SWIFT supporting the corporate market

SWIFT supporting the corporate market Elie Lasker SWIFT Journée SWIFTNet pour les entreprises - Reuters Utsit, Paris, 12th February Slide 1

Journée SWIFTNet pour les entreprises - Reuters Utsit, Paris, 12th February 2 Agenda What is SWIFT SWIFTNet - main features SWIFT as a standardisation body SWIFTNet in the corporate context

Journée SWIFTNet pour les entreprises - Reuters Utsit, Paris, 12th February 3 Agenda What is SWIFT SWIFTNet - main features SWIFT as a standardisation body SWIFTNet in the corporate context

Journée SWIFTNet pour les entreprises - Reuters Utsit, Paris, 12th February 4 What is SWIFT A co-operative organisation serving the financial industry A provider of highly secure financial messaging services The financial standardisation body

Journée SWIFTNet pour les entreprises - Reuters Utsit, Paris, 12th February 5 SWIFT - connecting the financial community Corporates Broker-dealers Investment managers Banks Insurance companies Government institutions Settlement systems Stock Exchanges Depositories Trustees Payment systems Clearing systems

Business dimensions Heritage Established in 1973 by 239 banks in 15 countries Developed shared messaging platform for financial transactions Emphasis on security, reliability and availability Understanding Serving 7,500+ financial institutions across 200 countries Payments, Securities, Foreign Exchange, Treasury and Trade Reducing costs, improving automation, managing risk Neutrality Industry-owned community Overseen by regulatory authorities Impartial to the data transacted across the messaging platform Technology Store and forward, file transfer, interactive query & response Open standards Multi-vendor IP VPN Journée SWIFTNet pour les entreprises - Reuters Utsit, Paris, 12th February 6

Extending our reach Countries Users Messages (millions) 94 106 110% 196 192 189 178 150 137 126 164 200 3.582 3.986 4.625 108% 5.229 5.511 6.176 6.557 6.797 7.125 7.199 7,527 348% 688 812 937 405 457 518 603 1.059 1.274 1.533 2,007 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 03 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 04 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 03 Journée SWIFTNet pour les entreprises - Reuters Utsit, Paris, 12th February 7

Journée SWIFTNet pour les entreprises - Reuters Utsit, Paris, 12th February 8 SWIFT today 7,527users 200 countries 2 billion messages/year 7 trillion USD/day Peak day 9,685,754 messages February 2004

Journée SWIFTNet pour les entreprises - Reuters Utsit, Paris, 12th February 9 Agenda What is SWIFT SWIFTNet - main features SWIFT as a standardisation body SWIFTNet in the corporate context

Journée SWIFTNet pour les entreprises - Reuters Utsit, Paris, 12th February 10 SWIFTNet - main features SWIFTNet messaging product offering FIN FileAct InterAct Standard store-and-forward messaging for single instructions Real-time file transfer for bulk payments files and reporting Real-time messaging for query / response and transaction input Browse Online information visualisation

Journée SWIFTNet pour les entreprises - Reuters Utsit, Paris, 12th February 11 SWIFTNet - main features Highest levels of availability and resiliency Multiple network providers production Network provider 1 Network provider 3 Multiple operating centres backup Network provider 2 Network provider 4 24/7/365 worldwide support 99.999% service availability Downtimes can damage reputation

The Security Layers of SWIFTNet Protects transactions against repudiation and internal attacks User/ Application User/Application Layer Protects data against insertion and modification User/ Application Messaging Layer Messaging Layer VPN IP Tunnel Protects against attacks on the IP equipment VPN IP Tunnel Journée SWIFTNet pour les entreprises - Reuters Utsit, Paris, 12th February 12 VPN

SWIFTNet - main features Guaranteed delivery mechanism Sender 1 MT101 3 MT101 Receiver ACK 2 Delivery Notif. 5 ACK 4 ACK = commitment to deliver Optional SWIFT is financially liable for non-delivered messages Journée SWIFTNet pour les entreprises - Reuters Utsit, Paris, 12th February 13

SWIFTNet - main features Third-party non repudiation Sender Receiver Non-repudiation database Any dispute on content or time between sender and receiver can be quickly resolved Journée SWIFTNet pour les entreprises - Reuters Utsit, Paris, 12th February 14

A comprehensive messaging infrastructure Location and configuration independence Switchover is transparent for the other participants Disaster site Production site Location and configuration independence caters for shorter downtimes and fast set-up times Journée SWIFTNet pour les entreprises - Reuters Utsit, Paris, 12th February 15

Journée SWIFTNet pour les entreprises - Reuters Utsit, Paris, 12th February 16 Agenda What is SWIFT SWIFTNet - main features SWIFT as a standardisation body SWIFTNet in the corporate context

SWIFT - as a standardization Convergence and interoperability ISO 15022 XML UN/CEFACT ebxml et TBG 5 Other Bodies Tools, support and facilitation Adoption and implementation SWIFT Standards Standards development and market practices Examples: customer to bank cash management Journée SWIFTNet pour les entreprises - Reuters Utsit, Paris, 12th February 17

Journée SWIFTNet pour les entreprises - Reuters Utsit, Paris, 12th February 18 SWIFT - Standards organisation Registration authority for BIC Existing FIN standards Examples: MT 101, MT 940, MT 300 Standards XML ISO methodology Modelling, data dictionary, repository Current projects: customer to bank cash management

Simple payment process based on a unique remittance ID B2B standards for Order, Invoice, and Remittance Advice with URI Buyer Seller SWIFT Payment Initiation XML with URI SWIFT Debit Advice XML SWIFT Credit Advice XML with URI Buyer s Bank Inter-bank clearing & settlement with URI URI: Unique Remittance ID Seller s Bank Journée SWIFTNet pour les entreprises - Reuters Utsit, Paris, 12th February 19

Journée SWIFTNet pour les entreprises - Reuters Utsit, Paris, 12th February 20 Project timeline 1Q 2003 2Q 3Q 4Q 2004 RosettaNet Payment program formation Corporate - bank - vendor face-to-face meeting, agreement on requirements Production Wider adoption Wider financial industry Reach out to additional industries Implementation Pilot BANKS: BOFA, CHAS,CITI CORP: INTEL, NOKIA, NSC, TI

Journée SWIFTNet pour les entreprises - Reuters Utsit, Paris, 12th February 21 Agenda What is SWIFT The SWIFTNet infrastructure - main features SWIFTNet in the corporate context Case study

Journée SWIFTNet pour les entreprises - Reuters Utsit, Paris, 12th February 22 The challenge for a multi-banked large/medium corporate (1/2) Corporate client Account payables Account receivables host to host X e-banking Y VAN leased line Treasury Other e-banking Z internet pstn fax-banking

The challenge for a multi-banked large/ medium corporate (2/2) Journée SWIFTNet pour les entreprises - Reuters Utsit, Paris, 12th February 23 Issues Multiple heterogeneous systems, links, and standards Poor integration Low STP rate Impacts Non-optimised liquidity! High exposure to operational risk! High operational costs How can banks help?

Journée SWIFTNet pour les entreprises - Reuters Utsit, Paris, 12th February 24 Banks can help by offering access over a secure standardised channel Corporate client Account payables Account receivables SWIFTNet Treasury SWIFTNet interface Other One platform Lower costs Full STP Reduced risk Highest level of security and resiliency Improved liquidity management

Journée SWIFTNet pour les entreprises - Reuters Utsit, Paris, 12th February 25 Service participant in a member administered closed user group Corporate SWIFT user SWIFT user A many-to-one model where no direct corporate-to-corporate communications are allowed Corporate SWIFT member Market infrastructure SWIFT user MA-CUGs support multibanking: corporates can join multiple CUGS Service Corporate participant SWIFT SWIFT user Member SWIFT user SWIFT only provides the messaging, not the application.

Journée SWIFTNet pour les entreprises - Reuters Utsit, Paris, 12th February 26 Member Administered CUGs Roles and responsibilities SWIFT Financial Institution Corporate Client Setting up the CUG Operating the CUG Standard FIN and SWIFTNet liability Defining the service Ensuring eligibility criteria are met Subscribing new users Joining SWIFT and the CUG Operating the connection to SWIFT!

List of MA-CUGs Publicly known banks ABN AMRO Bank N.V. ABSA Bank Limited American Express Bank Ltd BANK FOR FOREIGN TRADE CM-CIC Barclays Bank plc Bayerische Hypo- und Vereinsbank BNP Paribas CDC IXIS Citibank NA Clearstream Banking SA Crédit Agricole Crédit Lyonnais Credit Suisse, Zürich Deutsche Bank AG Deutsche Bank Trust Co. Americas Deutsche Postbank AG First Rand Bank First Union National Bank Fleet National Bank Fortis Bank N.V. HSBC Bank plc ING Belgium NV/SA JPMorgan Chase Bank KAS Bank N.V. KBC Bank N.V. Nedcor Bank Limited Raiffeisen Zentralbank Österreich AG Santander Central Hispano Investment Societe Generale Standard Bank of South Africa Standard Chartered Bank The Bank of New York The Bank of Tokyo-Mitsubishi, Ltd. UFJ Bank Limited Westdeutsche Landesbank Publicly known corporates Arcelor Eskom Lukoil Mastercard Shell Transnet Travelex ABP Johnson Johnson Journée SWIFTNet pour les entreprises - Reuters Utsit, Paris, 12th February 27

Journée SWIFTNet pour les entreprises - Reuters Utsit, Paris, 12th February 28 Areas where SWIFT adds value: examples Cash Management Treasury transactions Commercial payments and collection

Journée SWIFTNet pour les entreprises - Reuters Utsit, Paris, 12th February 29 Areas where SWIFT adds value: examples Cash Management Treasury transactions Commercial payments

Journée SWIFTNet pour les entreprises - Reuters Utsit, Paris, 12th February 30 Cash Management Use a single standards with all counter-parties Request for Transfer (MT101) Notice to receive (MT210) Credit/debit advice (MT900/910) Intra-day Statement (MT942) End of day Statement (MT940) A complete set of standard messages that allow end to end automation

Cash Management Monitor your global position intra-day SWIFT Streamlined flow End to end automation Pushed delivery Intra-day balance and movements Improved liquidity management Journée SWIFTNet pour les entreprises - Reuters Utsit, Paris, 12th February 31

Journée SWIFTNet pour les entreprises - Reuters Utsit, Paris, 12th February 32 Areas where SWIFT adds value: examples Cash Management Treasury operations Commercial payments

Treasury Counterparty MT3XX MT3XX MT3XX MT3XX MT3XX MT3XX MT3XX MT3XX Corporate MT3XX A treasury counterparty can exchange confirmations with all other SWIFT members Journée SWIFTNet pour les entreprises - Reuters Utsit, Paris, 12th February 33

Journée SWIFTNet pour les entreprises - Reuters Utsit, Paris, 12th February 34 Treasury operations A complete set of standards Spots, Forwards, Swaps (MT300) FX Options (MT305) Fixed loan/deposit (MT320) Forward Rate Agreements (MT340) Single/Cross currency IRS (MT360)

Treasury operations Automated matching with SWIFTNet Accord SWIFT Accord subscriber! Real-time interactive Reporting and Exception handling Copies of confirmations Accord Real-time Confirmation Matching Accord subscriber or non- subscriber SWIFTNet Accord further reduces costs and operational risk Journée SWIFTNet pour les entreprises - Reuters Utsit, Paris, 12th February 35

Journée SWIFTNet pour les entreprises - Reuters Utsit, Paris, 12th February 36 Business areas where SWIFT adds value: examples Cash Management Treasury transactions Commercial payments

Commercial payments and collections Rationalise your infrastructure and processes ETEBAC FR Payment files CODA BE SWIFT ZENGIN JP BAI US Centralise processing and transmission of commercial payments Journée SWIFTNet pour les entreprises - Reuters Utsit, Paris, 12th February 37

& uestions Answers Slide 38