Focus on Regional Banking: Meeting the Connectivity Needs of Increasingly Sophisticated Commercial Clients
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Focus on Regional Banking: Meeting the Connectivity Needs of Increasingly Sophisticated Commercial Clients

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Global expansion, evolving technology, and shifting market forces are driving Middle Market and Business Banking clients to become more sophisticated in their communication needs. To maintain and ...

Global expansion, evolving technology, and shifting market forces are driving Middle Market and Business Banking clients to become more sophisticated in their communication needs. To maintain and command a greater share of these growth segments, regional banks must be well-versed in the complexity of corporate-to-bank connectivity for an increasing variety of file formats and product interfaces. This session will provide an overview of industry trends, connectivity options and explore deployment alternatives for regional banks

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Focus on Regional Banking: Meeting the Connectivity Needs of Increasingly Sophisticated Commercial Clients Presentation Transcript

  • 1. Patricia Hines, CTPDirector, Financial ServicesIndustry Marketing, GXSJoe BarbieriGlobal Account ExecutiveGXSFocus on Regional Banking:Meeting the SWIFT and Corporate ConnectivityNeeds of Increasingly Sophisticated Clients
  • 2. May 21, 2013 | Slide 2 © 2013 GXS, Inc.About GXSIndustry TrendsSWIFT Corporate AccessConnectivity OptionsRegional Bank TrendsQ&ASession Agenda
  • 3. May 21, 2013 | Slide 3 © 2013 GXS, Inc.About GXS
  • 4. May 21, 2013 | Slide 4 © 2013 GXS, Inc.Leading Global B2B Service ProviderA Long-Term, Trusted PartnerServing Customers in61 Countries45 YearsExperienceExclusively in B2BIntegration550,000Businesses onTrading Grid14 BillionTransactions perYearServing 56% ofGlobal 100022 of Top 25Global SupplyChainsLeader in MostRecent GartnerMagic Quadrant40% of RevenuesDerived Outsidethe US
  • 5. May 21, 2013 | Slide 5 © 2013 GXS, Inc.Industry LeadershipValue-Added Solutions for the Financial Services SectorGXS Specializes inCorporate-to-BankIntegration SolutionsMarket Presence• Over 250 FS clients in the Americas,Europe, and Asia-Pacific• 90% of commercial banks in the Fortune®500 are GXS customers• FIs serve tens of thousands of corporateclients via GXS solutionsSolutions for the Financial Sector• Managed Integration Services• Client Enablement Services• Integrated Treasury Management• SWIFT Service Bureau• MFT and Integration Software• Cloud Applications for Commercial Financeand Securities
  • 6. May 21, 2013 | Slide 6 © 2013 GXS, Inc.Treasury & CashManagementCard Issuing &Merchant ServicesTrade & CommercialFinance• Integrated Payables• ConsolidatedReceivables• SWIFT Connectivity• Multi-BankPayments• MerchantEnablement &File Integration• PCI Compliance• ERP Integration• Factoring• Supply ChainFinance• Inventory Finance• Dealer FloorPlanningGXS in the Financial Services SectorEnabling Connectivity and STP Across Industry SegmentsSecurities• Connectivity forCounterparties• Order to SettlementLifecycleManagement• Post-TradeExceptionsGroup Benefits &Employer Services• Client Integrationfor Group Insurance• Payroll FileTransmission• Claims PaymentRemittances
  • 7. May 21, 2013 | Slide 7 © 2013 GXS, Inc.Industry Trends
  • 8. May 21, 2013 | Slide 8 © 2013 GXS, Inc.AutomationStandardizationCentralizationBankingRelationshipsEconomicClimateCostsLaborManual ProcessesFinancial Management TodayTreasury and Finance Facing Multiple ChallengesTechnologyCloudMobileWorking CapitalLiquidityForeign ExchangeSupply Chain FinanceCorporate SocialResponsibilityRegulatoryComplianceIntegrationStandardsProtocolsTrading PartnerRelationshipsVisibilityFinancialSuppliersSupply ChainRiskCommunityManagementCommunicationProcessData QualityMatching/ApprovalComplianceTaxPaymentsTrade
  • 9. May 21, 2013 | Slide 9 © 2013 GXS, Inc.Challenges with Bank InterfacesTreasury Organizations Want Real Time Information & Payment ExecutionTraditional Bank InterfacesUniqueconnection andfile format foreach bankingrelationshipsConnectivity,testing andcertificationrequired for eachbankLeasedLineWebPortalInternetFTPFaxStandards Complexity• Inflexible file format options and lack of ERPintegration (SAP, Oracle)• Limited internet protocol support for AS2,MQ, HTTPS, SFTP• Rigid security policies (encryption, firewalls,audits)Operational Constraints• Performance and capacity constraints• Lengthy implementation times• Limited knowledge of corporate ERP• Varying capabilities and support processesacross differing regions (Asia-Pacific, LatinAmerica)Lack of Integrated Interfaces• Reconciliation challenges• Limited visibility to cash and payment status• Distinct interfaces per product line (Cash, FX,Trade Finance, Securities Services )
  • 10. May 21, 2013 | Slide 10 © 2013 GXS, Inc.A World of Risk• Banks Hit Downtime Milestone In DDoSAttacks – April 2013• Bank Cyber Attacks Pose Warning toCorporate Clients – October 2012• South Carolina reveals massive databreach – October 2012• Global Payments still tallying databreach costs – March 2012• Data Breach at RSA lined to Attack on Lockheed – May 2011• Citibank Reveals Massive Data Breach – May 2011• Fidelity National Information Services Database Hacked: $13 millionStolen In One Day – May 2011Source: Identity Theft Resource Center
  • 11. May 21, 2013 | Slide 11 © 2013 GXS, Inc.SWIFT Corporate AccessBusiness Drivers
  • 12. May 21, 2013 | Slide 12 © 2013 GXS, Inc.SWIFT Corporate AccessA Single Global StandardPostWebPortalInternetFTPFaxFXConfirmationsInvestment TradeConfirmationsACH PaymentsWire PaymentsPrior / CurrentDay StatementsPrior DayBalancesCompany Financial SystemsTreasury A/PA/ROtherMultiple Connections & FormatsBank MandatesSignatureCardsFXConfirmationsInvestment TradeConfirmationsBank MandatesSignatureCardsCompany Financial SystemsTreasury A/PA/ROtherStandard Connections & FormatsACH PaymentsWire PaymentsPrior / CurrentDay StatementsPrior DayBalances
  • 13. May 21, 2013 | Slide 13 © 2013 GXS, Inc.What is SWIFT?Society for Worldwide InterbankFinancial Telecommunications• Consortium of member financialinstitutions• Started in 1973 to automate the telex• Premier financial messaging standardsbody• Powers real-time gross settlementsystems globally called “marketinfrastructures”• >2.5B messages exchanged between10,000+ financial institutions andcorporates in over 210 countries – largestfinancial messaging network andcommunity in the world• SWIFT develops and defines messagingand standards for the financial servicesindustrySource: SWIFT Standards OverviewMarket Infrastructures• Central Banks• Settlement SystemsCustomer Solutions• TRCO• MA-CUG• SCORESWIFTNet• 10,279Correspondents• 212 CountriesSWIFT Solutions• FileAct• Accord• Trade Services Utility• … and moreSecureFinancial MessagingGlobal FinancialStandards“The global provider of secure financialmessaging services”
  • 14. May 21, 2013 | Slide 14 © 2013 GXS, Inc.4.04.44.6Q4 10 Q4 11 Q4 12SWIFTNet FIN TrafficBillions of messagesGrowth in SWIFT MessagingDriving Adoption by Corporates of All Sizes+ 17.4%+ 19.1%SWIFTNet FileAct TrafficBillions of messagesSource: SWIFT10.114.133.8Q4 10 Q4 11 Q4 12+ 39.9%+ 139.9%
  • 15. May 21, 2013 | Slide 15 © 2013 GXS, Inc.1872824025797269021,0352006 2007 2008 2009 2010 2011 2012Growth Driven by Corporate Adoption ofSWIFTNumber of RegisteredCorporate Entities on SWIFTSource: SWIFT
  • 16. May 21, 2013 | Slide 16 © 2013 GXS, Inc.Trends Driving SWIFT AdoptionInterest in SWIFTEmerging Standards Better RiskManagementImproved CashManagementInfrastructureChanges
  • 17. May 21, 2013 | Slide 17 © 2013 GXS, Inc.• Corporate Drivers– Increased SWIFT marketing– Growing adoption amongcorporates– Single network to streamlinemessaging and formats– Centralizing treasury operations– New products: AllianceLite2,3SKey, eBAM, SWIFTRef,Watch AnalyticsInterest in SWIFT
  • 18. May 21, 2013 | Slide 18 © 2013 GXS, Inc.• Corporate Drivers– Better visibility and more efficientdeployment of cash– More frequent reconciliation ofbalances– Grow balances through interest rate,currency hedging, derivatives, etc.managementImproved Cash Management
  • 19. May 21, 2013 | Slide 19 © 2013 GXS, Inc.• Corporate Drivers– FIN MT to MX messagestandard evolution– ISO 15002 to ISO 20022 forCorporate Actions– European Union’s migrationto SEPA compliantpaymentsEmerging ISO 20022 XML Standards
  • 20. May 21, 2013 | Slide 20 © 2013 GXS, Inc.• Corporate Drivers– Simplifying, optimizing, and/ordiversifying banking relationships– Being more nimble to makechanges– Sensitivity due to Global FinancialCrisis of 2008Better Risk Management
  • 21. May 21, 2013 | Slide 21 © 2013 GXS, Inc.• Corporate Drivers– Upgrading or consolidatingtreasury technology infrastructure– Replacing Treasury ManagementSystem– Marketing influences from SWIFT(Alliance Lite2) and other ServiceBureausInfrastructure Changes
  • 22. May 21, 2013 | Slide 22 © 2013 GXS, Inc.Corporate-to-Bank Connectivity Options
  • 23. May 21, 2013 | Slide 23 © 2013 GXS, Inc.Multiple C2B Integration OptionsDirect Integration (DIY) Concentration Bank IntegrationSWIFT Integration Hybrid: SWIFT & Direct IntegrationSWIFTServiceBureauC2BankIntegrationServiceHigher TCO, multiple standardsConstrained by bank’s capabilitiesSWIFT bank data through concentration bankBank neutral, limit is bank SWIFT readinessMay use SWIFT Service BureauLower TCO, global reachBank neutral, maximum flexibility
  • 24. May 21, 2013 | Slide 24 © 2013 GXS, Inc.Alliance AccessAlliance AccessSWIFT Alliance Solution SetInstitutionSize/MessageVolumesAutomation, Integration, CustomizationAlliance Lite2 Alliance GatewaySWIFTNet LinkHSMsAlliance Messaging Hub (AMH)Alliance Access Integration PlatformSource: SWIFT
  • 25. May 21, 2013 | Slide 25 © 2013 GXS, Inc.SWIFT Connectivity Options• Customer-Owned– Specific security requirements– Full control over IT environmentincluding data storage– Supports high traffic volumes• Outsourced “Off-the-Shelf”– Clear ramp-up path– "Peace-of-mind" solution– Scalable to your needs• Outsourced Tailored– IT environment managed by third party– Using a shared infrastructure is notcritical– Traffic requires medium to high volumeinfrastructureSource: SWIFT
  • 26. May 21, 2013 | Slide 26 © 2013 GXS, Inc.Alliance Lite2 – How it WorksSource: SWIFT
  • 27. May 21, 2013 | Slide 27 © 2013 GXS, Inc.LeasedLineAlliance Web PlatformSWIFT InterfaceVPN BoxSAAALLIANCE ACCESSSAGSWIFTALLIANCE GATEWAYHSM BoxSNLSWIFT Net LinkVisibility & MessageManagement /MonitoringSWIFT Alliance AccessSolution ComponentsClient SystemsLicensed from SWIFT• Primary Dual leg HA• DR Infrastructure• Both have 2 leased linesto SWIFTNetSOAP
  • 28. May 21, 2013 | Slide 28 © 2013 GXS, Inc.Choosing a SWIFT Service Bureau• Can be daunting -- more than 130 organizations worldwide haveservice bureau offerings• SWIFT recently rolled out a new Shared Infrastructure Programme(SIP), to certify service bureaus that offer third-party connectivity to theSWIFT network• A list of SWIFT Service Bureau meeting the various operational levelsdefined by SIP can be found using SWIFT’s Partner Locator
  • 29. May 21, 2013 | Slide 29 © 2013 GXS, Inc.Regional Bank Trends and Case Studies
  • 30. May 21, 2013 | Slide 30 © 2013 GXS, Inc.Middle-Market and Small Business ClientsDrive Revenue for Tier 2 BanksLargeCorporateMiddleMarketSmallBusinessTop 5 29% 27% 13%Next 15 26% 32% 18%Peers 2 & 3 13% 40% 35%2011 Total 26% 30% 17%Share of fee-equivalentrevenue by customer segmentSource: Ernst & Young 29th AnnualCash Management Services SurveySource: GE Reports
  • 31. May 21, 2013 | Slide 31 © 2013 GXS, Inc.Revenue from Electronic Products drivingCash Management Growth11.0%6.0%3.5%1.5%0.5%-0.5%-1.0%-2.5%-3.0%-6.0%-7.0%-9.0%-6.0%-3.0%0.0%3.0%6.0%9.0%12.0%P Card Wire ACH/EDI Info Rpt ARP WLBX C&C RLBX DDA CDA CheckSource: Ernst & Young 29th Annual Cash Management Services SurveyRevenue growth rates for cash management products
  • 32. May 21, 2013 | Slide 32 © 2013 GXS, Inc.Single-Sign On / Multi-FactorAuthentication PortletLarge Regional BankExtending Capabilities to Small/Medium EnterprisesMessaging ServiceDataPool(Unisys)CIPG(EG)Customer Communication Facility(CCF)BankOnline Banking forBusiness PortalBusiness Issue• The bank wanted to extend the ability to upload payment filesand download information reporting files to small to mediumenterprises (SMEs)• Legacy solution called File Transfer Facility (FTF) no longersupported by vendor• Need for low-cost Internet solution for small to medium businesscustomers not able to exchange files using machine-to-machinesolutions• Multi-factor authentication required to comply with FFIECstandards for online security• Requirement for single sign-on to FTF solution through bank’sonline business banking portalSolution Deployed• Deployed Intelligent Web Forms (IWF) and Trading Grid for Excel(TG4E) in the bank’s messaging service to provide SME clientaccess for file transfer• Implemented multi-factor authentication and single-sign to allowthe bank’s clients to access the new file transfer client accesstools through the bank’s online cash management portalBank Clients
  • 33. May 21, 2013 | Slide 33 © 2013 GXS, Inc.Top Tier Global BankOvercoming Legacy System LimitationsBusiness Challenge• This global bank’s core deposit system canonly generate information reporting (current/prior day) in BAI2 format.• Multi-national corporate clients require SWIFTformatted files for integration with their back-office financial systemsGXS Solution• Translation from BAI2 to MT940 / MT942• Delivery to clients via SWIFT Service Bureauusing SWIFTNet File ActBusiness Benefits• Outsourcing corporate on-boarding = fastertime to revenue• Translation into global formats improves abilityto win multi-national corporate business• External SWIFT solution eliminates need for in-house hardware, software and technical staffCorporate ClientsManaged ServicesSWIFTService BureauBAI2MT940MT942SWIFTNet File Act
  • 34. May 21, 2013 | Slide 34 © 2013 GXS, Inc.US Regional BankWinning Large Corporate ClientsBusiness Challenge• Meeting SWIFTNet delivery and SWIFTformat requirements of multi-nationalcorporate clients for wire payments andbalance reporting• Bank applications unable to consumeSWIFT formats• Imminent go-live deadlineGXS Solution• File translation MT101 – EDI 820 BAI2 – MT940 / MT942• Connectivity via SWIFT Service Bureau• Corporate on-boarding• Enables additional large corporatebusinessCorporate ClientsSWIFTService BureauMT101Managed ServicesMT940MT942820 BAI2
  • 35. May 21, 2013 | Slide 35 © 2013 GXS, Inc.Take-Aways• Business Banking and Middle Market clientele have moresophisticated bank connectivity requirements• To meet these requirements,regional banks must bewell-versed in the complexityof corporate-to-bankconnectivity• Ever-evolving financialmessaging standardsincrease the complexity on anongoing basis
  • 36. May 21, 2013 | Slide 36 © 2013 GXS, Inc.To Learn MoreGeneral Information:• Corporate-to-Bank Connectivity: http://www.corporatetobank.com• SWIFT Connectivity Options: http://www.swift.com/corporates• gtnews SWIFT Service Bureau Buyer’s Guide:http://www.gtnews.com/Buyers GuideFormats:• ISO 20022 for Dummies: http://www.iso20022.ch/iso_dummies.pdf• SEPA Overview: http://www.europeanpaymentscouncil.eu• SWIFT Common Global Implementation (CGI):http://www.swift.com/corporates/cgi/index• Balance and Transaction Reporting Standard (BTRS):https://www.x9.org/btrs
  • 37. May 21, 2013 | Slide 37 © 2013 GXS, Inc.Thank You and Q&APatty Hines, CTPDirector, Financial Services IndustryMarketingE-mail: patty.hines@gxs.comJoe BarbieriGlobal Account ExecutiveE-mail: joe.barbieri@gxs.com