NYBF 2014 - Evolution of SWIFT in Treasury


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NYBF 2014 - Evolution of SWIFT in Treasury

  1. 1. Evolution of SWIFT in Treasury New York Business Forum 4 Mar 2014 Robert J. Blair, Managing Director, SWIFT and Americas Market Management, J.P. Morgan Robert Freiling, CTP - Senior Manager, Fund Financial Services Fund Treasury, Vanguard Stephanie McClintock, CTP - Manager, Fund Financial Services Fund Treasury, Vanguard
  2. 2. Disclaimer This presentation was prepared exclusively for the benefit and internal use of the J.P. Morgan client to whom it is directly addressed and delivered (including such client’s affiliates/subsidiaries, the “Company”) in order to assist the Company in evaluating, on a preliminary basis, certain products or services that may be provided by J.P. Morgan. This presentation is for discussion purposes only and is incomplete without reference to, and should be viewed solely in conjunction with, the oral briefing provided by J.P. Morgan. It may not be copied, published or used, in whole or in part, for any purpose other than as expressly authorized by J.P. Morgan. The statements in this presentation are confidential and proprietary to J.P. Morgan and are not intended to be legally binding. Neither J.P. Morgan nor any of its directors, officers, employees or agents shall incur any responsibility or liability whatsoever to the Company or any other party in respect of the contents of this presentation or any matters referred to in, or discussed as a result of, this document. J.P. Morgan makes no representations as to the legal, regulatory, tax or accounting implications of the matters referred to in this presentation. The products and services featured in this presentation are offered by JPMorgan Chase Bank, N.A., member FDIC, or its affiliates/subsidiaries. All services are subject to applicable laws and regulations and service terms. J.P. Morgan is a marketing name for the Treasury Services businesses of JPMorgan Chase Bank, N.A. and its affiliates/subsidiaries worldwide. J.P. Morgan is licensed under U.S. Pat Nos. 5,910,988 and 6,032,137. © 2013 JPMorgan Chase & Co. All rights reserved
  3. 3. Agenda Questions Vanguard Fund Treasury - Case Study SWIFT for Corporates – Evolving value proposition Result
  4. 4. The Result If this is the answer, what’s the question? +31% of the Fortune 500 + 72% of the Fortune 25 +12% of SWIFT connected parties +20% growth +31% FIN / +41% FileAct
  5. 5. SWIFT for Corporates SWIFT’s Training & Consulting Services Reference Data Global Standards and Implementation Guidelines Trouble-free payments and SEPA compliance Personal PKI Certificates User Entitlements End-to-end traceability and Single Sign-on Identity and mandate management Payment Assurance Pre-shipment Finance Post-shipment Finance A/R Reconciliation Certainty and efficiency in the supply chain Payments Cash Management Foreign Exchange Multi-asset class matching Trade Finance Supply Chain Finance Regulatory Requirements eStatements eBAM Secure financial connectivity The Evolving Portfolio Supporting treasury requirements The SWIFT portfolio for Corporates
  6. 6. Secure financial connectivity Before…Challenges The SWIFT portfolio for Corporates Dealing with multiple banking partners Different protocols, channels & systems - Lack of visibility on cash - High operational costs - Manual processes & errors - Complicated traceability and compliance
  7. 7. Secure financial connectivity Adopting multi-bank solutions - Streamline banking communication with industry standards After…Solution The SWIFT portfolio for Corporates Corporate YOURBIC8 YOURBIC8 YOURBIC8YOURBIC8BIC Benefits - Higher Efficiency & Reduced Costs across financial transactions - Standardize bank communications - Improved control and visibility - Automation - Accelerate decisions - Unique legal identification – BIC
  8. 8. Vanguard Fund Treasury SWIFT round table discussion March 2014 9
  9. 9. > 10 For Internal use only Agenda Review • Vanguard’s background – SWIFT metrics • Case study – Fund Treasury payments • Payment landscape • SWIFT implementation • Global expansion • Questions
  10. 10. > 11 For Internal use only Vanguard overview Vanguard profile Market leadership Investment management Depth of experience • No outside owners: we serve only client interests • An enduring commitment to lowering costs because low costs often provide a distinct advantage for investors • 38 years of investment management experience • $2.7 trillion in assets under management (U.S.- based mutual funds) • Assets increased $2 trillion past ten years, $1 trillion past five years • Broad lineup over 175 mutual funds, ETFs, and other products • Active equity: leading institutional sub-advisors • Index equity: internal management provides state-of-the-art execution • Fixed income: offering deep expertise and risk management • More than 14,000 crew based in Pennsylvania, Arizona and North Carolina • Growing international operations including: – Australia, Canada – Continental Europe – Hong Kong Vanguard total assets U.S.-based mutual funds Global Vanguard’s Mission – To take a stand for all investors, treat them fairly, and give them the best chance for investment success. $2.7 trillion Fund payments using SWIFT • Quality • Scalability • Uncompromised controls $ b i l l i o n s
  11. 11. > 12 For Internal use only Vanguard’s SWIFT usage SWIFT Breadth Across Vanguard’s divisions Statistics • 28 unique message types • 12 business units across global Vanguard enterprise • Message mix is 23% outbound to 77% inbound • Fund Financial organization accounts for 95% of volumes, 99% of outgoing traffic • 53,000 messages per day, up 23% in past year, 13.4 million in 2013 millions 20132012201120102009 Fund Financial Institutional Retail International Brokerage SWIFT message growth
  12. 12. > 13 For Internal use only SWIFT messages across Vanguard Incoming traffic Outgoing traffic  75% of incoming traffic is trade related  Statement related traffic largest increase over 2013  90% of outgoing traffic is security trade/FX related  Money movmenet payments holding consistently at just under 8%
  13. 13. > 14 For Internal use only Fund Treasury Services Money Movement Unit, Payment Case Study Indispensable partner Long term planning Money Movement Financial stewards Risk/control Support Vanguard’s mission by delivering accurate, timely and compliant Treasury services for Vanguard’s investment vehicles, driven by best in industry crew, VUE application and risk and control management. Trusted voice Suppliers & clients Talent Destination Crew growth Our purpose Our approach Our mission • receives payment instructions from 35 suppliers • instructs custody and transfer agent banks payments • provides oversight and management to intraday payments Our teams Reduce expenses Increase performance Manage liquidity Safeguard assets Manage operational risk Cash Management Bank Fee Management
  14. 14. > 15 For Internal use only Money Movement pre-SWIFT environment Transfer agent 70+ accounts Custody 250+ accounts Proprietary Fax Bank software Sources of instructions People dependent Multi-source No bank STP • $25 billion in daily movements • Manual process - proprietary system, fax and bank software • Over 800 bank accounts, low efficiency, high inherent risk • Files sent to banks for manual payment entry, no straight through processing • Reconciliation, manual and inefficient • No intraday payment oversight Brokers/Advisors 500+ accounts Retail Institutional Internal NSCC $25 billion daily Payment Case Study
  15. 15. > 16 For Internal use only Pre-SWIFT risks and mitigation needs Financial Impact or Significance Probability of Occurrence Low High Low High Payment methods Manual Fax, bank software Manual money movement Payment timeliness No bank STP, inability to move accurately/timely Manual money movement Payment accuracy Proprietary message types dependability Accurate/timely Reconciliations of many entry sources Security access o Dependable, scalable payment instruction source – Treasury workstation o Aggregated, netted payments o Ability to support global expansion o Straight through processing with banks o Security effectiveness, eliminate fax and bank software o Payment oversight/reporting and communication with banks Risk mitigation needs Pre-swift payment risks Payment Case Study
  16. 16. > 17 For Internal use only Treasury Workstation and messaging 2007 to present 2010 Netting technology 2008 Payment automation Expenses 2012 Payment automation Phase II 2013 Sustained contingency Global FFS 2020 Initiative 1998-2007 Pre-SWIFT Proprietary Treasury Workstation SWIFT implementation Successes • SWIFT immediacy - bank STP • Mitigated payment risks as planned Challenges • Migration timing - web of payments • Manual entry - payment source required • Day in the life – release timing based on banks, dollar size and time expectations • Reporting – internal management and bank funding, missed opportunity Lessons Learned • Phased approach – pilot probabilities • Change management – more is better Payment Case Study
  17. 17. > 18 For Internal use only Treasury Workstation and messaging 2007 to present 2010 Netting technology 2008 Payment automation Expenses 2012 Payment automation Phase II 2013 Sustained contingency Global FFS 2020 Initiative 1998-2007 Pre-SWIFT Proprietary Treasury Workstation SWIFT implementation Payment Case Study
  18. 18. > 19 For Internal use only Current state SWIFT environment Payment sources Treasury Workstation • $12 billion in daily movements – reduced by 60% • Executes 900 SWIFT payment instructions daily – reduced by 30% • Bank STP 98% • Reconciliation via MT940/950s to TWS book • Eliminated fax and bank software by 99 percent Supports messages • MT202 • MT940 • MT950 Retail Institutional Internal Transfer agent Custody US Domestic Brokerage NSCC Payment Case Study
  19. 19. > 20 For Internal use only Where we are headed 2014 Prep for global payments 2015 & beyond Intraday Business process monitor SWIFT MT900/910s MT103s 2014 TWS Elevation - Multi-currency - Dashboard prepare for global Cash Movement Center of Excellence 2014 International derivatives SWIFT MT210s Treasury Workstation SWIFT Preparing for Global Center of Excellence Payment Case Study
  20. 20. > 21 For Internal use only Target State Operating Model Global Cash Movement Team Shift from distinct local teams to a Global CoE that leverages time zone advantages: • Centralized oversight with local ownership • Governance, clear ownership, policies & procedures • Single global platform/system • Risk/control centralized oversight • 2 locations enable cash movement coverage around the clock covering each region Current State EuropeUS Australia Target State Outsourced Cash Movement Capstock Trades Payments Opportunity to cover all regions in 2 locations CoE – Localized Focus CoE – Leverage Time ZonesLocal CoE – One Location TradesCapstock Payments Supports messages • MT202 • MT210 • MT940 • MT950 Supports messages • MT202 • MT940 • MT950 • MT900/910 • MT210 • MT103 Payment Case Study
  21. 21. > 22 For Internal use only Future state Global Center of Excellence payment sources Domestic brokers/advisors International brokers/advisors Retail Institutional Internal NSCC International Brokerage Treasury Workstation Transfer agent Custody Transfer agent Custody Vanguard Australia Vanguard US/Malvern • MT103 • MT202 • MT210 • MT900 • MT910 • MT940 • MT950 Payment Case Study
  22. 22. Roundtable discussion topics • Your SWIFT evolution, from initial implementation to your plans of the future • Global expansion, success stories, lessons learned • Message types usage, additions since your early years.
  23. 23. Thank you ! The SWIFT portfolio for Corporates Website: www.swift.com/corporates Email: swiftforcorporates@swift.com Twitter: @swiftcorporates LinkedIn: http://www.linkedin.com/groups?gid=4351117