Cash & Liquidity ManagementPaymentsSWIFTA Banking Vision for the Future of SWIFTNet

A Banking Vision for the Future of SWIFTNet

There is no doubt that BNP Paribas is at the forefront of SWIFTNet. Its vision of a world where medium to large companies are all connected to SWIFTNet for all of their bank communications, is not one shared by the majority of its competitors. It is a bank with an overwhelming enthusiasm for getting corporates to access the secure and standardised payments network – previously only accessible to the banks themselves. BNP believes there is real potential in getting more corporates to access SWIFTNet.

Stéphane de la Fouchardière, head of SWIFT Coordination and Development at BNP Paribas, is largely responsible for this enthusiasm. He sees SWIFTNet connectivity as being revolutionary for the corporates – and sitting in his Parisian office his evangelical zeal is infectious.

“For me SWIFTNet for corporates is a revolution on two levels. On the first level the concept of having one secure platform to communicate with all your banks on all of your accounts, while reducing costs is revolutionary. And remember this is possible across banks, across accounts, across countries and in different currencies.” But the second level, says de la Fouchardière, is more personal revolution for the treasurers themselves. “SWIFTNet is allowing the treasurer’s position to become more powerful because he/she can centrally control much more of the information flows.”

But what is radical in BNP’s vision is that the bank itself is also undergoing a revolution, thanks to the potential it sees to serve its clients with new added value services wrapped around the SWIFTNet pipeline. De la Fouchardière wants to move the bank from seeing this network as just a network to recognising it as a business opportunity. He believes that this is where banks, many of which have been slow to see the potential in offering structures to allow multi-banking, have been blinkered.

BNP has been working over the last two years to achieve a business-centred approach to SWIFTNet, rather than just a simple technical ‘it’s a pipe’ approach. The target says de la Fouchardière is to harmonise different business lines at the bank and to have a common strategy on SWIFTNet across them. This, he says, goes beyond having just a common strategy and a common structure. It is, he says, opening up the possibilities to really deliver added-value to the clients via the SWIFTNet pipeline.

The cash management side of BNP Paribas’s business is just one of three business lines using SWIFTNet. The other business units using SWIFTNet are FX and custody. De la Fouchardière’s vision hinges on offering clients added value services around cash management, trade, FX and custody, like support, along with offering SWIFTNet connectivity with the business line for the client. Potentially a client could connect several of its own business lines with those of the banks through SWIFTNet – one channel of communication for all the banking needs of the client.

De la Fouchardière admits this is a trend for the future and a long-term vision for BNP itself. And it is not hard to see that this is BNP’s way of creating a new version of the ‘stickiness’ – using service and functionality to keep clients loyal to the bank.

Clients are demanding these kind of services says de la Fouchardière – it is not being driven by the bank. “When talking to treasurers today they are interested in the whole package. They want to know what services are on offer outside of just cash management. They want to know what is available on FX and trade too. They are interested in linking them all together through one platform,” he explains. Extending the bank’s reach into more of clients’ business lines is an enticing prospect for BNP. “While today a bank may only have a connection with a company on cash management and SWIFTNet – tomorrow that bank will have several business lines of the client under the same network activity, ” he says. This being the case it becomes more apparent why de la Fouchardière is so keen to apply a standard across-business line approach together for SWIFTNet at the bank.

But Fouchardière wants to be clear: it is not just simply a case of signing up to a MA-CUG with your bank of choice and then being able to channel all bank communication through that for all of your business lines – although that is the dream. Instead he says that if your company is using a MA-CUG for your cash management business then it is easier to get your other business lines involved in SWIFTNet – but it is not yet the same situation.

Accelerating the Reorganisation of Treasury

The task of implementing a SWIFTNet connection via a MA-CUG is not undertaken lightly as it requires a substantial reengineering and reorganisation of the treasury department. It is only suitable for those companies prepared to carry out far-reaching centralisation projects, indicates de la Fouchardière, but he adds that, “SWIFTNet can accelerate this reorganisation.”

“We believe in SWIFTNet but some clients are not ready to change to it – perhaps daunted by the whole reengineering process needed,” he says. There are other companies, he adds, who are cautiously testing the SWIFTNet waters, but who are not ready to jump into the deep end just yet. “In general, for the large corporates in the world, if you explain SWIFTNet they get it, they understand the possibilities,” he says.

De la Fouchardière gives an example of a multinational whose treasurer is sold on the concept of connecting to SWIFTNet, but who admits that the reengineering process required to install it and change the current processes are just too much for his company at the present time. But this same treasurer has said it is only a matter of time before his company moves to SWIFTNet. “The consequence of using SWIFTNet is to change and to accelerate rationalisation of your company and you must be able to have the vision to implement a payments factory or a level of concentration to make it worthwhile,” he adds.

The SWIFT Perspective

De la Fouchardière wants SWIFT to be more proactive on the issue of corporates access to SWIFTNet. He believes that SWIFT should realign its industries-based organisation to make way for more of a mandate for corporates. “It is in progress but at the top level we perceive some obstacles,” and he says some of the global banks are reluctant to offer SWIFTNet as the base communication network across business lines.

“It is definitive that we have opened up the SWIFTNet network to the corporates. The question we now must decide on as a community is how to move that access forward.”

De la Fouchardière is convinced that pricing remains the biggest obstacle to wider spread take up of SWIFTNet connection by corporates. He says that he has proposed a more open approach on pricing to SWIFT in order to entice people to the service. And he thinks perhaps SWIFT should offer attractive equipment pricing to enable corporates to connect to SWIFTNet.

“If SWIFT is interested in increasing the volume of corporates using SWIFTNet then it has got to consider the pricing issue, particularly for the middle market.”

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