos by attending the                  liquidity risk management                                            answer lies in collaboration. Industry-level
                session:
                                                                   cannot be ignored… SWIFT                                             initiatives to address these issues have
         Liquidity Risk – Have we learned lessons
         from the last crisis?
                                                                   stands ready to support our                                          already started. SWIFT stands ready to
         Tuesday 20 September 16:00-17:00                          customers in these efforts.                                          support our customers in these efforts.” l
         Conference room 1                                         Luc Meurant, SWIFT                                                   Email: Catherine.Banneux@swift.com for
                                                                                                                                        a free copy of the white paper.




7      Banks on SWIFT              Visit swift.com/banks for more information about SWIFT and its portfolio. Join the dialogue at www.swiftcommunity.net/banks or email us at swiftforbanks@swift.com
            BPO: Mitigating risks in
Interview



            international trade
            Banks on SWIFT spoke to Sharyn Trainor,
            Director, Global Financial Supply Chain
            Product Management, Deutsche Bank about the
            bank’s approach to the opportunities that TSU
            and BPO present.

            How has Deutsche Bank’s approach                             traditional paper-based trade business, where
            to TSU and BPO commercialisation                             banks already actively collaborate as a matter                       in their processes. key strategic priorities
            evolved?                                                     of course, there are standard messages.                              include risk management, enhanced visibility
            Deutsche bank was involved in discussions                    TSU has the potential to create a similar                            and the ability to improve working capital.
            around the Trade Services Utility (TSU) from                 environment in the open account space. We                              Multinational corporates are especially
            the start. With the first release of the TSU                 see the TSU as an opportunity to allow us to                         interested in more flexible financing. Most of
            our involvement deepened. However, it was                    collaborate in the open account space with                           the solutions on the market today are built
            with the additional functionality of the bank                other banks in a standard, regulated fashion.                        around strategies like reverse factoring. There
            payment obligation (bPO) that we became                                                                                           is certainly interest in multi-bank solutions and
            actively engaged in exploring the commercial                 How are you going about engaging your                                standardisation. This can be supported by
            opportunities of the solution. We have a large               corporate customers in promoting new                                 initiatives such as the TSU.
            community of importers and exporters among                   collaborative trade services?
            our client base, both in Europe and worldwide.               Understanding client needs and proactively                           Where is Deutsche Bank in terms
            Working capital is a huge strategic priority for             working together to identify and provide the                         of products within its trade services
            them. With the shift to open account trading,                best solution is at the heart of all we do. Many                     portfolio that are built on TSU and BPO?
            clients are coming to us and looking for solutions           aspects of the financial supply chain require a                      Deutsche bank has a rapidly growing and
            to the challenges of risk mitigation and supply              partnership approach between counterparties.                         robust portfolio of innovative open account
            chain financing and we want to move with them.               We are constantly engaging with our corporate                        financial supply chain solutions. We have a
               To accommodate the heightened interest of                 clients as we work together to develop tailored                      robust supplier finance confirmed payables
            our clients in financial supply chain solutions,             solutions. We also felt it was critical to expand                    offering that is available in over 25 countries.
            we are investing in our supply chain offering                the bank-to-bank discussions around TSU                              This, together with a sophisticated receivables
            to maintain a leading position in this space.                to actively include more input and feedback                          finance solution, will be enhanced and offered
            While the ideal situation for a bank is to                   from corporates. In addition to our own                              on an integrated platform. In addition, as clients
            have both sides of the transaction – i.e. the                client discussions, as part of the European                          increasingly look for financing opportunities
            importer and exporter – as customers, there                  user group, the German banks organised                               earlier in the supply chain cycle we are
            is a challenge for any one bank to cover every               a corporate workshop to actively engage                              expanding our platform-based pre- and post-
            client’s credit needs in every geography. In the             corporates. In addition, we are working with                         shipment offering. We have also automated
                                                                         banks on a partnership or collaborative basis                        and integrated TSU capabilities into our



              A
                       BPO is an optional component                      to identify joint business opportunities to                          proprietary offerings and supply chain portal to
                       of a transaction in SWIFT’s Trade                 provide greater value to our respective clients.                     allow us to collaborate with other banks.
                       Services Utility (TSU) which places                                                                                       We are an active participant in the bank
              a legal obligation on the issuing bank to pay              What feedback have you had from                                      Payment Obligation Commercialisation Group
              the recipient bank subject to the matching of              corporates so far?                                                   and are currently in discussions with a number
              compliant data in the TSU. The BPO delivers                There has been lots of interest from                                 of clients and banks regarding pilots and a
              all the benefits of a letter of credit, without            corporates in innovative open account and                            proof of concept to leverage the bPO. A key
              the drawbacks of manual processing.
                                                                         financing capabilities. Many are actively                            milestone for the group is endorsement by the
              For more information, please contact your
                                                                         looking for alternative ways to access liquidity                     International Chamber of Commerce as this
              account manager or visit www.swift.com
                                                                         and build greater automation and efficiency                          will aid market acceptance. l




8           Banks on SWIFT               Visit swift.com/banks for more information about SWIFT and its portfolio. Join the dialogue at www.swiftcommunity.net/banks or email us at swiftforbanks@swift.com

				
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