Using SWIFT to Optimize Your Treasury - Citibank · Using SWIFT to Optimize Your Treasury . Eileen Dignen SWIFT - Managing Director 24 August 2012 Rene Schuurman Citi - Product Manager

The Financial Professionals Forum 2012

Using SWIFT to Optimize Your Treasury

Using SWIFT to Optimize Your Treasury

Eileen Dignen

SWIFT - Managing Director

24 August 2012

Rene Schuurman

Citi - Product Manager Connectivity


Table of Contents

1. Who is SWIFT? 1

2. Corporate Value proposition 9

3. Make your business case 12

4. Corporates @ SWIFT 17

5. Citi and SWIFT 21

6. Roadmap

Who is SWIFT?


212

10k+

23

17.5m Messages

per day 4b

Messages per year

20m Peak day messages

11k IT changes

per year

5x9 Availability

SWIFT is the global provider of secure financial messaging services

1


SWIFT founded 1973

First OPC

1976

1977 SWIFT goes

live

1979 US

OPC

Asian countries connect 1980

1986 Value-Added

services

Securities 1987

SWIFTNet 2001

2004 SWIFTNet migration

1970s

Distributed Architecture

2008

Gottfried Leibbrandt

CEO 2012

1992 Interbank

File Transfer

Alliance 1993

1978 First Sibos

1980s 1990s 2000s 2010s

2010 First

acquisition: Arkelis

2

A timeline


You

Interface

Network

SIPN

Messaging Services

FIN

InterAct

FileAct

Browse

Business Applications

Market

Infrastructures

Service Providers

Correspondents

Platform

3


Secure, reliable and resilient platform

Directories &

Information Services

Secure IP Network (SIPN)

Interfaces

Messaging services

Standards Rules

Testing Services

Treasury Trade Securities Payments

Platform

4


Standards

5

Corporate Value Proposition


What issues are treasurers faced with ?

Commodity risk

Liquidity

Working capital

Currency risk

Security

Supplier risk

Counterparty risk

Cost

e.g. • Implementation of a

TMS • Matching System

e.g. • Centralise treasury

operations • Revisit security

procedures

e.g. • Establish more bank relations • Set up supplier

financing schemes

Technology

Business

Organisation

6


Supporting financial services

Treasury and Risk

management

Cash management

Trade finance

• Monitor accounts and obtain global visibility on cash • Manage liquidity and pool cash company-wide • Invest surplus cash • Manage financial risk (FX and interest rate)

• Sent account payable files (e.g. pay suppliers/salaries, debit customers) • Manage reporting through account statements

• Send application for L/C or Guarantees (import/export) • Receive advice of L/C

EBAM • Manage bank accounts : opening, maintenance, closing and reporting

FIN MT940/942

FIN MT101

FIN MT3xx

FIN MT798

or

FileAct

FileAct (ISO20022

or domestic

format)

FileAct (ISO20022)

7


Corporate business case

Security ↑ Risk ↓

Visibility ↑

Costs TCO* ↓

Business case

Quantitative Qualitative (More difficult to quantify)

Operational benefit

Financial benefit

Additional benefits

8

Corporates on SWIFT


Where do we stand today ?

≈ 25.000 legal entities

Breakdown by region Number of registered corporates

9


Profile of SWIFT registered corporates

Top 5 of industry sectors

Automobiles & Parts e.g. Daimler, Renault, Volkswagen,

Food producers e.g. Barilla, Ferrero, Nestle

Software and Computer Services

General Industrials

Personal Goods

e.g. Microsoft

e.g. Louis Dreyfus

e.g.Henkel, Unilever, Yves Rocher

Corporates by annual turnover (USD)

Corporates by # banking relationships (corporates registered more than 1 year ago)

10

Citi and SWIFT


Citi and SWIFT – A Unique Partnership

Citi is

– the single largest user of SWIFT, globally

– A founding members of SWIFT

– Chairman of the Board (Mr. Yawar Shah)

Citi works closely with SWIFT on governance, and is collaborator and innovator of many SWIFT solutions/initiatives (i.e. Corporate Advisory Group, National Member Groups)

Citi representatives speak at SWIFT Business Forums as well as key speaking engagements at Sibos each year to demonstrate thought leadership across all markets/regions

SWIFT regularly participates in Citi Client Forums in Greece, Zurich, Miami, Bangkok, etc

11


CitiConnect® for SWIFT

Facts 280+ clients globally use CitiConnect for SWIFT Citi is #1 bank for volumes of messages and files delivered

through SWIFT network, in both Corporate and Bank markets 18% market share of SWIFT Corporate market Citi is #1 in geographical coverage, with 90+ countries certified

for offering SWIFT for Corporates

Reduces cost of implementation, integration and support

True STP in all countries of operation

Detailed and automated response messages

Statement data aggregation capabilities

File format choices through SWIFT FileAct, including ISO 20022 XML – leveraging CitiConnect for Files

A single connection for multi-bank transaction initiation via other banks

ERP Integrator

SWIFT

Files

Benefits:

A secure connection to Citi via industry-standard SWIFT™ network

Support MT messages through SWIFTNet FIN, and batched files through SWIFTNet FileAct service

An integrated and real-time connection for initiating payments, receiving information, and accessing services directly from your treasury management system

Single BIC leveraging any of Citi's branches for a global access for sending messages

12


Support of industry standards for

communications and custom

formats

Unparalleled global reach with TTS and

SFS capabilities

covered worldwide

Single Connectivity

Window to Citi’s Investor Services,

Intermediary, Cash, Trade, and Card

products

Cash & Trade

Wholesale Cards

Issuer Services

Investor Services

Statements & Reporting

Security

Processing/Routing

Tracking

FTP SFTP HTTP

HTTPS AS2 VAN

MQ Series ConnectDirect

SWIFT

ERP Integrator

Communication Protocols

A multitude of connectivity options

Entrust TD Comm Press

S/MIME SWIFTNET Security

PGP

Enrichment Transformation Bundling/Un-

Bundling Multi-Destination-

Routing

SLA Monitoring File/Msg Monitoring

Runtime ID Reconciliation

CitiConnect® – The Architecture

13


Proprietary Connectivity vs. SWIFT

Internet or

VPN

VPN

Bank 3

Bank 2

VPN

VPN

Bank proprietary host-to-host connectivity solutions

Pros ▲ Once investment made, lower service and usage

fees ▲ No extensive agreements ▲ Fewer hops make connectivity troubleshooting

easier Cons ▼ Multiple bank connections result in higher

maintenance costs ▼ May need to maintain multiple standards in

connectivity, security

Pros ▲ One connection. Service Bureau manages

connectivity via SWIFT to banks ▲ Cost efficient on-boarding and migration of banks ▲ Proven reliability: over 99.99% availability Cons ▼ Agreements required by banks, SWIFT and

Service Bureau ▼ Initial cost of migrating to SWIFT /Service Bureau ▼ Additional intermediary charges by Service

Bureau and SWIFT

Service Bureau

Internet or

VPN

VPN

Bank 3

Bank 2

SWIFTNet (via Service Bureau)

VPN

VPN

VPN

14


SWIFT Service Bureaux

Check here: www.swift.com/corporates/partners.htm

Accredited Partners have a proven track record of

assisting Corporates to do business with banks worldwide using the SWIFT network

These service bureaux will organise the corporate’s project end-to-end, including: – Project definition – Implementation plan with banks – Connectivity and message formats – System integration for SWIFT connectivity – Running and monitoring your services

Citi maintain working relationship with leading Service Bureaux, for smoother client on-boarding for mutual clients

15

http://www.swift.com/corporates/partners.htm


The SWIFT Road to Efficiency

Joining SWIFT – FIN services are often chosen as the first step

Most popular combination of FIN messages: – MT101 for treasury payments & MT199 for rejects / validation status – MT940 for EOD statements & MT942 for Intraday updates – MT300/320 for confirmations of treasury deals

Phase 1 Treasury centralisation

Phase 2 Payment Factories & Shared Service Centres

Addition of FileAct service – Move of batch Payments and Direct Debits flows follows to

SWIFTNet follows as the next step Often limited to only a channel migration at this stage - does not

involve change of adopted file formats

Phase 3 Further standardisation and move to strategic formats

Harmonisation of SWIFT-enabled Treasury and Shared Service Centres business processes

Adoption of ISO20022 XML standard

16

Roadmap


Fax

Paper

Today Tomorrow

• Faster/cheaper • Standardised • Dematerialised • Automated/STP

XML messages Supporting documents

Personal Digital Signature

• Slow • Expensive

• Low integration • Low satisfaction

Electronic Bank Account Management (EBAM)

17


Service

Auto-mation

Security Control

Audit

Checking of signatures’ entitlements delegated to

the bank

Dematerialisation of approvals through digital signatures

Tracking of WHAT, WHEN and WHO

approved transactions

Authorize financial data at the level of one or multiple individuals

Major responsibility for banks and

corporates

3Skey: Some of the drivers for personal digital identity

18


Challenges for the corporate users

No uniform mechanism Different system per bank Costly & difficult to maintain

ONE token ONE password ONE process

Multiple devices Multiple passwords Mutliple systems

• Multi-Bank • Multi-Network • Mutli-Application • Multi-Country

19


Key benefits

For Vendors

Benefit from interoperable solution, easy to integrate and can be used across banks globally

For Banks

Cost effective use of shared infrastructure whilst keeping control over the user identity

For Corporates

One token, one process, one password across banks, networks and countries

20


Thank you

21

efficiency, renewable energy & mitigation

In January 2007, Citi released a Climate Change Position Statement, the first US financial institution to do so. As a sustainability leader in the financial sector, Citi has taken concrete steps to address this important issue of climate change by: (a) targeting $50 billion over 10 years to address global climate change: includes significant increases in investment and financing of alternative energy, clean technology, and other carbon-emission reduction activities; (b) committing to reduce GHG emissions of all Citi owned and leased properties around the world by 10% by 2011; (c) purchasing more than 52,000 MWh of green (carbon neutral) power for our operations in 2006; (d) creating Sustainable Development Investments (SDI) that makes private equity investments in renewable energy and clean technologies; (e) providing lending and investing services to clients for renewable energy development and projects; (f) producing equity research related to climate issues that helps to inform investors on risks and opportunities associated with the issue; and (g) engaging with a broad range of stakeholders on the issue of climate change to help advance understanding and solutions.

Citi works with its clients in greenhouse gas intensive industries to evaluate emerging risks from climate change and, where appropriate, to mitigate those risks.

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Documents

Using SWIFT to Optimize Your Treasury - Citibank · Using SWIFT to Optimize Your Treasury . Eileen Dignen SWIFT - Managing Director 24 August 2012 Rene Schuurman Citi - Product Manager