SWIFT Nordics Regional Conference 2013 - Payments- Supply Chain

SWIFT Nordics Regional

Conference 2013

Payments stream – Rewriting the rules

of financial supply chain

André Casterman

SWIFT | Global Head of Corporate and Supply Chain Markets

ICC | Member of Banking Executive Committee

Stockholm, 20 – 21 November 2013

Agenda

• Overview of Trade innovations

– Corporate Challenges

– Multi-bank Standards for Trade flows

• Views from Nordea

• Views from GlobalTrade Corporation

• Views from SEB

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Nordics Regional Conference - Speakers

Flemming Lippert, Business Development Manager,

GlobalTrade Corporation

Urban Ljungblom, TP Global Development, Nordea

Johan Sahlen, Global Product Manager, SEB

Andre Casterman, Global Head of Corporate and Supply Chain

Markets, SWIFT (moderator)

Corporate challenges with traditional trade

instruments (1/2)

Export documentary credit • Difficult to manage advices of export L/Cs

and amendments received from multiple

banks in paper form and via different banks

portals

• Difficult to collaborate between treasury and

various business units on L/C allocation and

preparation of documents

• Delayed receipt of payment

Import documentary credit • Treasury lacks visibility to the allocation of

credit facilities to business units for import

L/C issuance

• Lack of standardised approval process for

import L/C issuance

• Delays in import L/C issuance

• No electronic global data base of import L/Cs

for real time reporting of outstanding L/Cs.

4

Standby L/C and Demand Guarantee • Management is decentralized and handled independently by each subsidiary

• Reconciliation of related data and settlement of fees is time consuming and prone to errors

• Complex documentation management will result in increased charges

• Transparency is not optimal and will result in differences between the banks‘ and treasury‘s records

• With different technology solutions, more challenging to on-board subsidiaries and banks

Industry standards Developed by international standardisation bodies

Industry standards are industry-owned and technology-neutral.

They offer a dependable legal and operational framework.

• Trade Finance instruments (E.g. UCP 600, URDG 758, ISP98, URC 522, URBPO)

• MT standards (for L/Cs, Demand Guarantees, Collections)

• ISO 20022 standards (for BPOs)

• ISO 9362 Business Identifier Code (BIC)

• ISO Country codes, Currency codes, …

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FIN MT 798

FIN MT 7xx

Buyer’s

bank(s)

Seller

Seller’s

bank(s)

Buyer

1 2 3

Industry standards for L/Cs and Guarantees

1

SWIFT's MT 7xx are industry owned and technology

neutral standards in support of ICC's rules for L/Cs,

Standby L/Cs and Demand Guarantees

MT 798 Documents MT 798 Documents

UCP 600

URDG 758

ISP98

FileAct

MT 7XX

Industry standards for Bank Payment Obligation

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2

Any channel /

any format /

any solution

Trade

Matching

Application

Any channel /

any format /

any solution

Seller Buyer

1 2 3

Bank

Payment

Obligation

Pu

blic

Do

ma

in

Co

mm

erc

ial

• SWIFT's Trade Services

Utility (TSU)

• Any other inter-bank

trade matching

application (TMA)

• Bank portal

• SWIFT's SCORE

• Paper

• Bank portal

• SWIFT's SCORE

• Paper

ISO 20022 mandatory

ISO 20022 optional

Means for daily interchange with multi banking

corporates in Trade Finance

”Prime business integration partner of choice”

Customer interchange in the TF landscape as of yesterday – …and still of today

• Limited system integration in B2C interchange

• Bank specific procedures for corporates buying L/C- and guarantee services

‒ Insufficient for multi banking TF customers

‒ Diversity in procedures and reporting inhibit effective business management, productivity and

profitability in Trade

• Extensive manual work in both ends

‒ Costly due to labour intensive work, diverse and inconsistent procedures

‒ Operational risks due to human factor

Being everything for everyone whoever, whatever and whenever they ask? – Nordea’s perspective

Customers differing in respect of size, type of contract, volume, profitability,

skills & experiences, service level, etc…

Nordea TF Back-end

In-/ and out-bound

guarantees and

L/Cs

Quoting and

advicing,

examination,

discounting,

payments and

disbursments…

Facsimile Postal mail E-mail Nordea

interface Bolero @GlobalTrade MT798

Customers

Customers’ bombardment

turns Nordea TF into a war

zone – Poor us!

Touch points

The cumbersomeness of daily interchange is mutual – How do customers perceive the situation?

Faxcimile

Postal mail E-mail Bolero

@GlobalTrade MT798

Integrated processes

internally but unique

interfaces for each individual

bank inhibits efficiency

Bank I Bank II Bank III Bank IV Bank V

Corporate Customer Plenty of functions and people involved

Sales – Order – Production

Shipping – Service Contract – Insurance - Finance

Banks’ bombardment turns

customers’ TF function into a

war zone – Poor them!

Touch points

Bank

interfaces

Customers care about the journey – Not the individual touch points

Customer benefits of having an electronic multi banking system – Interchange with banks is only (a minor-) part of the ball game

Corporates’ guarantee procedures

‒ Global procedures, access and credit limit management

‒ Global user admin’, authorisation and approval process

‒ Real time control and ’traceability’ of individual transactions, validities,

total outstanding volumes, compiled by region, business area etc

‒ Base for audit and transfer pricing…

Customers are likely to move in this direction

regardless of what we are doing…

Corporates’ L/C procedures

‒ One common globally standardized process for L/C – 24/7

‒ Improve daily work by electronic communication with banks and

forwarders

‒ Coordinate the utilization of banks used for Trade Finance products

‒ Improve service towards sales and customers

‒ Reduce lead time for presenting correct doc’s to banks

We are facing a diverse system landscape – Where are we and where do we want to go?

Direct Interfacing

Manual interfacing

Standard Channel [SWIFT MT798]

Proprietary Channel

Communication ”Hard wired” ”Logging on” ...to individual customers’

specific systems

”Loose Coupling” ”Loose Coupling”

Reusable No No Yes Yes

Install cost High Low High High

Transaction cost Low High Low High

Nordea IT policy Not preferred - Preferred To be approved

Estimated total cost High High Low High

Harmonized way for B2C – C2B Interchange – Swift is the only available provider of vendor- and bank neutral channel for interchange

Harmonized industry standards for

communication and business

interchange enable integration of

banking procedures into

corporates’ internal workflow

management systems

Bank I

In-/ and out-bound

guarantees and L/Cs

Quoting and

advicing,

examination,

discounting,

payments and

disbursments

Bank II

In-/ and out-bound

guarantees and L/Cs

Quoting and

advicing,

examination,

discounting,

payments and

disbursments

Bank III

In-/ and out-bound

guarantees and L/Cs

Quoting and

advicing,

examination,

discounting,

payments and

disbursments

Bank IV

In-/ and out-bound

guarantees and L/Cs

Quoting and

advicing,

examination,

discounting,

payments and

disbursments

Bank V

In-/ and out-bound

guarantees and L/Cs

Quoting and

advicing,

examination,

discounting,

payments and

disbursments

MT 798

Corporate Customer Plenty of functions and people involved

Sales – Order – Production

Shipping – Service Contract – Insurance - Finance All major vendors of TF business

manage systems for corporates

provide MT 798 capability

Copyright and Confidential | GlobalTrade Corporation 2013 | www.globaltradecorp.com

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Shaping the future of trade services


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GlobalTrade Corporation (GTC) is a software developer and applications service provider whose product solutions improve the world of trade finance and trade services.

GTC's @GlobalTrade technology helps buyers, sellers, traders, and financial institutions communicate faster and more efficiently to free up working capital, realize cost savings, reduce risks and improve monitoring and control.

Our Clients are:

Corporations that need consolidated access to multiple banks and logistic providers.

Banks that require trade finance and trade services software solutions to meet their clients’ needs.

Our expertise is in multi-bank financial supply chain systems.

About GlobalTrade Corporation

Full Compliance SWIFT for Corporates – Trade Finance Label


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Adoption is growing of multi-bank trade technology solutions

Main growth markets are Europe and North America

SWIFT for Corporates MT 798 is making implementation of multi-bank solutions easier through open standards

Majority of corporate RFPs have MT 798 requirement

Trade banks are upgrading their back office systems to seamlessly handle MT 798

Global Trade Banks are now promoting ‘Lead Bank Model’ to service their large corporate customer better

Developments in Multi-banking for Trade


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Over 30 Banks have adopted SWIFT's MT798

http://www.nordea.com/

http://www.standardchartered.com/

http://www.ubs.com/

http://www.socgen.com/


20 | Corporate Needs for Multibank Trade Finance System

Complete solution for all Trade Finance Workflows:

Incoming and Outgoing Guarantees

Export and Import Documentary Credits

Export and Import Documentary Collections

Out of the box communication with banks via SWIFT

Ability to track utilization of credit facilities

Configurable user roles and workflows

Automatic calculation of bank fees

Ability to configure and generate reports

Reminders of status changes and key transactional dates

Functionality to collaborate on documents electronically


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“Metsäliitto Group has changed its LC workflow from

paper-based handling to the electronic way of

working. All the LC handling work was formerly

based on papers received via fax or e-mail from the

different counterparties involved, but the

@GlobalTrade Export LC multibank System has given

our Group the possibility of receiving LC information

electronically into its system, giving it the opportunity

to harmonize the workflow on a whole company level

and to speed up the entire LC process.”

Kimmo Helle, VP Treasury Development and Trade

Finance, Metsä Group Financial Services

Case Study

How Metsa Group is using the Export Documentary Credit System


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Difficult to manage advices of export L/Cs and amendments received from

multiple banks in paper form

Difficult to collaborate between Metsa Financial Services, units and sub-units on

L/C allocation and preparation of documents

Metsa wanted to improve visibility of each step in the transaction process

Reduce discrepancies

Speed up receipt of payment

Case Study – Export Documentary Credit

Challenges:


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Electronic delivery of all export L/C messages Online collaboration of Metsa Financial Services, its Units and Sub-Units Ability to pre-check documents with banks electronically Global visibility and real time reporting Faster receipt of funds due to electronic presentation

*) Electronic or paper or combined electronic/paper

Case Study – Export Documentary Credit

Solution:

e-Advices

Presentations (*

Payments

Instructions

and

Documents

Domestic and

Foreign Banks

Units & Sub-Units

Logistics Providers

Metsa Treasury


24 | GTC Implementations in Europe Q4 - 2013

French Aerospace & defense company:

20+ banks;

@GlobalTrade systems: Guarantee Issuance, Guarantee

Receipt, Export Documentary Credits, Import Documentary Credits.

Nordic supplier of equipment for cement & minerals industries:

6+ banks;

@GlobalTrade systems: Guarantee Issuance, Guarantee Receipt, Export

Documentary Credits.

Nordic manufacturer of busses, trucks & construction equipment:

7+ banks;

@GlobalTrade systems include Export Documentary Credits.


25 | GTC Products and Services to Financial Institutions

GlobalTrade Advisory Services

- Worldwide Trade Finance Experts & Database

- www.tradeservicesupdate.com

Dynamic Message Converter Product

MT 798 Testing Services

Multi-bank Trade Finance Front End Portal


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For more information please visit: www.globaltradecorp.com

Contact Information

GlobalTrade Corporation 2727 Steeles Ave. West, 4th Floor Toronto, ON, Canada, M3J 3G9 Tel: +1 416 661 8520 Fax: +1 416 661 2819 E-Mail: [email protected]

Flemming Lippert E-Mail: [email protected] Mobile: +45 2536 5696

http://www.globaltradecorp.com/

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Bank Payment Obligations Johan Sahlén

The Bank Payment Obligations

– a quick overview

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“BPO means an irrevocable and independent

undertaking of an Obligor Bank to pay or incur a

deferred payment and pay at maturity a specified

a mount to a Recipient Bank following Submission

of all Data Sets required by an Established

Baseline resulting in a Data Match […]” Article 3,

URBPO

The Bank Payment Obligations process

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Obligor

Bank

Recipient

Bank TMA

Commercial contract

Documents and goods/services

Flow of

data

Flow of

data

Matching

of data

A match of data triggers the BPO and it becomes an irrevocable commitment for

the Obligor Bank to pay the Recipient Bank upon the agreed maturity date.

Buyer Seller

Data Data

BPO – a short summary of SEB’s view

New payment term for corporates

Limited uptake in banking community

Untested legal framework

Unknown capital treatment

Banks need to develop the product

range

Business case large enough?

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Key features

Key challenges

• Risk mitigation, low risk transactions

• Settlement based on matching of data

• Process efficiency enhancement

through automation

• Removal of paper based

documentation

• New opportunities to finance a

transaction

• Enables improved liquidity forecasts for

the customer

• Tool for banks to become more

relevant on transaction level for open

account financing

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Join our "Supply Chain on SWIFT" group on

Email us at [email protected] to register to our

frequent information mailings

Join our frequent Webinars

Market adoption of the MT 798 standards

mailto:[email protected]

http://www.linkedin.com/updates?view=my&goback=.nmp_*1_*1_*1_*1_*1_*1

SWIFT Nordics Regional Conference 2013 - Payments- Supply Chain

Economy & Finance

Transcript of SWIFT Nordics Regional Conference 2013 - Payments- Supply Chain