2014 kyriba webcast_connectivity 0722_final_ss

July 22, 2014

CONNECTIVITY IN THE CLOUD

2© 2014 Kyriba Corporation. All rights reserved. PROPRIETARY & CONFIDENTIAL.

Topics we plan to discuss:1) The Need for Bank Connectivity

2) Sorting out the Vocabulary

3) Bank Connectivity Defined• Security• Bank Formats• Methods to Connect

4) Making the right choices – which is best for you?

Today’s discussion


Need for Connectivity

Connectivity is key to:•Gain visibility into cash & liquidity•Measure forecast accuracy•Make effective financial decisions

Requirements•Secure•Automated•Monitored•No IT involvement


Making Sense of Bank ConnectivityCommunication Protocol Formats

BACS for UK

FTX

FtpPESIT

SecurityLanguage Content Encryption and Signatures


Connectivity Vocabulary

SWIFT (The Society for Worldwide Interbank Financial Telecommunication)

•Network - that enables banks and corporates to securely send and receive financial messages information

•Author of Formats – SWIFT advocates on behalf of financial community to standardize message formats and delivery channels

Service Bureau

•Service provider to manage connectivity, including SWIFT, for corporations or banks

•Like a ‘connectivity’ post office.

•For SWIFT – will manage all the incoming/outgoing messages and deliver them to you / pick them up from you



SWIFTNet

•Inter-bank communication network developed and maintained by the SWIFT organization

•There are over 10,000 SWIFT members – including banks and corporates

SWIFTNet for Corporates

•Restricted membership within SWIFTNet

•Of 10,000+ SWIFT members, less than 2,000 are part of SWIFTNet for Corporates

•Bank/branch may choose to be a member of SWIFTNet, but choose not to be a member of the SWIFTNet for Corporates



Concentrator

•Service provider that receives bank statements (or payments) on behalf of a client

•For SWIFT – service provider will ‘share’ their SWIFT address, meaning corporate clients do not need to be part of SWIFT to use SWIFT

Protocol

•Method for communicating a file/message from one system to another

•FTP, EBICS, SWIFT are all examples in this context

Encryption

•Method to enhance security of a file/message by scrambling contents so it can be read only by those with the right encryption key to unscramble it.

•Example encryption types: PGP, SMIME, DES, etc.


Making Sense of Bank ConnectivityCommunication Protocol Formats

BACS for UK

FTX

FtpPESIT

SecurityLanguage Content Encryption and Signatures


Security

Typically four components1)Authentication

• Digital Signature (e.g. 3SKEY) can be applied to payment file

2)Confidentiality• Encryption: so that only receiving party can read the file

– e.g. PGP (bank industry standard), S/MIME, PKCS7, DES

• Warehoused data (“data at rest”) is encrypted

3)Integrity• “Sealing” of a file: receiving party can validate if file integrity has been compromised

4)Non-repudiation• Proof of delivery: authentications/confirmations key to process


Formats

North America Europe “Evolving”

Bank Reporting BAI2 MT940/942 XML ISO20022 CAMT 052/053

Payments EDI 820 MT101SEPA

XML ISO20022 PAIN formats

Bank Fee Analysis EDI 822 TWIST BSB XML ISO20022 CAMT 086

Formats vary across geographies and for different types of transactions

Ideally, corporate treasury never has to worry about formats as systems and vendors manage this ‘on behalf of’


Bank Connectivity Options

1

2

3

Host to Host Connections

Domestic/Regional Networks

SWIFT Concentrator Service

SWIFT Alliance Lite 2

SWIFT via Service Bureau

4

5


TMS connects directly to the bank’s servers.– Commonly referred to as “FTP” connection

– Most common protocol in North America

– Supports both inbound (statements) and outbound (payments)

– Security dictated by bank

– No restriction on format (although typically BAI / EDI)

– Ideal for small number of US banks

Host to Host Connection

TMSDomestic Banks


TMS connects to the regional network (e.g. EBICS or BACS)– Available for most banks within a region

– Supports both inbound (statements) and outbound (payments)

– Security dictated by regional network

– No restriction on format (although usually regional formats)

– Ideal for multiple banks or high volumes within a specific region (e.g. France, Germany)


TMSRegional Banks


Client does not need to subscribe to SWIFT for own BIC; borrows use of provider's SWIFT membership– Available for ~10,000 banks within SWIFTNet

– Security dictated by SWIFT

– Limited message formats (FIN messages only) • Bank Reporting - MT940 and MT942 • Payments - MT101

– Ideal for low payment volumes outside of NA


TMSTMSLimited message types


Client manages their own SWIFTNet (BIC address) application– IT and Technical involvement (AL2 software installation and maintenance as well as SWIFT training for

resources)

– Available for ~ 2,000 banks within SWIFTNet for Corporates

– Security dictated by SWIFT and Internal IT

– All file/message types can be transmitted (FIN and FileACT)

– Highly scalable

– Ideal for global clients with low to moderate transaction volumes

SWIFT Alliance Lite 2 (Client managed)

Corp. ClientTMSLower payment volumes


TMS manages the Alliance Lite 2 service:– Integration to TMS– Proactive Connectivity Monitoring– Multiple Acknowledgements

Client’s responsibilities lessened; including need for internal IT Alliance Lite 2 service otherwise the same Ideal for corporates who have low/moderate volumes

SWIFT Alliance Lite 2 (TMS managed)

Corp. ClientTMSLower payment volumes


Like SWIFT AL2, TMS connects to SWIFT directly– Service Bureau = TMS manages everything.

– No client involvement required / No internal SWIFT expertise needed

– No restriction on formats, types of transactions

– Ideal for higher number of banks / greater transaction volumes

– Key to SWIFT connectivity is knowing volume of transactions that would flow through SWIFT (bank reporting indirectly; payments directly)

– Making the wrong choice = you spend too much money

SWIFTNet Service Bureau

TMSTMSNo restrictions


How Do I Choose?


Bank Connectivity Options

1

2

3

Host to Host Connections



SWIFT Alliance Lite 2

SWIFTNet Service Bureau

4

5


What is your connectivity profile?Your company has banking partners based entirely in the US

Bank Reporting: 5 US banks - 100 accountsPayments: 2 US banks - 100 payments per day

A

Best Choice Host to Host Connections

Why?

• Low number of banks

• High number of accounts

• Domestic banking relationships

1


What is your connectivity profile?Your company has banking partners in the US, France, and Germany

Bank Reporting: 3 Banks (US, FR, GER) - 100 AcctsPayments: 3 Banks – 100 payments per day

Best ChoicesHost to Host Connections (US)

Regional Banking Network (FR, GER)

Why?

• EBICS doesn’t charge for transactions in FR, GER

• Utilizing SWIFT outside of US would incur network traffic costs

1

B

2


What is your connectivity profile?Your company has banking partners in CA and Internationally

Bank Reporting: 20 accounts in CA + 20 accounts at 10 Int’l BanksPayments: 1 CA Bank – 100 payments per day

Best ChoicesHost to Host Connections (CA)

SWIFT Concentrator Service (International)

Why?

• Outside NA there is a low bank : account ratio (cost effective for per account pricing)

• Payments only needed in CA

1

C

3


What is your connectivity profile?Your company has many banking partners globally

Bank Reporting: 20 banks globally – 175 accountsPayments: 2 Banks – 3 payment batches per day

Best ChoicesSWIFT Alliance Lite 2

Host-to-Host Connections (possible for US/Canada)

Why?

• SWIFT Membership is recommended given # of banks + accounts

• Low number of payments ideal for AL2

• Host-to-host dependent on how much domestic activity

D

4

1


What is your connectivity profile?Your company has many banking partners globally + initiates payments

Bank Reporting: 20 banks globally – 175 accountsPayments: 10 Banks – 15 payment batches per day

Best ChoicesSWIFTNet Service Bureau

Host-to-Host Connections (possible for US/Canada)

Why?

• Higher payments volume makes AL2 more expensive

• SWIFT membership still recommended

• Host-to-host dependent on how much domestic activity

E

1

5


Summary

Multiple connectivity choices. FTP, regional networks, multiple SWIFT services are all required to offer optimal cost/benefit for connectivity. One solution does not fit all.Multiple connectivity choices. FTP, regional networks, multiple SWIFT services are all required to offer optimal cost/benefit for connectivity. One solution does not fit all.

Analysis. Your partner can analyze your connectivity requirements and propose the most efficient and cost effective connectivity strategy to minimize costs / maximize reliability.Analysis. Your partner can analyze your connectivity requirements and propose the most efficient and cost effective connectivity strategy to minimize costs / maximize reliability.

Security. You expect best-in-class data protection and authentication – including: • Industry standard file encryptions (e.g. PGP, SMIME, and DES) • Digital signature technology (e.g. SWIFT 3SKEY)• Database encryption (i.e. data at rest)

Security. You expect best-in-class data protection and authentication – including: • Industry standard file encryptions (e.g. PGP, SMIME, and DES) • Digital signature technology (e.g. SWIFT 3SKEY)• Database encryption (i.e. data at rest)

Monitoring. Your partner should proactively monitor bank connections and work with your banks to resolve any issues on a 24x7 basis, in every global region.Monitoring. Your partner should proactively monitor bank connections and work with your banks to resolve any issues on a 24x7 basis, in every global region.


Download Kyriba Connectivity fact sheet at www.bit.ly/ConnFS to find out how you can connect and transact with confidence!

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2014 kyriba webcast_connectivity 0722_final_ss