Presentation at 2015 Association for Financial Professionals (AFP) Annual Conference. As global organizations use diverse technologies to improve payment efficiency, the SEPA mandate has propelled the use of ISO20022 XML to the international forefront. In this session, attendees will learn how Bayer leveraged their European processing acumen to streamline domestic payments in the US and their future direction with this expanding technology. Speakers provide an overview of the ISO20022 standard, its adoption globally and the forces driving change in the US. They offer insights into navigating the challenges of migrating from traditional payment methods and how the ISO20022 XML standard can deliver value to companies.

1. How Bayer Stopped Payments
Pain with ISO20022
Michael Sweeney
Bayer Corporation
Lisa Hays
BNY Mellon
Nasreen Quibria
Q Insights

2. Getting To Know Us

3. Today’s Discussion

4. Around the World in ISO 20022
Live ISO 20022 standards or on the future roadmap…

5. ISO 20022 Activities in the U.S.

6. A standard for standards – a “recipe”
or a standardized approach to
building message standards across
financial services
What is ISO 20022?

7. What is ISO 20022?

8. What is ISO 20022?

9. What is ISO 20022?
All the content (definition, validation, etc.) is stored in a central repository

10. How Does it Help?

11. CGI-MP for Corporate-to-Bank
Communications
Source: SWIFT / CGI-MP
In total 45 FI members (Contributing & Observers) In total 88 Non-FI members (Contributing & Observers)
….And Growing!

12. ISO 20022 Messages

13. ISO 20022 Flow of Messages

14. Today’s Discussion

15. BNY Mellon Background with ISO
• BNY Mellon decided to implement ISO into phases based on client needs and market trends
• BNY Mellon implemented ISO 20022 for payments only in November 2012
• This included USD wires, ACH, Checks, FX payments (both global and exchange payments)
• First Corporate client was implemented in November 2012
• Implemented three additional clients in 2013
• Have continued to enhance our product offering each year and rolled out XML
acknowledgements in 2014 (3 Levels)
– File Acknowledgements
– Data Translation Acknowledgements
– Payment Applications Acknowledgements.
• Implemented Drawdown/Debit Origination in early 2015
• CAMT reporting will be implemented in 2015
19

16. Banker’s Perspective
• ISO allows for standardization in payments
• International capabilities / standardization
– domestic vs international
– XML ease of use (readable)
• Fit processing module (seamless, with the array of formats we currently support)
• Improve STP and efficiency
• Comprehensive Payable opportunities (less proprietary formats to support)
• BNY Mellon has the personnel with expertise to support it XML
• Preparation for the future, based on ISO in and ISO out – Leveraging the format both
government and business remittance detail
• Provides incremental value to our customers both domestic and international
• ISO 20022 allows for the inclusion and reporting of all parties to the transaction and significantly
greater transaction detail
The Pros
20

17. Banker’s Perspective
• Multiple hours of prep work to understand the concept of ISO and the schema layouts, how
they are broken out.
– Newness of the ISO XML format in the US
• Although it is a standard, the tendency of various banks may use fields in various ways
• Internal controls (approval to implement a new format)
• Processing procedures and training with rolling out a new format
• Level of information that can be provided in many cases is much more than the payment
applications can handle, NACHA, MT103 etc.
The Cons
21

18. Today’s Discussion

19. Bayer
• Founded in 1863
• Global HQ in Leverkusen, Germany
• U.S Corporate Headquarters in Pittsburgh, PA
• Two main subgroups:
• Bayer HealthCare
• Animal Health
• Consumer Care
• Medical Care
• Pharmaceuticals
• Bayer CropScience

20. Bayer
• Locations in over 70 countries around
the world
• 118,900 Employees worldwide and
15,300 in the United States
• Sales of €42.2B globally and $11.4B in
the United States
• Figures reported for 2014

21. Why Did We Begin Using XML?
• Global initiative to centralize payments for all Bayer
entities around the world.
• Payment processing completed in Germany for all
countries, payment files sent to banks around the
world in XML format through SWIFT.
• Goal was to have a global standard for all countries
for payment processing. Implementation of XML
creates a standard file that can be used with banks
worldwide that accept the format. This replaced the
need to have country specific file formats.

22. Payment Processing Pre-Implementation
Page 22 •
Barcelona
Payment
Processing
Cash
Accounting
Payment
Proposals
Treasury
Send
proposals to
Treasury
around
2:00pm
ACH
Wire
Foreign
Exchange
Paid Automatically
(>86k)
>$100K
<$100k
Bid
Pay
EDI payment file sent
directly to bank
BNY Mellon
BNY Mellon
Online
Portal
Foreign
Exchange
>6.2k wires and >2.1k FX
manually entered and
approved

23. Payment Processing Post Implementation
Page 23 •
Leverkusen
Payment
Processing
Treasury
Payment
proposals sent
directly by 9:00
a.m.
BNY MellonXML payment
files sent to
bank
ACH
Wire
Foreign
Exchange
All processed
automatically

24. New Payment Environment

25. How Did We Get There?
• Long process – initial preparation internally began in 2012
• February of 2013 we began working with BNY Mellon on
implementation
• August of 2013 began first live payments, total implementation
April 2014.
• Weekly status calls involving all parties involved:
• Bayer Treasury
• Bayer Global IT
• Bayer Payment Processing
• BNY Mellon
• Treasury team played primary role of middle man. Also were
responsible for making sure project was on task from Bayer
side.

26. Testing & Setup
• Swift connectivity testing between Bayer IT and BNY
Mellon
• Treasury team worked with BNY Mellon on required
forms and bank related setup (accounts involved,
ACH Customer ID’s, XML Customer ID terms &
conditions, etc.)
• XML schema/format had to be designed for the files.
• Test files sent from each of the SAP systems for each
company (5 systems, 11 accounts) to test
connectivity, format of the files, and the receipt of
acknowledgement files back from BNY Mellon.

27. Challenges
• Managing time difference between Germany & US
• Newness of XML for Bayer U.S and BNY Mellon
• Acknowledgement files
• Handling rejected files and/or individual payments
• Internal controls
• Authorizations
• Vendor banking instructions
• File formatting, particularly with FX files

28. Benefits
• Bayer Group
• One standard file format for all companies
around the world
• Implementing a new bank or transitioning from
one to bank to another is easier now
• Ability to have a centralized payment processing
team instead of hubs throughout the world
• Local Treasury Group
• Elimination of manual payments
• Flexibility within our working day/team
• Focus on value added activities

29. Today’s Discussion

30. Corporate Implementation Challenges

31. Benefits & Opportunities with ISO 20022

32. How Do You Get Started? Engage in
Dialogue…
Internally Banks & Solution Providers
› Educate yourself and key
internal stakeholders
› Identify organizational
opportunities:
– Beyond Treasury, include
A/R and A/P
– Areas to streamline and
simplify processes
› Talk to your customers to
identify need
› Speak with your bank and
solution providers – They’re
also working with other
corporate clients and can
share their lessons and best
practices
› Understand their
capabilities and limitations
– What messages and
versions are supported?
Which business processes
are supported?
– How is data exchanged?

33. Today’s Discussion

34. Thank You – Questions? …Let’s Connect
(m) 617.388.6207
Nasreen Quibria|Founder
nasreen.quibria@qinsights.net
nasreenquibria
@nquibria
(o) 315.765.4359
Lisa Hays|Vice President
lisa.hays@bnymellon.com
(o) 412.777.5730
Michael Sweeney|Manager
michael.sweeney@bayer.com

35. • ISO: http://www.iso20022.org/
• SWIFT:
http://www.swift.com/products_services/by_type/standards/standards_what_s_new?rdct=t
• CGI – MP: http://corporates.swift.com/en/cgi-mission-and-scope
• NACHA:
https://www.nacha.org/programs/xml-ach-remittance-xml-ach
https://www2.nacha.org/webform/nacha%E2%80%99s-iso-20022-mapping-guide-tool
• Federal Reserve Banks:
https://fedpaymentsimprovement.org/get-involved/iso-20022/
• Canadian Payments Association (CPA):
https://www.cdnpay.ca/imis15/eng/Our_Initiatives/eng/initiatives/ISO_20022.aspx
• European Payments Council (EPC):
http://www.europeanpaymentscouncil.eu/index.cfm/sepa-credit-transfer/iso-20022-
message-standards/
• IFX: http://www.ifxforum.org/home/
Appendix – Resources