That Ol’ Share-of-Wallet Issue

NeuGroup’s Assistant Treasurers’ Leadership Group tackles managing banks and the corporate wallet.

stock market ticker62

Libor to SOFR Switch Will Be Challenging

Response to CME’s SOFR futures contracts may provide early signal.

NGI Skyline

Get the Latest Insights

Sign up to have an eye in the room where it happens. Connect to NeuGroup Insights 

Treasury Technology

SWIFT, SAP Band Together for Efficiency, Speed

Share |
April 28, 2018

SAP inks agreement to provide SWIFT connectivity to ERP clients. 

It’s a melding of the acronyms. SWIFT recently announced it has reached an agreement with SAP to allow corporate clients of the business-software giant’s S/4HANA ERP offering to directly access the global messaging service’s vast network of banks, without intermediaries or the operational challenges of an in-house solution.

“SWIFT has provided a solution that sits in the SAP environment, so customers won’t have to go through a service provider for a connectivity solution, and they won’t have to buy SWIFT hardware to do this,” said Christian Mnich, senior director for solution management treasury at SAP.

Depending on the complexity of the corporate customer, connecting to SWIFT directly or via a service bureau can take between three and 12 months. Under the agreement with SAP, its S/4HANA customers essentially have immediate access to the messaging network to connect with more than 11,000 banks worldwide. Companies can choose between an embedded connection to the SWIFT network or bank connectivity through their usual banking partners.

In order to use the new SAP solution, corporates must already belong to SWIFT or go through the process of joining the network. Once members, however, their on-premise or cloud-based ERP system is connected via the SAP multi-bank connectivity application to SAP’s cloud-based platform, which runs the SWIFT interface. SAP maintains that software, so corporates using it will encounter minimal operational challenges and a high level of security.

Mr. Mnich said SAP research suggests that its SWIFT connectivity solution should be less costly than existing solutions, although the service comprises only basic connectivity.

Marc Delbaere, head of corporate and supply chain at SWIFT, said SWIFT service bureaus acting as intermediaries between corporates and SWIFT typically provide additional services, such as anti-money laundering checks and statement segregation.

“Service bureaus are effectively competing for business and typically charge for services on top of pure SWIFT connectivity, which is what we’re packaging here.” Mr. Delbaere said. “It’s up to the corporate to decide whether additional services are useful.”

SAP’s treasury management system (TMS) sits inside its ERP, which contains a module that generates the corporate customer’s payment files and other treasury output that travel via SWIFT to the appropriate banks. Some large multinationals may have ERPs in different parts of their business from other providers, perhaps resulting from acquisitions. However, if such a company is running a central in-house bank over the SAP ERP, the other ERP systems can connect to it to take advantage of its SWIFT connectivity. Mr. Mnich said companies such as Swiss pharmaceutical Roche are already taking that approach today through a service bureau, and the new S/4HANA solution will enable such connectivity through the cloud back-end.

“This is becoming very common, and we’re seeing a big portion of clients evaluating bringing the treasury function back into the ERP,” Mr. Mnich said.

comments powered by Disqus