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Bank Connectivity: Perfecting the ChoicesJune 20, 2013

© 2013 Kyriba Corporation. All rights reserved. PRIVILEGED & CONFIDENTIAL. 2

Simone BernardelliManager, Global Bank [email protected]

Ken KetchumDirector, Account [email protected]

Bob StarkVice President, [email protected]

Today’s presenters

• Manages global bank connectivity implementation team

• Host to Host, SWIFT, EBICS etc. connectivity choices

• Manages team for all US, Canada Kyriba clients

• Extensive work with bank connectivity, including SWIFTNet

• Product and business strategy, including bank connectivity strategy and alliances

mailto:[email protected]




1) Bank connectivity: sorting out the vocabulary

2) Choices for bank connectivity

3) What is best for me? Perfecting the choices…

4) Detailed Q&A

Agenda

“I just want to give my list of banks to my service provider and let them take care of the rest”

- Almost every treasurer in the world


Domestic Banks

Vendor manages formats and connections for you

International Banks

Corporate Client

Service providers manage domestic and internal connectivity for bank reporting, payments, and (once available) electronic bank account management

Service Provider

Connectivity defined



Connectivity is…

Connectivity Element Examples1) Network protocol Network IP, VPN, MQ, AS2

2) Connectivity method FTP, SWIFT, EBICS, internet-based

3) File format BAI, EDI820, MT940, XML 20022

4) Security Encryption via PGP or PKCS7, S/MIME, 3SKey


1) FTP• Host-to-host connections

• Directly to/from the bank using a custom script developed and maintained by vendor

• Access and security dictated by the bank

• Used frequently around the world


Connectivity Methods


2) SWIFT• Confusing because both a network and an author

of formats/standards

• The ‘network’ requires membership and allows communication of messages between members SWIFT (or BIC) addresses

• Different membership types -> different services (e.g. Member-Concentrator vs. SWIFTNet)




3) EBICS (and regional protocols)• Certain countries have protocols to connect

directly to banks in that country (e.g. France, Germany, Austria)

• Simplifies connectivity for the vendor, although likely require a vendor to get connected

4) “Creative methods”• Typically Internet-based methods





Connectivity is…







File Formats

Primary File Formats DescriptionBAI2 Bank balance and transaction reporting (North

America)

EDI 820 High and low value payments (North America)

SWIFT MT.xxx Primarily for non-US reporting and payments• MT940 = prior day• MT942 = current day• MT101/103 = high value payments

XML 20022 XML CAMT = bank reporting e.g. <camt.053.001.03) XML PAIN = payments message formats e.g. <pain.001.001.03>



Connectivity is…






1) Authentication/Authorization• Bank knows payment originated from my company

and was authorized to be sent (e.g. digital signature)

2) Confidentiality• Payment file is encrypted and only the bank can read the data

3) Integrity• Payment has been sealed (bank can tell if ‘seal’ was tampered with)

4) Non-repudiation• (for certain protocols) Bank cannot deny receiving payment message

that organization can prove was sent


Security


Who can offer bank connectivity?

1) Treasury Management Systems (TMS)

2) ERP

3) Banks

4) Service bureaus

5) SWIFT

Bank connectivity options


Is one provider better than another?

Key questions you want to ask:• Cost• Experience

“Inventory” of connectivity Expertise with onboarding banks

• Ease (cost) of integration• Ability to support multiple methods/protocols



Most popular connectivity choices (in US/Canada)

1) Direct connectivity• Host-to-host connection (e.g. FTP)

2) SWIFT Member-Concentrator• Shared BIC address• Priced per account/transaction

3) SWIFTNet• Your own SWIFT/BIC address



What about my situation affects the choice?

Variables: # of banks Who/where they are # of accounts # of transactions Types of transactions (e.g. payments)



What’s best for me?

Connectivity Method Ideal ScenarioFTP High volume of activity at domestic banks

Regional Protocol Connecting with banks in those regions (e.g. France, Germany for EBICS)

SWIFT Member-Concentrator

Outside North AmericaLarge number of banks; small volume of activity

SWIFTNet Lots of everything


● Often a combination of methods may be best ●


Scenario Recommendation: FTP$5 Billion Revenue Domestic treasury

FTP most common in North America

3 Large US Banks Most US Banks offer BAI reporting via FTP

Balance Reporting and Payments

FTP will deliver BAI files for bank reportingFTP will transmit EDI and similar files for

payments110 Bank Accounts No ‘traffic’ charges for number of accounts or

transactions




Scenario Recommendation: FTP + SWIFT$5 Billion Revenue International Treasury

International activity means FTP alone won’t be sufficient

1 Large US Bank1 Large CDN Bank8 International Banks

US and CDN banks can be served with FTP connections and domestic formats

International banks likely require SWIFT


FTP & SWIFT can serve both activitiesSWIFT Member-Concentrator = high value

payments50 Accounts (US)10 Accounts (Canada)50 Accounts (INTL)

60 Accounts can be served with FTP and domestic formats it supports

50 Accounts likely isn’t enough to pursue dedicated BIC/SWIFT Address




Scenario Recommendation: FTP + SWIFTNet$10 Billion Revenue International Treasury

Dedicated BIC will be useful for expanse of banks, accounts, and transactions

5 Large US Banks1 Large CDN Bank50 International Banks

US and CDN banks may still be served with FTP connections, despite SWIFT abilities

Many banks (and accounts) lead to SWIFTNet


FTP & SWIFT can serve both activitiesSWIFTNet allows high and low value payments

(FIN and FileACT messages)100 Accounts (US)10 Accounts (Canada)400 Accounts (INTL)

110 Accounts can be served with FTP and domestic formats it supports

400 Accounts is easily enough to pursue dedicated BIC/SWIFT Address




Summary

Scope of Bank ConnectivityBank Reporting

Payments(hopefully) eBAM

Connectivity MethodsFTP

SWIFTRegional Protocols

File Transfer FormatsBAI

SWIFT MTxxxXML ISO20022 (Pain/CMT)

Best solution depends on:Banks

Type of ActivityVolumes

Evaluating Service ProvidersCost

ExperienceFlexibility


Questions?

Kyriba offers:• Choice – more connectivity options than any other provider

• Experience –Kyriba processes 1,000,000 transactions per day

• Expertise - Kyriba onboarded more SWIFTNet customers than any third party provider

• Monitoring – Kyriba’s dashboards allow proactive monitoring of all bank connectivity, including SWIFT traffic

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