Corporate treasury departments have a massive connectivity problem. They have to communicate and deal internally with almost every department and operating unit within the company or the group, and externally with many different banks, financial and other service providers.
Corporate Treasury Department Connectivity
Source: J&W Associates Copyright© 2011
The dream of all corporate treasurers is fully automated straight through connectivity both internally and externally. There are now services and solutions that can deliver this.
Main Connectivity Options
For a corporate treasury department with a some form of Treasury Management System (TMS), there are five main types of connectivity solution:
- Use the bank electronic banking services which range from simple Internet connections to advanced host-to-host services
- SWIFT corporate services
- general business message connectivity and middleware systems and services which range from simple host-to-host services to 'Any-to-Any' solutions
- connectivity modules in the cash and treasury management systems which connect to banks and other financial institutions, and internally to other departments and operating units
- bank data aggregation and delivery services.
The Standards Problem
Although there are only two main bank account balance and transaction reporting, and payment message standards: the USA's Bank Administration Institute (BAI) and the global SWIFT message standards, these are just two of many standards which include the many different national standards used by banks who are not members of SWIFT. There is another major problem, cash management banks around the world often use the same fields in these standards slightly differently.
There are also different communication standards used by the internal systems and the external service providers. Communicating with all the banks and service providers that corporate treasury departments use is not easy.
SWIFT is being promoted as the ultimate bank agnostic solution for most corporate treasury departments, but SWIFT connectivity can be unnecessarily expensive and restrictive. It is an obvious choice for payment instructions requiring indemnification guarantees for many companies, but cash management reporting reporting and general corporate notifications do not require this level of security. In addition, SWIFT cannot provide connectivity to all banks, let alone to all companies in the supply chain. Global networks such as British Telecommunications' MSM, with 99% plus reliability of connection, costs per message much lower, and easier setup costs can be considerably cheaper. For most companies a multi-pronged approach is more effective.