Patricia Hines, CTP

Director, Financial Services

Industry Marketing, GXS

Joe Barbieri

Global Account Executive

GXS

Focus on Regional Banking: Meeting the SWIFT and Corporate Connectivity

Needs of Increasingly Sophisticated Clients

May 21, 2013 | Slide 2 © 2013 GXS, Inc.

About GXS

Industry Trends

SWIFT Corporate Access

Connectivity Options

Regional Bank Trends

Q&A

Session Agenda

May 21, 2013 | Slide 3 © 2013 GXS, Inc.

About GXS

May 21, 2013 | Slide 4 © 2013 GXS, Inc.

Leading Global B2B Service Provider A Long-Term, Trusted Partner

Serving Customers in

61 Countries

45 Years

Experience

Exclusively in B2B

Integration

550,000

Businesses on

Trading Grid

14 Billion

Transactions per

Year

Serving 56% of

Global 1000

22 of Top 25

Global Supply

Chains

Leader in Most

Recent Gartner

Magic Quadrant

40% of Revenues

Derived Outside

the US

May 21, 2013 | Slide 5 © 2013 GXS, Inc.

Industry Leadership Value-Added Solutions for the Financial Services Sector

GXS Specializes in Corporate-to-Bank

Integration Solutions

Market 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 corporate

clients via GXS solutions

Solutions for the Financial Sector

• Managed Integration Services

• Client Enablement Services

• Integrated Treasury Management

• SWIFT Service Bureau

• MFT and Integration Software

• Cloud Applications for Commercial Finance

and Securities

May 21, 2013 | Slide 6 © 2013 GXS, Inc.

Treasury & Cash

Management

Card Issuing &

Merchant Services Trade & Commercial

Finance

• Integrated Payables

• Consolidated

Receivables

• SWIFT Connectivity

• Multi-Bank

Payments

• Merchant

Enablement &

File Integration

• PCI Compliance

• ERP Integration

• Factoring

• Supply Chain

Finance

• Inventory Finance

• Dealer Floor

Planning

GXS in the Financial Services Sector Enabling Connectivity and STP Across Industry Segments

Securities

• Connectivity for

Counterparties

• Order to Settlement

Lifecycle

Management

• Post-Trade

Exceptions

Group Benefits &

Employer Services

• Client Integration

for Group Insurance

• Payroll File

Transmission

• Claims Payment

Remittances

May 21, 2013 | Slide 7 © 2013 GXS, Inc.

Industry Trends

May 21, 2013 | Slide 8 © 2013 GXS, Inc.

Automation

Standardization

Centralization

Banking

Relationships

Economic

Climate

Costs Labor

Manual Processes

Financial Management Today Treasury and Finance Facing Multiple Challenges

Technology Cloud

Mobile

Working Capital Liquidity

Foreign Exchange

Supply Chain Finance

Corporate Social

Responsibility

Regulatory

Compliance

Integration Standards

Protocols Trading Partner

Relationships

Visibility Financial

Suppliers

Supply Chain

Risk

Community Management

Communication

Process Data Quality

Matching/Approval

Compliance Tax

Payments

Trade

May 21, 2013 | Slide 9 © 2013 GXS, Inc.

Challenges with Bank Interfaces Treasury Organizations Want Real Time Information & Payment Execution

Traditional Bank Interfaces

Unique

connection and

file format for

each banking

relationships

Connectivity,

testing and

certification

required for each

bank

Leased

Line

Web

Portal

Internet

FTP Fax

Standards Complexity • Inflexible file format options and lack of ERP

integration (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 processes

across differing regions (Asia-Pacific, Latin

America)

Lack of Integrated Interfaces • Reconciliation challenges

• Limited visibility to cash and payment status

• Distinct interfaces per product line (Cash, FX,

Trade Finance, Securities Services )

May 21, 2013 | Slide 10 © 2013 GXS, Inc.

A World of Risk

• Banks Hit Downtime Milestone In DDoS

Attacks – April 2013

• Bank Cyber Attacks Pose Warning to

Corporate Clients – October 2012

• South Carolina reveals massive data

breach – October 2012

• Global Payments still tallying data

breach 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 million

Stolen In One Day – May 2011

Source: Identity Theft Resource Center

May 21, 2013 | Slide 11 © 2013 GXS, Inc.

SWIFT Corporate Access Business Drivers

May 21, 2013 | Slide 12 © 2013 GXS, Inc.

SWIFT Corporate Access A Single Global Standard

Post Web

Portal Internet

FTP Fax

FX

Confirmations

Investment Trade

Confirmations

ACH Payments

Wire Payments

Prior / Current

Day Statements

Prior Day

Balances

Company Financial Systems

Treasury A/P

A/R Other

Multiple Connections & Formats

Bank Mandates

Signature

Cards

FX

Confirmations

Investment Trade

Confirmations

Bank Mandates

Signature

Cards

Company Financial Systems

Treasury A/P

A/R Other

Standard Connections & Formats

ACH Payments

Wire Payments

Prior / Current

Day Statements

Prior Day

Balances

May 21, 2013 | Slide 13 © 2013 GXS, Inc.

What is SWIFT?

Society for Worldwide Interbank

Financial Telecommunications

• Consortium of member financial

institutions

• Started in 1973 to automate the telex

• Premier financial messaging standards

body

• Powers real-time gross settlement

systems globally called “market

infrastructures”

• >2.5B messages exchanged between

10,000+ financial institutions and

corporates in over 210 countries – largest

financial messaging network and

community in the world

• SWIFT develops and defines messaging

and standards for the financial services

industry

Source: SWIFT Standards Overview

Market Infrastructures

• Central Banks

• Settlement Systems

Customer Solutions

• TRCO

• MA-CUG

• SCORE

SWIFTNet

• 10,279

Correspondents

• 212 Countries

SWIFT Solutions

• FileAct

• Accord

• Trade Services Utility

• … and more

Secure

Financial Messaging

Global Financial

Standards

“The global provider of secure financial

messaging services”

May 21, 2013 | Slide 14 © 2013 GXS, Inc.

4.0

4.4

4.6

Q4 '10 Q4 '11 Q4 '12

SWIFTNet FIN Traffic Billions of messages

Growth in SWIFT Messaging Driving Adoption by Corporates of All Sizes

+ 17.4%

+ 19.1%

SWIFTNet FileAct Traffic Billions of messages

Source: SWIFT

10.1

14.1

33.8

Q4 '10 Q4 '11 Q4 '12

+ 39.9%

+ 139.9%

May 21, 2013 | Slide 15 © 2013 GXS, Inc.

187 282

402

579

726

902

1,035

2006 2007 2008 2009 2010 2011 2012

Growth Driven by Corporate Adoption of SWIFT

Number of Registered

Corporate Entities on SWIFT

Source: SWIFT

May 21, 2013 | Slide 16 © 2013 GXS, Inc.

Trends Driving SWIFT Adoption

Interest in SWIFT

Emerging Standards Better Risk

Management

Improved Cash

Management

Infrastructure

Changes

May 21, 2013 | Slide 17 © 2013 GXS, Inc.

• Corporate Drivers

– Increased SWIFT marketing

– Growing adoption among

corporates

– Single network to streamline

messaging and formats

– Centralizing treasury operations

– New products: AllianceLite2,

3SKey, eBAM, SWIFTRef,

Watch Analytics

Interest in SWIFT

May 21, 2013 | Slide 18 © 2013 GXS, Inc.

• Corporate Drivers

– Better visibility and more efficient

deployment of cash

– More frequent reconciliation of

balances

– Grow balances through interest rate,

currency hedging, derivatives, etc.

management

Improved Cash Management

May 21, 2013 | Slide 19 © 2013 GXS, Inc.

• Corporate Drivers

– FIN MT to MX message

standard evolution

– ISO 15002 to ISO 20022 for

Corporate Actions

– European Union’s migration

to SEPA compliant

payments

Emerging ISO 20022 XML Standards

May 21, 2013 | Slide 20 © 2013 GXS, Inc.

• Corporate Drivers

– Simplifying, optimizing, and/or

diversifying banking relationships

– Being more nimble to make

changes

– Sensitivity due to Global Financial

Crisis of 2008

Better Risk Management

May 21, 2013 | Slide 21 © 2013 GXS, Inc.

• Corporate Drivers

– Upgrading or consolidating

treasury technology infrastructure

– Replacing Treasury Management

System

– Marketing influences from SWIFT

(Alliance Lite2) and other Service

Bureaus

Infrastructure Changes

May 21, 2013 | Slide 22 © 2013 GXS, Inc.

Corporate-to-Bank Connectivity Options

May 21, 2013 | Slide 23 © 2013 GXS, Inc.

Multiple C2B Integration Options

Direct Integration (DIY) Concentration Bank Integration

SWIFT Integration Hybrid: SWIFT & Direct Integration

SWIFT

Service

Bureau

C2Bank

Integration

Service

Higher TCO, multiple standards Constrained by bank’s capabilities

SWIFT bank data through concentration bank

Bank neutral, limit is bank SWIFT readiness

May use SWIFT Service Bureau

Lower TCO, global reach

Bank neutral, maximum flexibility

May 21, 2013 | Slide 24 © 2013 GXS, Inc.

Alliance Access

Alliance Access

SWIFT Alliance Solution Set In

sti

tuti

on

Siz

e / M

es

sa

ge

Vo

lum

es

Automation, Integration, Customization

Alliance Lite2 Alliance Gateway

SWIFTNet Link

HSMs

Alliance Messaging Hub (AMH)

Alliance Access Integration Platform

Source: SWIFT

May 21, 2013 | Slide 25 © 2013 GXS, Inc.

SWIFT Connectivity Options

• Customer-Owned

– Specific security requirements

– Full control over IT environment

including 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 not

critical

– Traffic requires medium to high volume

infrastructure

Source: SWIFT

May 21, 2013 | Slide 26 © 2013 GXS, Inc.

Alliance Lite2 – How it Works

Source: SWIFT

May 21, 2013 | Slide 27 © 2013 GXS, Inc.

Leased

Line

Alliance Web Platform

SWIFT Interface

VPN Box

SAA

ALLIANCE ACCESS

SAG SWIFT

ALLIANCE GATEWAY

HSM Box

SNL SWIFT Net Link

Visibility & Message

Management /

Monitoring

SWIFT Alliance Access Solution Components

Client Systems

Licensed from SWIFT

• Primary Dual leg HA

• DR Infrastructure

• Both have 2 leased lines

to SWIFTNet

SOAP

May 21, 2013 | Slide 28 © 2013 GXS, Inc.

Choosing a SWIFT Service Bureau

• Can be daunting -- more than 130 organizations worldwide have

service bureau offerings

• SWIFT recently rolled out a new Shared Infrastructure Programme

(SIP), to certify service bureaus that offer third-party connectivity to the

SWIFT network

• A list of SWIFT Service Bureau meeting the various operational levels

defined by SIP can be found using SWIFT’s Partner Locator

May 21, 2013 | Slide 29 © 2013 GXS, Inc.

Regional Bank Trends and Case Studies

May 21, 2013 | Slide 30 © 2013 GXS, Inc.

Middle-Market and Small Business Clients Drive Revenue for Tier 2 Banks

Large Corporate

Middle Market

Small Business

Top 5 29% 27% 13%

Next 15 26% 32% 18%

Peers 2 & 3 13% 40% 35%

2011 Total 26% 30% 17%

Share of fee-equivalent revenue by customer segment

Source: Ernst & Young 29th Annual Cash Management Services Survey

Source: GE Reports

May 21, 2013 | Slide 31 © 2013 GXS, Inc.

Revenue from Electronic Products driving Cash Management Growth

11.0%

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 Check

Source: Ernst & Young 29th Annual Cash Management Services Survey

Revenue growth rates for cash management products

May 21, 2013 | Slide 32 © 2013 GXS, Inc.

Single-Sign On / Multi-Factor

Authentication Portlet

Large Regional Bank Extending Capabilities to Small/Medium Enterprises

Messaging Service

DataPool

(Unisys) CIPG

(EG)

Customer Communication Facility

(CCF)

Bank

Online Banking for

Business Portal

Business Issue

• The bank wanted to extend the ability to upload payment files

and download information reporting files to small to medium

enterprises (SMEs)

• Legacy solution called File Transfer Facility (FTF) no longer

supported by vendor

• Need for low-cost Internet solution for small to medium business

customers not able to exchange files using machine-to-machine

solutions

• Multi-factor authentication required to comply with FFIEC

standards for online security

• Requirement for single sign-on to FTF solution through bank’s

online business banking portal

Solution Deployed

• Deployed Intelligent Web Forms (IWF) and Trading Grid for Excel

(TG4E) in the bank’s messaging service to provide SME client

access for file transfer

• Implemented multi-factor authentication and single-sign to allow

the bank’s clients to access the new file transfer client access

tools through the bank’s online cash management portal

Bank Clients

May 21, 2013 | Slide 33 © 2013 GXS, Inc.

Top Tier Global Bank Overcoming Legacy System Limitations

Business Challenge

• This global bank’s core deposit system can

only generate information reporting (current/

prior day) in BAI2 format.

• Multi-national corporate clients require SWIFT

formatted files for integration with their back-

office financial systems

GXS Solution

• Translation from BAI2 to MT940 / MT942

• Delivery to clients via SWIFT Service Bureau

using SWIFTNet File Act

Business Benefits

• Outsourcing corporate on-boarding = faster

time to revenue

• Translation into global formats improves ability

to win multi-national corporate business

• External SWIFT solution eliminates need for in-

house hardware, software and technical staff

Corporate Clients

Managed Services

SWIFT

Service Bureau

BAI2 MT940

MT942

SWIFTNet File Act

May 21, 2013 | Slide 34 © 2013 GXS, Inc.

US Regional Bank Winning Large Corporate Clients

Business Challenge

• Meeting SWIFTNet delivery and SWIFT

format requirements of multi-national

corporate clients for wire payments and

balance reporting

• Bank applications unable to consume

SWIFT formats

• Imminent go-live deadline

GXS Solution

• File translation

MT101 – EDI 820

BAI2 – MT940 / MT942

• Connectivity via SWIFT Service Bureau

• Corporate on-boarding

• Enables additional large corporate

business

Corporate Clients

SWIFT

Service Bureau

MT101

Managed Services

MT940

MT942

820 BAI2

May 21, 2013 | Slide 35 © 2013 GXS, Inc.

Take-Aways

• Business Banking and Middle Market clientele have more

sophisticated bank connectivity requirements

• To meet these requirements,

regional banks must be

well-versed in the complexity

of corporate-to-bank

connectivity

• Ever-evolving financial

messaging standards

increase the complexity on an

ongoing basis

May 21, 2013 | Slide 36 © 2013 GXS, Inc.

To Learn More

General 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/Buyer's Guide

Formats:

• 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

May 21, 2013 | Slide 37 © 2013 GXS, Inc.

Thank You and Q&A

Patty Hines, CTP Director, Financial Services Industry

Marketing

E-mail: patty.hines@gxs.com

Joe Barbieri

Global Account Executive

E-mail: joe.barbieri@gxs.com