GTR: Could you tell us about the scope of the new role?

I’m delighted to be joining the existing supply chain solutions team, which is expanding its focus to include both trade and supply chain, recognising the role that Swift is playing in facilitating trade flows and associated documentation.

We cover bank-to-bank product developments and corporate-to-bank requirements around order-to-cash processes, ie the information flows that take place before the cash flow. Our major focus areas at present include bringing the TSU (trade services utility) to market, and analysing corporate requirements for automating the processes surrounding documentary credits.

GTR: What is the business case for focusing on these areas?

A number of banks have come to Swift to ask for help in bringing financial supply chain solutions to their clients. For example, although companies have become increasingly efficient in payments processing, there are still significant inefficiencies and manual processing associated with trade flows, particularly the delays created by the lengthy exchange of trade documentation.
This is the background to the TSU, which allows the rapid and transparent exchange of documentary and trade information between banks, and is core to the trade services that banks then deliver to their corporate customers.

GTR: How can corporates ensure that the TSU and related initiatives meet their needs?

In general, corporates should be engaging with their banks as they provide both the financing as well as the communication aspects of trade finance and supply chain solutions. The MT 798 trade envelope message is the Swift service that facilitates trade messaging between corporates and banks.

The trade envelope can be used for import or export letter of credit and guarantee/standby letter of credit flows. Many corporates connected to Swift see trade as a natural extension to their current treasury and cash management communication with their banks, such as by using FIN for trade flow messages and FileAct for back-up documentation, in the same way as for cash management. Consequently, we would expect to see an increasing intensity of dialogue in this area at the Sibos corporate forum in Amsterdam next year as more corporates extend their use of Swift into trade.

GTR: How can corporates take advantage of the new opportunities for using Swift for trade services?

Firstly, a company’s relationship bank needs to be ready to support MT 798 messages. Swift has already been in active dialogue with a large number of banks on this, and we have seen a significant level of interest and commitment.

Although we also communicate directly with corporates on the opportunities for communicating with their banking partners using Swift, both for trade and cash, most of this is handled by the banks as they are delivering the services to their customers with SwiftNet as the mechanism.

Corporates should speak directly to their key relationship banks to find out more about their strategy and timescales for adopting the TSU, and how this will be embedded into their solutions.

GTR: Why is Swift focusing on the financial supply chain, rather than simply trade and cash?

Four years ago, following approaches from a number of banks, we established an advisory group, including Swift and a number of banks, to determine how Swift can support banks in providing financial supply chain services to their corporate customers. This group, which still exists, has established a strong mandate to grow the financial supply chain service offerings which are available, a process that has already resulted in the TSU.

The challenge is to help banks to grow their role in the financial supply chain by delivering more customer data at each stage of the transaction flow, from purchase order through to settlement. This in turn enables them to understand their customers’ trade and cash flows more fully and provide solutions to automate and accelerate these processes.

GTR: How far can the provision of trade services through Swift extend? Is it within Swift’s mandate to include the corporate-to-corporate elements of the transaction flow?
There are already platforms facilitating corporate-to-corporate communication, such as exchanging purchase orders and invoices. Providers of these portals are approaching Swift to reach out to banks and ensure the smooth integration of all the flows that make up the order-to-cash and purchase-to-pay processes.

Swift’s direct focus is on corporate-to-bank (and vice versa) communication, and bank-to-bank communication, as this is where our mandate, experience and infrastructure lie.

GTR: How do you see Swift’s trade and financial supply chain services developing?
The number of banks offering TSU-based services is likely to increase steadily over the coming years.

Some banks, such as Deutsche Bank, have already announced that they are in a position to provide trade services to their customers via Swift. We will therefore be focused on helping these banks develop their value proposition and implement their customer solutions, as well as building corporate awareness. We will not be selling TSU directly to corporates, however we will be continuing to reach out to the corporate community to raise awareness and encourage dialogue with their banking partners.