Swift says it is “in discussions” about the future of its trade services utility (TSU), the centralised matching and workflow engine that operates as the backbone for the bank payment obligation (BPO).
Commercialised by Swift in 2007, the TSU was originally created to improve the flow of information in the supply chain. The service matches data in items such as orders, invoices and transport documentation, allowing banks to re-intermediate across the value chain in open account trade. Adoption, however, was initially slow, and it was not until the introduction of the BPO in 2013 that the inter-bank matching application seemed to have found its raison d’être.
The BPO is a form of payment instruction which uses the TSU to match purchase orders and shipping documents. If the TSU finds a match between the data supplied electronically by the seller and that required in the purchase order, automatic payment is triggered. With take-up of the BPO lacklustre to date, Swift is now seeking a new direction for the utility.
Speaking to GTR, Marc Delbaere, head of corporates and trade at Swift, says: “TSU is, at its core, a matching platform. It is the only matching engine run by Swift, and it is currently only used in trade finance and only for the BPO, so we believe that looking at partners with further adjacencies can only strengthen its value proposition.”
According to a source with knowledge of the discussions, paperless trade platform provider essDocs is one such partner, although neither Swift nor essDocs would confirm this.
“essDocs’ strategic focus is on propelling paperless trade,” Alexander Goulandris, CEO of essDocs tells GTR. “Over the years we have worked with many partners to deliver on our goals, including working with Swift on combining BPOs and eDocs [electronic documents]. We see an exciting future for the BPO and how it can evolve in a world where blockchain and digitisation are the norm. We continue to explore various projects with Swift to further digitise trade.”
What any eventual partner might do with the TSU remains to be seen, but Swift recognises there is a need for more work to be done in order to bring what is a theoretically elegant solution into the wider market.
“Clients who are using BPO for their trade settlements are keen that more banks and corridors are activated on BPO to grow the current offering, which validates the value proposition that BPO brings,” says Delbaere. “At the same time, they also acknowledge that TSU needs to be developed further to make the value proposition stronger. Our strategy is to allow further development of TSU to achieve more with existing rules and to let the platform evolve with the rules.”