Multi-bank Trade Finance for Corporates

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Facilitating multi-banking solutions in documentary trade finance

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Multi-bank Trade Finance for Corporates

  1. 1. Trade Finance for CorporatesFacilitating multi-banking solutionsin documentary trade financeSWIFT’s Trade and Supply Chain teamWebinar, July 2012supplychain@swift.comJoin our LinkedIn group Supply Chain on SWIFT
  2. 2. Content• Rationale for MNCs to adopt multi-bank solutions in trade finance• Role of standardisation bodies• Portfolio of industry standards• Scope of SWIFT’s MT 798 standards• Use of SWIFT’s FIN and FileAct• Adoption by corporates, banks and vendors• Best practices for corporates• Future developments• Benefits• Training and Consulting Services• Conclusion• ContactsTrade finance for corporates – Webinar 12 July 2012 2
  3. 3. Trade Finance for Corporates MNCs and multi-banking in trade and supply chain finance SWIFT and your payments business 3
  4. 4. Corporate challenges with traditional tradeinstruments (1/2)Export documentary credit Import documentary credit• Difficult to manage advices of export L/Cs • Treasury lacks visibility to the allocation of and amendments received from multiple credit facilities to business units for import banks in paper form and via different banks L/C issuance portals • Lack of standardised approval process for• Internally, difficult to collaborate between import L/C issuance treasury and various business units on L/C • Delays in import L/C issuance allocation and preparation of documents • No electronic global data base of import L/Cs• Lack of visibility of each step in the for real time reporting of outstanding L/Cs. transaction process Ideally by Business Unit, Bank, Product,• Too many discrepancies, slowing down Counter Party document compliance checking • Difficult to link import L/Cs with export L/Cs• Delayed receipt of payment for back to back transactions • Challenging to set up permanent and transactional alarms on key L/C dates Trade finance for corporates – Webinar 12 July 2012 4
  5. 5. Corporate challenges with traditional tradeinstruments (2/2)Standby L/C and Demand Guarantee issuance• Management is decentralized and handled independently by each subsidiary – Difficult for central treasury to monitor the terms and the availability of Standby L/C and Guarantee facilities and improve the diversification of business allocation between the banks – How to offer flexibility for subsidiaries but enforce standard policies moving forward?• Reconciliation of related data and settlement of fees is time consuming and prone to errors• Complex documentation management will result in increased charges• Transparency is not optimal and will result in differences between the banks‘ and treasury‘s records• With different technology solutions, more challenging to on-board subsidiaries and banksTrade finance for corporates – Webinar 12 July 2012 5
  6. 6. Rationale for MNCs to adopt multi-bankingsolutions for trade finance Digitise and automate Improve Consolidate control information Standardise Accelerate bank decisions interfaceTrade finance for corporates – Webinar 12 July 2012 6
  7. 7. Trade Finance for Corporates Role of ICC, SWIFT and ISO 7
  8. 8. Industry standardsDeveloped by international standardisation bodies • Trade Finance instruments (E.g. UCP 600, URDG 758, ISP98, URC 522, URBPO) • MT standards (for L/Cs, Demand Guarantees, Collections) • ISO 20022 standards • ISO 9362 Business Identifier Code (BIC) • ISO Country codes, Currency codes, … Industry standards are industry-owned and technology-neutral. They offer a dependable legal and operational framework.Trade finance for corporates – Webinar 12 July 2012 8
  9. 9. Trade Finance for Corporates Portfolio of Industry Standards SWIFT and your payments business 9
  10. 10. 1 Industry standards for L/Cs and Guarantees UCP 600 URDG 758 ISP98 MT 798 Documents MT 7XX MT 798 Documents 1 2 3Buyer Seller Buyer’s Seller’s bank(s) bank(s) SWIFTs MT 7xx are industry owned and technology FIN MT 7xx neutral standards in support of ICCs rules for L/Cs, FIN MT 798 Standby L/Cs and Demand Guarantees Trade finance for corporates – Webinar 12 July 2012 FileAct10
  11. 11. 2 Public Domain Industry standards for Bank Payment Obligation Bank Payment Obligation 1 2 3Buyer Seller Any channel / Trade Any channel / Commercial any format / Matching any format / any solution Application any solution • Bank portal • SWIFTs Trade Services • Bank portal • SWIFTs SCORE Utility (TSU) • SWIFTs SCORE • Paper • Any other inter-bank • Paper trade matching application (TMA) Trade finance for corporates – Webinar 12 July 2012 ISO 20022 optional 11 ISO 20022 mandatory
  12. 12. Industry standards support end-to-end flows MT 798 MT 7XX MT 798 ISO 20022 ISO 20022 ISO 20022 Internet InternetBuyers Issuing banks Advising / confirming banks Sellers Application, Inter-bank flows Advice, confirmation, amendment, … amendment, … Streamline the L/C, Guarantees and open account trade transactions Automate workflow of the trade life cycle to reduce cost Accelerate handling of discrepancies and settlement Move to paperless transaction processing Enhance visibility on credit linesTrade finance for corporates – Webinar 12 July 2012 12
  13. 13. Industry standards enable competitive vendorsolutions to interoperate MT 798 MT 7XX MT 798 ISO 20022 ISO 20022 ISO 20022 Internet InternetBuyers Issuing banks Advising / confirming banks Sellers Application, Inter-bank flows Advice, confirmation, amendment, … amendment, … Business process-level interoperability between various software solutions Increased choice of vendor solutions in competitive space No need for banks to join multiple corporate portals Reduced technical, operational and legal costs No vendor lock-inTrade finance for corporates – Webinar 12 July 2012 13
  14. 14. Trade Finance for Corporates Scope of MT 798 standards SWIFT and your payments business 14
  15. 15. IMPORT DOCUMENTARY CREDITS Corporate-to-Bank Bank-to-Corporate Applicant Import Documentary Credits Bank MT 798<770> APPLICATION MT 798<700> MT 798<701> MT 798<771> ISSUANCE NOTIFICATION MT 798<700> MT 798<701> MT 798<772> AMENDMENT REQUEST MT 798<707> AMENDMENT NOTIFICATION MT 798<773> MT 798<707> AMENDMENT ACCEPTANCE NOTIFICATION MT 798<736> DISCREPANCY ADVICE MT 798<748> MT 798<750> MT 798<749> DISCREPANCY ADVICE RESPONSE COMPLIANCE ADVICE NOTIFICATION MT 798<753> MT 798<754> DISCHARGE ADVICE NOTIFICATION MT 798<731> MT 798<732> REFUSAL ADVICE NOTIFICATION MT 798<733> MT 798<734> MT 798<755> PAYMENT ADVICE NOTIFICATION MT 798<756> IMPORT PAYMENT SETTLEMENT ADVICE MT 798<757> 15
  16. 16. EXPORT DOCUMENTARY CREDITS Corporate-to-Bank Bank-to-Corporate Bank Beneficiary MT 798<774> Export Documentary Credits MT 798<700> CREDIT ADVICE MT 798<701> MT 798<776> AMENDMENT ADVICE MT 798<707> AMENDMENT ACCEPT/REFUSAL ADVICE MT 798<735> MT 798<780> MT 798<710> THIRD BANK ADVICE MT 798<711> MT 798<737> PRESENTATION RESPONSE MT 798<751> A U T H O R I S A T I ON A D V I C E N O T I F I CA T I O N MT 798<752> MT 798<753> COMPLIANCE ADVICE NOTIFICATION MT 798<754> MT 798<731> DISCHARGE ADVICE NOTIFICATION MT 798<732> MT 798<733> REFUSAL ADVICE NOTIFICATION MT 798<734> MT 798<755> PAYMENT ADVICE NOTIFICATION MT 798<756> TRANSFER REQUEST MT 798<722> MT 798<782> MT 798<720> TRANSFER ADVICE MT 798<721> EXPORT PAYMENT SETTLEMENT ADVICE 16 MT 798<758>
  17. 17. GUARANTEES / STANDBY LETTERS OF CREDIT Corporate-to-Bank Bank-to-Corporate Applicant Guarantees/Standby Letters of Credit Bank MT 798<761 or 784 > APPLICATION MT 798<760> NOTIFICATION MT 798<762 or 785 > MT 798<760> MT 798<763 or 786 > AMENDMENT REQUEST MT 798<767> MT 798<764 or 787 > AMENDMENT NOTIFICATION MT 798<767> EXTEND / PAY QUERY MT 798<777> MT 798<778> EXTEND / PAY RESPONSE CLAIM NOTIFICATION MT 798<779> CLAIM / CHARGES SETTLEMENT MT 798<781> MT 798<783> REDUCTION / RELEASE REQUEST REDUCTION / RELEASE ADVICE MT 798<766 > MT 798<769> 17
  18. 18. GUARANTEES / STANDBY LETTERS OF CREDIT cont. Corporate-to-Bank Bank-to-Corporate Bank Guarantees/Standby Letters of Credit Beneficiary MT 798<745 or 746 > ADVICE MT 798<760> MT 798<743 or 744 > AMENDMENT ADVICE MT 798<767> PAYMENT CL AIM MT 798<712> MT 798<714> CLAIM ACKNOWLEDGEMENT 18
  19. 19. COMMON GROUP Corporate-to-Bank Bank-to-Corporate Applicant Bank C H A R G E S S E T T L E M E N T N O T I CE MT 798<793> MT 798<790> CHARGES SETTLEMENT REQUEST MT 798<794> MT 798<791> MT 798<788> F R E E F O R M AT MT 798<799> FREE FORMAT MT 798<789> MT 798<799> Corporate-to-Bank Bank-to-Corporate Bank Beneficiary MT 798<793> C H A R G E S S E T T L E M E N T N O T I CE MT 798<790> MT 798<794> CHARGES SETTLEMENT REQUEST MT 798<791> F R E E F O R M AT MT 798<788> MT 798<799> MT 798<789> FREE FORMAT MT 798<799> 19
  20. 20. Trade Finance for Corporates Use of FIN and FileAct 20
  21. 21. Use of FIN and FileAct for C2Bdocumentary trade finance flowsFIN FileAct• Structured MT 798 messages • Facilitates document between the banks and the exchange between banks corporates (content defined and corporates by instrument) • Any document type in any• MT7XX messages between preferred or required format the banks – Stand-by L/Cs & Guarantees:• Enables higher level of • Draft guarantee text automation and back-office • Scanned copy of the issued or received guarantee/amendment integration – Export L/Cs: • Commercial documents related to the transactionTrade finance for corporates – Webinar 12 July 2012 21
  22. 22. Trade Finance for Corporates Adoption of MT 798 standards SWIFT and your payments business 22
  23. 23. Corporates adopting the MT 798 standardsMost are already using SWIFT for payments but this is not a pre-requisite Corporates Use of MT 798 Use of MT 798 Live Multi-bank for … as … Usage Solution Alcatel-Lucent Guarantees Exporter Live Surecomp Saudi Aramco Export LCs Exporter Live In-house ArcelorMittal Export LCs Exporter Live Misys International Metro Group Import LCs Importer Live In-house Buying Metsä Finance Export LCs Exporter Q4 2012 GlobalTrade Corporation Safran Guarantees, LCs Exporter and Q4 2012 GlobalTrade importer Corporation Voith Guarantees, LCs Exporter and Q4 2012 Surecomp importer Close to 10 additional corporates will publicly disclose their adoption of MT 798 in H2 2012Trade finance for corporates – Webinar 12 July 2012 23
  24. 24. 25 banks adopting the MT 798 standards12 from the top20 Trade banksTrade finance for corporates – Webinar 12 July 2012 24
  25. 25. All leading Trade Finance vendors areaccredited by SWIFT SWIFTReady for SWIFTReady Trade Corporates – Trade Finance Finance • Bank-to-bank standards • Corporate-to-bank • Corporate-to-bank standards standards Bank Corporates Vendor Trade Finance Vendor Trade Finance Solution Solution China Systems Eximbills GTC GlobalTrade Corporate CSI BankTrade Misys Misys Trade Portal Misys Trade Innovation Pinnacle Synergy Trade Services Plus Solutions (TS) Multi-bank Incorporated Corporate Site MIT CREDOC (PSI) Sopra Evolan IB Note: Surecomp is ready but not certified in 2011 Surecomp DOKA 5, IMEXTrade finance for corporates – Webinar 12 July 2012 25
  26. 26. Trade Finance for Corporates Best practices for multi-banking Trade finance for corporates – Webinar 12 July 2012 26
  27. 27. Best practices for multi-banking in trade finance Rules • ICC Banking Commissions rules • MT Cat4/7 standards Messages • ISO 20022 standards Identity • Business Identifier Code for banks and corporates (BIC or ISO 9362) • SWIFT for bank-to-bank (FIN) Channel • SWIFT or Internet for corporate-to-bank • SWIFTReady vendors Solutions • In-house developmentIndustry standards enable banks and corporates to increase efficiency and minimise costs when respecting all of the above best practicesTrade finance for corporates – Webinar 12 July 2012 27
  28. 28. Issues for corporates with non standardised multi-bank options Scenarios: Corporate using a Corporate re-using Corporate using a Corporate using vendor platform its FI BIC and the vendor BIC and forcing banks to MT 7xx messages the MT 798 MT 798 standards withMajor issues own BIC in SCORE adopt proprietary on the bank-to- standards on the for formats, security bank FIN service bank-to-bank FINcorporates: and rules service Increased Need for multiple Proprietary Re-use SWIFTvendor and solutions when any development: so connectivity in use for of the banks packaged solutions technical treasury and cash required do not and costs cannot be costs support the vendor shared management platformNot following Dependency on Not able to benefit Corporate does not Single process with all industry single vendor from full MT 798 benefit from banking partners solution: less functionality SWIFTs FIN standards competition and Responsibility and and best technical lock-in Liability (R&L) practices Increased Parties need to Parties need to Corporate cannot Standardised SCORE legal develop vendor- develop corporate- benefit from agreement for cash and specific contractual specific contractual standardised legal complexity trade arrangements arrangements documentation and costs Increased Depends on vendor- Lack of visibility on Lack of full visibility Standardised SWIFT KYC risks owned legal corporate identity, to corporate registration for corporates frameworks resulting with likely identity, resulting and re-use of BIC by KYC issues with likely KYC issues corporate 28
  29. 29. Trade Finance for Corporates Next MT 798 features 29
  30. 30. Next version of MT 798 standards (1/2)General• Incremental changes• Further clarification• Editorial correctionsDiscrepancy Settlement• MT 798<749> Response to Advice of Discrepancy Waiving of discrepancies by applicant pending adjustment of amount payable. To be agreed and accepted by Beneficiary.Presentation• MT 798<737> Response to Documentary Credit Presentation Additional fields.Trade finance for corporates – Webinar 12 July 2012 30
  31. 31. Next version of MT 798 standards (2/2)Lead Bank Model• Addition of 3 optional fields at the end of every MT 798 Index Message – Customer Identifier – Processing Bank Identifier – Lead Bank IdentifierRequested new functionality (for review)• Multi-currency guarantees• Drafting of Applications and Amendments (Guarantees & Standbys)• Settlement of Guarantee/Standby Claim• Amendment of Export L/C Transfer Analysis and Review • 2/3 Community Review Cycles • 3 week review period • 1st Draft, end July 2012 • Final Publication, November 2012 31
  32. 32. Trade Finance for Corporates Benefits 32
  33. 33. Win-win benefits for corporates and banksBenefits Corporates BanksConsolidated Trade finance positions and increased visibilitySingle multi-bank & multi-business channelDematerialization & standardizationRe-use bank-to-bank FIN MT7xx data fields with CorporatesRe-use of FileAct for any needed documentsto be included in the information flowsOverall cost reductionImproved straight-through processing end-to-endImproved overall transaction timeOnly one interface development to integrate to Bank backoffice (no need for vendor-specific interfaces, procedures,contracts, formats)Corporates and banks can make independent decisionson technical platforms and implementationsTrade finance for corporates – Webinar 12 July 2012 33
  34. 34. Trade Finance for Corporates Training and Consulting Services 34
  35. 35. Training and Consulting Services• On-site courses on MT 798 standards• SWIFT Consulting Services puts at your disposal a dedicated team of experts who provide extensive knowledge of financial markets, message standards and back office integration• Our consultants can lead and support every phase of your project: – From assessment and analysis of your processes and needs – Design and implementation of the right solution – Support you through “go live” and maintenance following launch• Great asset if you decide to up-grade and integrate your in- house systemsTrade finance for corporates – Webinar 12 July 2012 35
  36. 36. SWIFT’s Consulting portfolioCommon problems, unique solutions BusinessDo you need knowledgeable and dedicated assistance during your SWIFT projects? How to use SWIFT Do you need help Do you have data to get to strategic with optimal usage of Redundant & manual insights? Standards? interventions? Technical What is the right How to get to 5x9’s How can you further sourcing model for operational reduce your Cost of SWIFT infrastructure? excellence? Ownership? Implementation How to get to an easy Who can guarantee Can you provide me integration of your risk-free installations peace of mind post applications & SWIFT and field services? ‘go live’? 36
  37. 37. Trade Finance for Corporates Conclusion 37
  38. 38. ConclusionMulti-banking in trade finance is now a reality• All trade banks in the world use SWIFTs MT7xx standards with their correspondent banks• The leading trade finance banks are now extending the use of those standards to the corporate world through the MT 798; all leading vendors have adopted the MT 798• The MT 798 can be used on any channel (Internet, SWIFT) and with any software solution; the SWIFTReady certification ensures inter-operability between competitive vendor solutions• The growing adoption by all leading players confirms the immediate relevance of the MT 798 industry standards to the trade finance market Avoid vendor lock-in by pushing back on proprietary portals/formatsTrade finance for corporates – Webinar 12 July 2012 38
  39. 39. Trade Finance for Corporates Contacts 39
  40. 40. Contact the MT 798 bank product teamsBanks adopting MT 798 Country MT 798 Product contactBank of America US Paul JohnsonBanque Saudi Fransi SA Shafeek H. Al-ManameenBayerische Landesbank DE Florian SeitzBNP Paribas FR Eric HenryBNY Mellon US Andres RamosCitibank US Fran MartellCM CIC FR Tony CroizerCommerzbank DE Sven MuellerCrédit Agricole CIB FR Patrick BoiteauDanske Bank DK John EnemarkDeutsche Bank DE Frank BotheGulf International Bank SA Mathew SilvaHSBC HK Kate HanJP Morgan Chase US Merlin DowseKBC BE Karen SterckxLBBW Landesbank Baden Württemberg DE Rolf SeidelNordea FI Soren AndresenRBS US Deborah SeliskiRiyad Bank SA Medhat SanuriSamba SA Abdulkader A. BazaraSociété Générale FR Corinne BakokStandard Chartered SG Ashutosh KumarThe National Commercial Bank SA Omar YassineUBSfinance for corporates – Webinar 12 July 2012Trade AG CH Erwin Freiburghaus 40Unicredit AT Markus Wohlgeschaffen
  41. 41. Contact our SWIFTReady Trade Finance2011 partners Partner Solution Contact Joel Schrevens, Digby Bennett joel@chinasystems.com digby@chinasystems-me.com +32 475 904413 Selene Chan, James Tindall schan@banktrade.com jtindall@banktrade.com + 44 7941 325716 Olivier Berthier, Stephan Nouy Misys TI Plus Olivier.berthier@misys.com Stephane.Nouy@misys.com +33 (0)1 53 00 70 13 Jean-Luc Spinardi sales@mitsa.ch + 41 213 188 181 Marina Singlard Evolan IB msinglard@sopragroup.com +33 5 6573 4651 Murray Freeman DOKA 5, IMEX Murray.freeman@surecomp.com +1 201 716 1236 41
  42. 42. Contact our SWIFTReady for Corporates - Trade Finance 2011 partners Partner Solution Contact Jacob Katsman, Nick Pachnev katsman@globaltradecorp.com GlobalTrade Corporate pachnev@globaltradecorp.com +1 416 627 8520 / +1 416 661 8520 Olivier Berthier, Stéphane Nouy Olivier.Berthier@misys.com Misys Trade Portal +65 6416 4095 Stephane.Nouy@misys.com +33 (0)1 53 00 70 13 Pinnacle Synergy Trade John Nash Solutions Services (TS) Multi-bank +44 7587 088 049 john.nash@psi-nj.com Incorporated (PSI) Corporate SiteNote: Surecomp is ready but not certified in 2011 Trade finance for corporates – Webinar 12 July 2012 42
  43. 43. Contact us now!André Casterman Head of Banking and Trade solutionsPatrick Krekels Legal CounselNadine Louis Supply Chain Finance and Business IntelligenceMarie-Christine Diaz Supply Chain FinanceDavid Hennah Supply Chain FinanceAline Henrard Supply Chain FinanceRaimo Naatsaari Documentary Trade Finance and e-invoicingDavid Dobbing StandardsRobert Marchal StandardsKineth Yuen Standards – Asia PacificAngéline Tan Standards – Asia PacificFilip Versluys Partner ManagementChris Conn Business Development – AmericasJames Wills Business Development – AmericasConnie Leung Business Development – Asia PacificVivian Zeng Business Development – Asia PacificRobert Schneider Business Development – EMEAUrs Kern Business Development – EMEA Neil Gray Corporate Sales – UK/Ireland/NordicsMatt Monaco Corporate Sales – Americas Jan Heinsbroek Corporate Sales – NordicsZelda Anthony Corporate Sales – Asia/Pacific Roger Inderbitzin Corporate Sales – SwitzerlandThomas Peeters Corporate Sales – Benelux Ashley Schmidt Media Relations – AmericasSebastian Niemeyer Corporate Sales – AT/DE/CH Sandra Gavard Media Relations – Asia PacificArnaud Dupuy Corporate Sales – France Thea George Media Relations – EMEA 43E-mail: firstname.lastname@swift.com

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