icc bpo seminar for uae banks
DESCRIPTION
ICC BPO Seminar for UAE banksTRANSCRIPT
BPO / Supply Chain Finance seminarExtending your trade businessusing new ICC and SWIFT standards
André CastermanHead of Corporate and Supply Chain Markets, SWIFT
Member of the Banking Commission’s Executive Committee, ICC
Co-Chair Bank Payment Obligation Project, ICC
Dubai, JW Marriott Marquis, 17 February 2013
2
Objective
• To inform you about the new industry standards for Supply Chain Finance: BPO and ISO 20022 / TSU
• To share latest success stories from experienced BPO bankers
• To facilitate corporate on-boarding on the BPO and bank pairing on BPO/TSU
To help you growyour trade business
3
Speakers
• Lakshmanan SankaranHead of ICC UAE Banking Commission and Head of Operations & Trade Finance, Commercial Bank of Dubai
• Michael F QuinnManaging Director, JP Morgan Global Trade and Chair of the ICC BPO Education Group
• Bob BlowerGlobal Head of Payments, Cash Management & Trade Products, Standard Bank of South Africa
• Sanjoe MathewAssociate Director, Sales Financing Department, Huawei Dubai
• Sido BestaniHead of Middle East and North Africa, SWIFT
• André CastermanHead of Corporate and Supply Chain Markets, SWIFT and Member of the Banking Commission Executive Committee, ICC
4
Agenda
• Introduction• SWIFT’s innovations in multi-banking
standards for trade and supply chain• ICC’s new Bank Payment Obligation
trade instrument and benefits for corporates
• The first BPO case studies and Live BPO banks
• The corporate perspective on BPO – Questions for a corporate to bankers
• How to get started on the ICC UR BPO rules and ISO 20022 standards
• SWIFT in the MENA Corporate Market• Closing remarks
5
Agenda
• Introduction• SWIFT’s innovations in multi-banking
standards for trade and supply chain• ICC’s new Bank Payment Obligation
trade instrument and benefits for corporates
• The first BPO case studies and Live BPO banks
• The corporate perspective on BPO – Questions for a corporate to bankers
• How to get started on the ICC UR BPO rules and ISO 20022 standards
• SWIFT in the MENA Corporate Market• Closing remarks
6
“Merchandise trade volumes in 2025 hitting $48.5 trillion compared to
today’s $27.2 trillion”
Source: HSBC trade connections, Oct 2011
7
What is the challenge today?
SellerBuyer
LC Advising Bank
LC Issuing Bank
Docum
ents
Contract
Documents
Doc
umen
ts
Adv
ice
Application
Issuance
Payment
Letter of Credit
Bank risk / financing services based on paper document
processing
SellerBuyer
Seller’s Bank
Buyer’s Bank
Contract
Payment
Open Account
Documents
Bank services limited to payment processing.
If any risk, Credit Insurance or Payment Guarantee is added
Continuous shift
Year World Trade (WTO data)
Total Volume of LCs on SWIFT
Total Value of LCs on SWIFT
% world trade on LC (by value)
2000 USD 6 trillion 4.5 million USD 1.5 trillion 25.0
2010 USD 15 trillion 4.6 million USD 2.5 trillion 18.0
2020 (est) USD 33 trillion 4.7 million USD 3.5 trillion 11.0
Market share of the Letters of Credit
The L/C is there to stay but not the instrument for banks to grow their business
Relative drop
9
The opportunity for banks
SellerBuyer
Seller’s Bank
Buyer’s Bank
Contract
Payment
Open Account
Documents
Bank services limited to payment processing
SellerBuyer
Recipient Bank
Obligor Bank
Contract
Documents
Payment
Bank Payment
Obligation
Bank risk / financing services based on electronic trade data
Data
Dat
a
Dat
a
Bank-assisted open account
The BPO enables bank-assisted Open Account trade
10
Agenda
• Introduction• SWIFT’s innovations in multi-banking
standards for trade and supply chain• ICC’s new Bank Payment Obligation
trade instrument and benefits for corporates
• The first BPO case studies and Live BPO banks
• The corporate perspective on BPO – Questions for a corporate to bankers
• How to get started on the ICC UR BPO rules and ISO 20022 standards
• SWIFT in the MENA Corporate Market• Closing remarks
Trade flows have grown substantially over the decades …
Cross Border Trade has more than tripled since the 1980s ….
2010 trade levels (14.5% growth rate) rebounded to pre crisis levels
… the relative importance of Letter of Credit has diminished as trade transactions have migrated to Open Account (i.e. > 80% of transactions are on open account)
% of trade on L/CGlobal value of trade (USD billions)
0
20
40
60
80
100
1950s 1970s 1980s 1990s
0
5,000
10,000
15,000
2000s
Transaction flows via SWIFT have shown a year on year increase in payment volumes (albeit global macro economic conditions)
Trade volumes have remained low or flat over the years due to lack of new and innovative solutions that support the migration to electronic exchange of data and open account trade flows
Cross Border Trade OverviewCross Border Trade Overview
SWIFT Traffic AnalysisSWIFT Traffic Analysis
5T H
E
P O
W E
R
O F
T
R A
D E
-
S
W I
F T
B
A S
E D
S
O L
U T
I O
N S
There are still some inherent challenges with both the traditional documentary credit flows as well as with open account flows; creating an opportunity for a solution that has the best of both flows
Corporates still face challenges in managing the financial supply chain
Challenges on ‘Letter of Credit’ Trade FlowsChallenges on ‘Letter of Credit’ Trade Flows
Process Inefficiencies – Document creation process is onerous for the exporter and often generates discrepancies which result in additional fees and delay in receipt of payment
Higher Credit Utilization – Increased credit utilization on behalf of the buyer and associated conflicts around prudent allocation of available credit
Need For Multi Bank Relationships – requires infrastructure and process (workflow) dealing with different banks
Increased Need For Working Capital – Receipt of documentation takes long; in some cases goods arrive prior to the documents required to clear the goods
Challenges on ‘Open Account’ Trade FlowsChallenges on ‘Open Account’ Trade Flows
Payment / Liquidity Risk – Exporter/Supplier lose access to a negotiable instrument that guarantees payment; potential concerns on credit and exposure concentration
Process Inefficiencies – Documentation receipt and accuracy risk for the Importer/Buyer; potential supply chain risk resulting from tightening credit and liquidity markets
Supply Chain Disruption – Operational risk management especially around discrepancy identification, tracking and resolution could end up being quite onerous for both parties and often lead to disruption of supply chain disruption
6T H
E
P O
W E
R
O F
T
R A
D E
-
S
W I
F T
B
A S
E D
S
O L
U T
I O
N S
Change Is Required In Trade Finance Servicing
The Trade technology environment has been slow to evolve. Recent developments have seen a sudden emergence of multiple initiatives. Which of these is here to stay?
During the technical boom experienced by the Trade Finance banks in the 1990’s, some third party companies found a gap and commenced with the development of bank-neutral platforms. This led to the rise of the innovative multi-bank offering to Corporates leveraging a web-based technology and facilitating the existing flows between Corporates and Banks
Corporate take up of the latter has until now been somewhat lacking, however: Corporates have various types of relationships with their banks. Managing these
relationships in a fast-paced, technology-driven environment becomes complex, especially without a solution based on uniform standards
7T H
E
P O
W E
R
O F
T
R A
D E
-
S
W I
F T
B
A S
E D
S
O L
U T
I O
N S
J.P. Morgan leading the way with SWIFT
Since its inception, J.P. Morgan has been deeply involved in the development of SWIFT Corporate Access. Companies are able to consolidate their banking connectivity and leverage standardized formats and features common to most banks
In 2005, J.P. Morgan was among the first 5 banks to invest with SWIFT in an open account matching solution (Trade Services Utility)
In 2008, SWIFT announced a move to further standardize trade messaging by introducing SWIFT Trade for Corporates, an initiative that delivers Corporate-To-Bank (C2B) and Bank-To-Corporate (B2C) message flows for a number of traditional trade products
In 2010, J.P. Morgan made the strategic decision that SWIFT Trade for Corporates and the Trade Services Utility will be the initiatives that look to revolutionize the multi-bank environment between Corporates and Banks
J.P. Morgan continues to work closely with SWIFT, participating in Global Trade forums and has accepted invitations from Corporates to aid in explaining these initiatives
8T H
E
P O
W E
R
O F
T
R A
D E
-
S
W I
F T
B
A S
E D
S
O L
U T
I O
N S
Industry standardsDeveloped by international standardisation bodies
Industry standards are industry-owned and technology-neutral. They offer a dependable legal and operational framework.
• 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, …
15
FIN MT 798
FIN MT 7xx
Buyer’s bank(s)
Seller
Seller’sbank(s)
Buyer
1 2 3
Industry standards for L/Cs and Guarantees
16
1
SWIFT's MT 7xx are industry owned and technology neutral standards in support of ICC's rules for L/Cs,
Standby L/Cs and Demand Guarantees
MT 798 Documents MT 798 Documents
UCP 600URDG 758
ISP98
FileAct
MT 7XX
17
Industry standards for Bank Payment Obligation2
Any channel / any format / any solution
Trade Matching
Application
Any channel / any format / any solution
SellerBuyer
1 2 3
Bank Payment
Obligation
Pu
blic
Do
ma
inC
om
me
rcia
l
• SWIFT's Trade Services Utility (TSU)
• Any other inter-bank trade matching application (TMA)
• Bank portal• SWIFT's SCORE• Paper
• Bank portal• SWIFT's SCORE• Paper
ISO 20022 mandatoryISO 20022 optional
18
The BPO is a new payment method
Seller Buyer
Buyers'Bank
Seller'sBank
Purchase OrdersTransport docsCertificatesInvoices
ICC SWIFT
Established B2B
practices
UR BPO rules govern an irrevocable and conditional electronic inter-bank
payment obligation
An industry-wide transaction matching platform that imple-
ments the BPO using ISO 20022
BPO is a new payment term in the ICC Int’l
Sales Model Contract
BPOLC
Pa
pe
r / D
ata
Da
ta
A legally binding rulebook owned by the ICC and based on
ISO 20022 standards
C2B contracts facilitating the
provision of risk & financing services
OA
19
Agenda
• Introduction• SWIFT’s innovations in multi-banking
standards for trade and supply chain• ICC’s new Bank Payment Obligation
trade instrument and benefits for corporates
• The first BPO case studies and Live BPO banks
• The corporate perspective on BPO – Questions for a corporate to bankers
• How to get started on the ICC UR BPO rules and ISO 20022 standards
• SWIFT in the MENA Corporate Market• Closing remarks
“Traditional” Trade Services – Terms of trade impact liquidity and payment risk within a financial supply chain
Globalization and vertical integration has increased the risk across the supply chain leading to challenges for exporter (seller) and importer (buyers) alike.
Increased risk for the buyer
Increased risk for the seller
Seller
BuyerSeller
BPO / TSUISO 20022
Alternate Financing Options - BPO
MT101SWIFT For Corporate (Corporate to Bank)
Trade Service Utility (Bank to Bank)
TSUISO20022
OpenAccount
AdvancePayment
CollectionsFileAct
Collections
L/CMT798
L/CGuarantees
L/CMT7xx
CollectionsMT4xx MT202
Terms of trade
SWIFT Messaging
Source: Trade and Supply Chain in 2011
New
New
13T H
E
P O
W E
R
O F
T
R A
D E
-
S
W I
F T
B
A S
E D
S
O L
U T
I O
N S
Bank Payment Obligation (BPO) – Combine the best features across letters of credit and open account trade flows
The BPO is a new component of the Trade Services Utility (TSU), a data matching and workflow engine based on ISO 20022 accredited XML messaging standards which helps buyer and seller communicate
more effectively in cross border trade via their banking partners.
Efficient exchange of trade related informationEfficient exchange of trade related information
What is it?
TSU was developed by SWIFT to provide efficient exchange of trade related information on an open account basis, through common messaging, industry standards and a utility supported by banks globally
BPO is an irrevocable (conditional) obligation of an obligor bank (typically the buyer’s bank) to pay a specified amount to a recipient bank (the seller’s bank) based on the successful matching of agreed datasets within the TSU
How it works?
Uses SWIFT standardized XML languages and sub sets of data (e.g. ISO 20022)
The data is extracted from existing electronic documentation which represent the basic documentary requirements under LCs – Commercial, Transport, Insurance, Certificate
Centralized data matching and workflow engine designed to handle open account business using SWIFT
Importer or Exporter does not need to be SWIFT or TSU enabled as the interaction is managed by banks
Evolution Of BPO In The MarketplaceEvolution Of BPO In The Marketplace
43 – Countries covered (including North America (USA, Canada), Western Europe, China, India, Brazil among others)
131 – Number of country locations including J.P. Morgan, HSBC, Bank of China, Bank of Tokyo Mitsubishi UFJ, Citibank, Deutsche amongst others
Initial Industry Applicability – Oil & Gas, Mining, Pharmaceutical, Retail, Chemicals
Comparison of a BPO to a Letter of CreditComparison of a BPO to a Letter of Credit
A LC is an irrevocable payment undertaking between a bank and a corporate client, whereas a BPO is an irrevocable payment undertaking between the buyers bank and the sellers bank
Under a LC, an obligation to pay is created based on the presentation of compliant documents; under BPO an obligation to pay is created based on the presentation of compliant data
Under an LC, document checking is manually undertaken and the bank takes the documentary risk; in the case of a BPO the checking of data is automated within the TSU at SWIFT’s risk
Letters of Credit are governed under Uniform Custom and Practice (UCP600), whereas the BPO is governed by the SWIFT TSU Rule Book
15T H
E
P O
W E
R
O F
T
R A
D E
-
S
W I
F T
B
A S
E D
S
O L
U T
I O
N S
22
The Bank Payment Obligation (BPO)A new alternative instrument for trade settlement
A BPO is an irrevocable undertaking given by one bank to another bank that payment will be made on a specified date after a successful electronic matching of data according to an industry-wide set of rules.
New ICC Uniformed Rules for BPO Target adoption: April 2013
Designed to complement and not to replace existing solutions
ICC Uniform Rules for
Bank Payment Obligations
Letters of Credit BPO Open account
Guaranteed exchange of goods for payment based on physical
presentation of compliant documentation
Guaranteed exchange of goods for payment based on electronic
presentation of compliant data
Exchange of goods for payment based on trust
Long established instrument with basic functionality in use for
hundreds of yearsHigh degree of security for
buyers and sellersVery low default rates for banks;
short-term, self-liquidating
Fully automated processing with low transaction costs
Industry standard data formatsHigh degree of security for the
seller to receive payment
Flexible arrangement requiring no specific infrastructure, processes or
standardsOwing to buyers ability to dictate
terms of trade, risk can be pushed to the seller
Significant amount of manual processing / paperwork
70% rejected on first presentation owing to
discrepanciesHigh costs involved for banks and
corporates
Some risk to the buyer as payment is triggered by the matching of the
invoice data
Offers no protection to the seller against risk of non-paymentDifferent payment terms and methods used across different
countries involving numerous payment processes
High Cost
Low Risk
Des
crip
tio
nP
ros
Co
ns
Low Cost
High RiskLow Cost
Low Risk
The BPO is particularly suited for “trusted” relationships looking for certainty and efficiency
Use of ISO 20022 standards is only mandated between banks
24
COLLABORATIVE
CO
MP
ET
ITIV
EC
OM
PE
TIT
IVE
COLLABORATIVEThere is collaboration between buyer & seller in the selection of the BPO as the agreed payment terms.
There is competition between banks in terms of the level of service they can offer to the corporate in respect of risk mitigation, financing, payment assurance, process efficiency, price etc. In this competitive space, there are no rules or
mandatory standards. Banks & corporates are free to negotiate their own terms by way of bilateral forms of agreement.
There is collaboration between banks in terms of the establishment of a BPO subject to the matching of specified data elements. In this collaborative space, the adoption of the rules (URBPO) and ISO
20022 TSMT messaging standards is mandatory.
Corporate Corporate
Bank Bank
25
Contracts
Seller’s bank
Buyer’s bank
Buyer Seller
Purchase order:
BPO is one option of payment conditions
BPO-based services terms and
conditions
Rulebook in the
TSU Service Description
TSU
Correspondent banking contract
BPO-based services terms and
conditions
See SWIFT’s TSU Service
Description for C2B
contractual guidelines
The BPO transaction lifecycle
Initial Baseline Submissions
Dataset submission and reports
Mismatch acceptance or rejection
BPO establishment
Data SetMatching
Baseline Match report
Pu
rch
ase
ord
er d
ata
Tran
spo
rt
and
Invo
ice
dat
a
Pay
men
t Payment
Cash reportingPayment due
BPO irrevocable & conditional subject to matching of specified data
Bank Payment Obligation due (at sight or deferred)
ISO
20
02
2 T
SM
T r
eq
uir
ed
to
s
up
po
rt B
PO
tra
ns
ac
tio
ns
Ou
tsid
e s
co
pe
o
f B
PO
Ru
les
Baseline amendments
The baseline gathers the matching conditions using data extracted from trade documents
27
Baseline
Commercial data set
Transport data set
Insurance data set
Certificates data set
Purchase order
Insurancedocument
CertificatedocumentInvoice
Air Waybill (AWB), bill of lading (BOL),…
Matching conditions
Optional
MandatoryAllows payment risk
syndication by multiple obligor banks
Ordering Production Delivery Invoicing Payment & cash mgmt
Invoice Issuance
Purchase Order (PO)
TransportDocuments
Invoice ApprovalCertificates Payment
Goods Acceptance
Payment risk mitigationPre-shipment finance
Post-shipment finance
Earlypayment
Payment Processing
Transforming open account payments into SCF opportunities
The BPO will allow banks to extend risk mitigation and pre/post-shipment financing services on open account trade transactions
The BPO builds upon electronic data matching
Matching of contract data
Transfer of funds
Matching of data
Buyer Seller
1) Sign contract / raise PO
2) Enter PO data
3) Enter PO data
4) Match PO data & confirm
6) Match requested datasets & confirm
5) Enter invoice/transport data
8) Transfer funds
7) Debit buyer 9) Pay sellerFIN
TSU
Bank A Bank B
Buyer Seller
Bank A Bank B
TSU
Buyer Seller
Bank A Bank B
BPO is established
BPO is due
Transaction is settled
BPO flows for pre-shipment financeRecipient Bank finances Seller based on BPO
Seller Buyer
BPO Obligor
Bank
BPO Recipient
Bank
Carriers
1 Purchase order
3
Agree BPO based on PO data 2
Request BPO based on PO data
Trade Services
Utility (TSU)
BPO established
5Pre-shipment financing
Confirmed PO
4
BPO flows for post-shipment financeRecipient Bank finances Seller based on BPO
Seller Buyer
BPO Obligor
Bank
BPO Recipient
Bank
CarriersDelivery of goods
Transport & invoice data
56
Data match report
6 Data match report
10 Transfer funds at maturity
1 Purchase order
3
Agree BPO based on PO data
2 Request BPO based on PO data
4 Shipment
Invoice and shipping documents9
Trade Services
Utility (TSU)
Established BPO
BPO is due
8 Post-shipmentfinancing
Confirmed invoice
7
32
Agenda
• Introduction• SWIFT’s innovations in multi-banking
standards for trade and supply chain• ICC’s new Bank Payment Obligation
trade instrument and benefits for corporates
• The first BPO case studies and Live BPO banks
• The corporate perspective on BPO – Questions for a corporate to bankers
• How to get started on the ICC UR BPO rules and ISO 20022 standards
• SWIFT in the MENA Corporate Market• Closing remarks
33
Live BPO banksBanks with live transactions + 1 corporate case study
Live Banks Region Intra / Inter-bank transations
Locations of live corporate supply chains
Corporate case study
Bank of China APAC Intra in ChinaInter
CN Ito Yokado’s Chinese suppliers
Bank of Tokyo Mitsubishi UFJ
APAC IntraInter
JP, HK, CN, TW Ito Yokado
Korea Exchange Bank
APAC Inter KR Automotive industry (in development)
Standard Chartered Bank
EMEA Intra BE, OM BP ChemicalsOctal
Siam Commercial Bank
APAC Inter TH PTT Polymer Marketing Co (in development)
34
Banks ready for live use of BPOBanks ready to go live but with no live BPO transactions yet
• Bank al Etihad (Jordan)• Barclays• Byblos Bank (Lebanon)• Commercial Bank of Dubai• Commerzbank• Deutsche Bank • Hua Nan Bank (Taiwan)• J.P. Morgan• Kasikornbank (Thailand)• Siam Commercial Bank (Thailand)• Standard Bank of South Africa• Sumitomo Mitsui Banking Corporation (SMBC)
35
49 banks adopting BPO (update as at 3 January 2013)
Including 15 from the top20 Trade banks
BP Chemicals case SCB offers BPO to replace confirmed L/Cs
36
Challenges• About 50% of exposure on secured terms • Competitive commodities market requires a
secure and cheaper alternative to L/Cs• High processing and confirming costs (0.8%
of transaction value) • LCs process limits commercial possibilities
and weakens compliance under certain conditions.
Company profile• 2010 Revenues of USD 14 billion • Revenue created for approx. 50% in Asia• Trade account receivables of EUR 1.4
billion (consolidated receivables only)• More than 600 clients worldwide
Key benefits• Get paid on time and avoid judicial proceedings • Reduce complexity – removal of paper trail• Limit to relevant trade information only • Reduce cost by removing vetting activities and
presentation assistance• Improve customer offer by allowing for flexible
options• Improve speed of handling discrepancies • Reduce the risk of discrepancies• Reduce need for confirmation cost by being able
to tap larger pools. Free up banking lines.• Easy to exercise tool for liquidity• Easier access to banks to secure transactions • Possibility to spread the risk with multiple obligors• Avoid unnecessary paper flows.
Gains expected greater than $1m per year worldwidebut most of the upside lies in more marginal income
The Bank Payment Obligation
Live
Kabushiki-gaisha Itō Yōkadō ( 株式会社イトーヨーカ堂 ) BPO to replace L/C and D/P
37
Challenges• Sales decrease of 2.5% in 2011 due to lower consumer
spending: offset by cost reduction• Leverage group strengths to raise competitiveness • Direct overseas procurement for apparel • Import garments from suppliers in Hong-Kong and China
requires 2 weeks until fund settlement: goods are already sold
• Delay in reconciliation of Account Payables.
Company profile• Subsidiary of Seven & I Holdings operating convenience
stores, superstores, food supermarkets, department stores, food services, financial services, and IT/services
• One of the 5 hypermarkets (Superstore) in Japan, part of Seven & I Holdings Co
• 170+ stores in Japan, 10+ stores in China• Food (48.7%), Apparel (18.9%), Household goods
(14%), Tenants (17.3%)• 167 million USD revenue & 40,000 employees
Key benefitsBank of Tokyo-Mitsubishi UFJ• Branch network on TSU• Reduce costs of document handling • B/L from exporter to importer directly (70-80% of L/Cs)• Agreement template for local regulations
Importer: • Early payment to the exporter –financial support • Ability to negotiate better trade terms with exporter • Improve the reconciliation of the Account Payables by
using shipping data from TSU• Optimize working capital thanks to earlier settlement • Streamline operations• Flexible order of goods: increase business opportunities
Exporter: • Easier operation and earlier funds collection and FX risk
elimination: from 10 days to 3 days in average • No need to secure professional resources • Cut discrepancy fees • Improve visibility and traceability
Reduce process from 2 weeks to 3 days: pay suppliers in advance, reduce discrepancy and outsourcing costs, improve working capital management
Live
38
Agenda
• Introduction• SWIFT’s innovations in multi-banking
standards for trade and supply chain• ICC’s new Bbank Payment Obligation
trade instrument and benefits for corporates
• The first BPO case studies and Live BPO banks
• The corporate perspective on BPO – Questions for a corporate to bankers
• How to get started on the ICC UR BPO rules and ISO 20022 standards
• SWIFT in the MENA Corporate Market• Closing remarks
39
Questions on BPO to bankers
• What’s in it for buyers?
• What’s in it for sellers?
• Are banks ready?
• Which changes are required on the customer contracts?
• How should a corporate start? Is any technology required for corporate clients?
Value Proposition for Corporates
TSU – BPO initiative can radically reduce operational costs, mitigate risk and optimize working capital requirements along the supply chain.
Exporter (Seller) BenefitsExporter (Seller) Benefits
Mitigate payment risk associated with a move to Open Account (OA)
Improve Days Sales Outstanding (DSO) by driving better accuracy of data matching
Ability to collect receivables (lower DSO) by participating in payables discounting, receivables financing
Ability to receive cost effective funding from banking partners (pre-shipment, post-shipment, supply chain finance etc.)
Reducing liquidity risk by getting faster confirmation of payments from importer
Improved management of third party providers / intermediaries, performance against SLAs
Increased visibility to transaction flows
Importer ( Buyer) BenefitsImporter ( Buyer) Benefits
Enable the exporter to receive alternate sources of financing (pre-shipment, post shipment etc.)
Enable my trading partners to move to open account terms
Provide operational and technology infrastructure to facilitate data matching and compliance
Reduce cycle time to receive documentation compared to traditional documentary trade process
Reduce total cost of operation across Open Account and LC transactions
Better integration with existing technology and facilitation of electronic processes (higher STP)
Optimized credit utilization via selective usage of risk mitigation tools
19T H
E
P O
W E
R
O F
T
R A
D E
-
S
W I
F T
B
A S
E D
S
O L
U T
I O
N S
41
Agenda
• Introduction• SWIFT’s innovations in multi-banking
standards for trade and supply chain• ICC’s new Bank Payment Obligation
trade instrument and benefits for corporates
• The first BPO case studies and Live BPO banks
• The corporate perspective on BPO – Questions for a corporate to bankers
• How to get started on the ICC UR BPO rules and ISO 20022 standards
• SWIFT in the MENA Corporate Market• Closing remarks
42
Not yet a TSU member?
43
Readiness dashboard for banks adopting the BPO
Commercial readiness
•Business case•Market research•Data mining•New product definition•Legal•Accounting•Collateral•Sales training•Promote
Operational readiness
•“Proof of concept”•Training•Test plan•Operational procedures•Automation
Technical readiness
•Register to TSU•Set up test environment incl. TSU Interface•Define impact on front / middle / back office•Develop integration project
Business Operations Infrastructure
44
BPO training and testing
• Customized BPO business and operational training (onsite or webinar)
• SWIFT as test partner: a service provided by SWIFT HQ in Belgium.
• For TSU banks that do not have a counterparty test bank yet.
• 3 pre-defined scenarios with XML files
45
BPO starter pack
•Business training: BPO benefits and BPO-based services,…•Delivery: on-site or private webex•1 man-day
TSU Business Training/Workshop
•Operational training: messages (ISO20022), flows, matching,…•Delivery: on-site or private webex•2 man-days
TSU Operational Training/Workshop
•A full description of all BPO rules + examples•Delivery: on-site or private webex•2 man-days
TSU BPO rules Workshop
•SWIFT will provide test cases and will act as counterparty bank•2 man-days (to be adapted if bank specific scenario's)
BPO Testing via SWIFT’s Test Partner Service
•Direct access to a BPO/TSU expert •Time & material
Business & Technical Support
46
“à la carte” selection from a list of modules
•Organization, scheduling, and maintenance for your TSU implementation project
•Min. 10 man-days
Project management
•Analysis of current flows•Recommendations on new opportunities•Min 10 man-days
Building your business case for adopting BPO
•Project plan to adopt BPO: can include market research, data mining, new product definition, legal, accounting, etc•Min 10 man-days
Develop your BPO adoption plan
•TSU ordering•1 man-day
TSU Implementation Ordering
•Configuration of Alliance WebStation or Web Platform•Installation of TSU-Interface•2 man-days
TSU Implementation TSU-Interface Installation
47
“à la carte” selection from a list of modules
•How to use the ISO 20022 standards and the various fields. How to map existing formats to ISO 20022 standards. How to use the matching rules.•Min. 5 man-days
Ad-hoc implementation of ISO 20022 TSMT
messages with correspondent banks
•Business content and information flows on existing ISO 20022 TSMT messages, covering the possible communication between corporations and financial institutions•Min. 2 man-days
Ad-hoc implementation of ISO 20022 TSMT
messages with corporate clients
•Integration Services related to your SWIFT infrastructure through experienced SWIFT consultants•Functional Analysis to deliver an Integrator service proposal •Time & material
Implementation of Alliance Integrator in support of back-office integration
•To evaluate the benefits of using BPO in terms of process efficiency gains and payment delay risk mitigation in a multi-bank environment.•Min. 20 man-days per corporate
Ad-hoc corporate on-boarding on BPO
48
Agenda
• Introduction• SWIFT’s innovations in multi-banking
standards for trade and supply chain• ICC’s new Bbank Payment Obligation
trade instrument and benefits for corporates
• The first BPO case studies and Live BPO banks
• The corporate perspective on BPO – Questions for a corporate to bankers
• How to get started on the ICC UR BPO rules and ISO 20022 standards
• SWIFT in the MENA Corporate Market• Closing remarks
49
Corporates in MENA: 34SAUDI Year
Saudi Aramco 2005
Arab Petrolem Investments 2010
King Abdullah Petroleum Studies 2009
Gpt Special Projects Mangt. Ltd 2010
National Biscuits & Onfectionery 2010
Sahara Petrochemicals Company 2010
United Carton Industries Co 2011
Aramco Trading 2011
Saudi Chevron 2012
Saudi Ceramics 2012
National Food Industry 2012
SABIC 2012
SADARA 2012
SIPCHEM 2012
QATAR YearQatar Telecom 2006Qatar Foundation 2008Tasweeq 2009Qatar Gas 2010Rasgas 2010Qatar Petroleum 2012
KUWAIT YearKuwait Petroleum Corporation 2008Arab Fund For Economic And Social 2009Kuwait Airways 2010Independent Petroleum 2012Others: AE, BH, LB, LY, MA YearEastnets 2010Zain Bahrain B.S.C Closed 2009Mabruk Oil 2009Louis Dreyfus 2011Katota 2011General National Maritime 2011Ocp 2011Middle East Airlines 2012Octal Petrochemicals FZC 2012Al Jaber Group 2013
50
Agenda
• Introduction• SWIFT’s innovations in multi-banking
standards for trade and supply chain• ICC’s new Bbank Payment Obligation
trade instrument and benefits for corporates
• The first BPO case studies and Live BPO banks
• The corporate perspective on BPO – Questions for a corporate to bankers
• How to get started on the ICC UR BPO rules and ISO 20022 standards
• SWIFT in the MENA Corporate Market• Closing remarks
51
Why shall banks consider BPO?
To benefit from new sources of transaction banking revenue
To provide trade services in a cost effective wayand benefit from a higher margin
To stay in the game andrespond to market demand and trends
To be more competitive and innovative
As trade will grow by 2020 and beyond, banks need to get ready to mitigate payment risks and offer flexible financing in
a modern way
52
Thank youJoin our "Supply Chain on SWIFT" group on
Email us at [email protected] to register to our frequent information mailings
Join our frequent Webinars