What is FIN? What is FileAct? What is SWIFTNet? What, for that matter, is SWIFT?
CFOs and treasurers have been grappling with these unfamiliar terms as SWIFT – that’s the Society for Worldwide Interbank Financial Telecommunications – intensifies its push for companies in Asia to use its SWIFTNet product. This is the secure and standardised global communications platform that banks have long relied on to send and receive messages about cash transfers, payment instructions, letters of credit and other ultra-confidential transactions.
The financial messages are categorised into three types: 1) FIN, suitable for treasury and risk management communications; 2) FileAct, for cash management; and 3) InterAct, for exceptions and investigations. All three types of messages can be sent through any of three products: direct connection, indirect connection and the Internet-based Alliance Lite. Each one has a different cost structure.
The idea behind corporate usage of SWIFTNet is for companies to communicate directly with banks, both in terms of sending them messages and receiving real-time reports on corporate accounts and financial transactions. Caroline Lacocque, Head, Corporate Connectivity APAC, sent written answers to e-mailed questions from CFO Innovation about the benefits and challenges of SWIFTNet for corporates in Asia.
What is the picture like in Asia currently about corporate take-up of SWIFT connectivity?
Corporates on SWIFT come in all sizes – from mid-sized companies with simple cash management structures dealing with a few banks locally to large corporations deploying sophisticated payments and collections factories.
Today, over 565 corporates are using SWIFT worldwide. Eleven percent of those are based in Asia, which we see as an important growth market. Samsung, LG, Panasonic, the Noble Group, and Petronas are among those corporates on SWIFT in Asia. We also recently signed our first Indian corporate.
The rest of the breakdown for corporates on SWIFT is 69% EMEA [Europe, Middle East and Africa] and 20% Americas.
There has been a substantial increase in the uptake of SWIFTNet in Asia over the last two years. Corporates are now realising the advantages that SWIFT can bring in terms of rationalising their bank connectivity and getting better views on their cash, and the technical component is also now better understood.
Furthermore, the 2008 credit crisis has had a big impact on the industry as a whole since there is much greater scrutiny of spending and all new projects have to go to procurement in a more detailed way than before.
Part of the increase in adoption is due to the fact that it is now easier to connect to SWIFT. This can be attributed to greater connectivity options.
Globally there’s an increasing number of smaller size (<1 bn EUR annual turnover) and corporates with fewer banking relationship (sometimes even just one) using SWIFT for domestic transactions.
How do you differentiate among the three connectivity products currently on offer?
From a technical point of view, connecting to the SWIFT network requires the availability of specific software. This software can either be purchased from SWIFT, or alternatively from a SWIFT Interface vendor. This software can either be installed at the corporate’s premises (“direct connectivity”), or the corporate can rely on the services of a certified provider, called a SWIFT Service Bureau (“indirect connectivity”). In that case, the Service Bureau will operate the connection to SWIFTNet and the SWIFT interface on the corporate’s behalf.
2012, Feb 09 
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