By Dwight Cass
The SIBOS conference highlighted some important achievements, but market and regulatory uncertainty kept new blockbusters at bay.
The SWIFT annual conference on financial technology, SIBOS, took place in Toronto in the shadow of some of the most severe market gyrations since the 2008 financial crisis. Despite the uncertainty, SIBOS (Swift International Banking Operations Seminar) boasted some notable progress on the Electronic Bank Account Management (eBAM) project, as well as several lower-visibility initiatives. But most debate centered on the chaotic markets and their ramifications for ongoing SWIFT projects; there were no blockbuster debuts this year.
Standards Focused
As expected the official spotlight was on data standards, information sharing and related projects. But much of the chatter in the hallways focused on Greece, the European bank conundrum and rumors about the size of the SIFI (Systematically Important Financial Institution) capital charge, all of which put something of a damper on the meeting. “I may be able to communicate with my client in record time, all STP whiz-bang,” said one banker in attendance. “But that’s no help if all I’m saying is no.”
And, as troops of regulators took to their soapboxes to finger-wag about lax regulatory standards, attendees complained about how expensive regs compliance was becoming and how difficult it is to plan in the absence of detailed guidance. To further stir the pot, the European Systemic Risk Board (ESRB) issued a statement during the conference warning of serious systemic risk issues due to Eurozone interconnectedness, which causes the risk of contagion to rise—not the most welcome message at a financial messaging technology conference.
One topic about which corporate anxiety ran high was the Single Euro Payments Area (SEPA). The migration deadline of 2014 is looking increasingly ambitious given the lack of official guidance and growing doubts about the future of the euro and the Eurozone in light of the PIIGS debt crisis. On the bank side, the amount of regulatory change being considered and/or implemented has execs scrambling to allocate scarce resources among compliance projects, leaving little attention span left for things like SEPA.
Another issue that set bankers grumbling, although it had only indirect consequences for corporate treasurers, was the delay in implementing the Target 2 Securities (T2S), the European Central Bank’s project to standardize securities settlement throughout the Eurozone.
eBAM Pilots Forward
Perhaps the most closely watched development, and one on which a number of other projects waited, was the successful completion of SWIFT’s eBAM Central Utility pilot project. The “E-CU” project was designed to address concerns about different interpretations of bank messages in different jurisdictions.
The project involved for banks and seven corporates stress testing the system against some 100 different scenarios. The E-CU system is meant to ensure all eBAM messages conform to agreed-upon standards in whatever jurisdiction they’re being sent. SWIFT said it would decide by the end of the year whether to go live with the E-CU system.
A number of financial institutions had waited until the pilot project’s completion to officially roll out their eBAM offerings, or to expand them substantially. Bank of America unveiled a new eBAM service as part of its CashPro Connect system. Citi also announced an expansion of its eBAM service. SWIFT announced that it chose SunGard’s AvantGard eBAM system and its EcoSystem Communication Hub for the E-CU project.
XML First for MSFT
Also at SIBOS, Microsoft announced that it has become the first corporate treasury to implement Extensible Markup Language (XML) standard ISO 20022, camt.052 and camt.053 version two (camt refers to cash management), the new international standard for cash management financial messaging.
Microsoft said it implemented this solution with Bank of America Merrill Lynch and Citi to provide a common language for Microsoft to receive electronic bank statements from its global banking providers.
The International Organization for Standardization (ISO) 20022 Common Global Implementation (CGI) is a collaborative effort driven by Microsoft, Bank of America Merrill Lynch, Citi, and SWIFT to define a standard implementation of ISO 20022 XML messages for transaction exchange over the SWIFT network—setting a higher standard regarding how corporate treasuries connect to banks.
“The use of the common standard opens up tremendous benefits for all parties involved,” said George Zinn, corporate vice president and treasurer at Microsoft, in a press release.
“For example,” Mr. Zinn said, “the reduction in current shortcomings, such as maintaining multiple customized pipes; fewer processing errors thanks to consistent formatting standards; and the flexibility to support extended, more complex messages versus the fixed format of yesterday, means that both my team and our banking partners are spending less time on maintenance and more on higher value-add analysis, leading to higher impact and deeper relationships.”
The ISO 20022 standard was developed under the auspices of the ISO in conjunction with several other international and country standards organizations, including SWIFT. ISO 20022 XML messages cover a range of business processes, like payments, foreign exchange, trade, securities and invoicing.