If you’re currently thinking about how your company should connect to the SWIFT network, this article lays out the thoughts and considerations of the Treasury team within a global manufacturing business looking to streamline their payment operations to improve cash visibility across the globe.
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A few years ago, global manufacturer NSG Group came to us with a cash visibility issue.
To support a more flexible, agile approach to their banking processes, the company looked to replace their decentralised, manual online banking processes with fully integrated SWIFT connectivity across their shared service centers and payments factories.
But before choosing to partner with AccessPay, a debate needed to be settled: do you build or buy connectivity to the Swift network?
The Build Argument
The first option for corporates looking to use SWIFT or its gpi tracking service is to build your own internal system to handle SWIFT messages.
The core benefit to this is total ownership and transparency of payment messages. But it does come with a very real set of challenges.
- Knowledge – An in-house build does not simply involve an integration between internal systems and SWIFT – there is a thorough application of business rules and processes to consider first. Its imperative to have an understanding of the collection of Swift MTs and gpi messages – and an awareness of an additional 10 or more gpi statuses which indicate where a payment is in its lifecycle.
- Compliance – Custom builds must be updated every year to comply with the annual SWIFT standards release. Then there is the challenge of migrating all messages to ISO 20022 by the end of 2022.
- Investment – Last but not least, connectivity from legacy systems to the SWIFT network do not come without significant cost, as well as heavy investment in time and resource from IT, Treasury, Finance and other areas of the business to turn your custom build in to a reality.
“We ruled out an on-premise gateway for swift due to it being too resource intensive and heavy security requirements around the swift audit.” Chris Davies, NSG Pilkington
Outsourcing to a Swift Bureau
At the other end of the spectrum, there is the option to outsource completely to a Swift Bureau.
The main benefit here is the reduction in manual intervention and back office processes, as the third party will take care of message reconciliation on your behalf, only sending back the final message.
But the reality is that Swift bureaus are costly and are typically only a viable option for tier one banks dealing in very high volumes of financial messages.
“We ruled out a swift bureau because of expense and wanting to retain some control over the system with our own BIC” Chris Davies, NSG Pilkington
Looking to Vendor Partnerships
For the majority of corporates, the most logical solution lies in working with technology providers like AccessPay to augment both cloud and legacy systems with a “plug and play” Swift solution.
AccessPay is the UK’s 1st Swift Alliance Lite 2 provider, providing a fast, cost efficient way to insulate existing business systems, whilst also giving corporates the control and transparency they need over their payments processes.
Compared to building a solution in-house, speed to value goes through the roof. With set up times taking weeks, not months.
“It made sense for us to look towards buying a ready-made solution to cut down the amount of time it’d take for us to start seeing the benefits, so quite quickly we decided to review the market.” Chris Davies, NSG Pilkington
Not to mention the reduction in on-going maintenance costs, as any updates and migrations are handled by vendors like ourselves.
But one of the biggest benefits to using third party vendors like AccessPay lies in addressing the knowledge gap between corporates and banks.
For example, at AccessPay, we provide full assistance with your compliance in Swift’s Customer Security Programme during onboarding and eliminate the need for regular auditing – which wouldn’t be the case if you were to build your own solution.
What’s more, we’re future-proofing the way in which organisations are handling compliance to changes like the new ISO 20022 messaging standard, with AccessPay acting as a file-agnostic platform that automatically transforms messages to the correct format on behalf of the corporate client.
ISO 20022 is a huge operational change for anyone looking to connect to Swift, so unless you have significant resource available to invest in researching and complying with the new messaging standards, choosing a Swift vendor is a wise investment.
The current pace of change is intense – with changing standards, migrations and payment types being introduced. Whatever method you choose to connect to SWIFT, the technology you have needs to respond quickly to allow you to take advantage of future payments innovation.