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Swift standardises payments end-to-end to enhance corporate experience - Industry roundup: 22 May

Swift standardises payments end-to-end to help banks enhance corporate experience

Swift has set out plans to help financial institutions streamline the cross-border payments experience for their corporate customers, by extending ISO 20022 across the entire payment chain and giving banks ready-to-use, white-labelled tracking services that can be activated for customers at the click of a button.

Swift will enable financial institutions to capture rich data at source by standardising payments end-to-end with ISO 20022. Swift will also help banks offer their customers ready-made and white-labelled payment tracking services by API or messaging channel, giving complete transparency on a payment’s status and confirmation of its receipt. Currently, corporate payments are complicated by competing standards and proprietary formats. Multi-banked corporates face a fragmented landscape as they interact with many banking providers with varying features and services.

Swift’s plan was developed with a working group of 25 cash management banks and 20 corporates, including Roche and Saudi Aramco. The goal is to introduce a universal standard that maximises the benefit of ISO 20022’s richer, more structured data, facilitating automation and reconciliation and drastically reducing integration costs.

The standardisation of payment tracking data will enable financial institutions to easily offer the same experience across their corporate customer base, regardless of their own geographical reach or local investment. Currently, where multi-banked corporates receive tracking information, it comes through different channels and in different formats.

The global pharmaceutical company Roche has successfully implemented Swift’s new corporate API channel with a key banking partner. This enables their direct access to tracking information for payments they send and receive.

“Swift’s new approach undoubtedly offers significant benefits from a corporate client perspective,” commented Stefan Windisch, Global Head, InHouse Bank at Roche. “It enables us to enhance and accelerate our payments analysis, giving us a comprehensive overview at pace. Having direct API access to Swift’s payment tracking system will provide us with more transparency and strengthen our ability to analyse overall payment performance. It will allow us to refine our instructions, better identify inefficiencies, and minimise erosion of value in cross-border payments.”

Many members of the cooperative’s working group are implementing and piloting the new capabilities, and Swift intends to extend them to its wider community later this year.


UK headline inflations nears 2% target

The UK Consumer Prices Index (CPI) rose by 2.3% in the 12 months to April 2024, down from 3.2% in the 12 months to March, according to new data from the Office for National Statistics (ONS). This is well below its recent peak of 11.1% in October 2022. ONS indicative modelled consumer price inflation estimates suggest that the October 2022 peak was the highest rate in over 40 years. The annual rate in April 2024 was the lowest since July 2021, when it was 2.0%.

The easing in the annual rate between March and April 2024 resulted from prices rising by 0.3% on the month, compared with a rise of 1.2% a year earlier. Core CPI remained somewhat stickier than the headline inflation measure, rising by 3.9% in the year to April 2024, down from 4.2% in the year to March 2024.

The easing in the annual inflation rates in April 2024 principally reflected price changes in the housing and household services division, particularly for gas and electricity. Gas prices fell by 37.5% on the year, compared with a fall of 26.5% in the year to March 2024, while electricity prices fell by 21.0%, compared with 13.0% in March.

There were also large downward effects from alcohol and tobacco, food and non-alcoholic beverages, recreation and culture, and communication. Restaurants and hotels, and miscellaneous goods and services provided small, partially offsetting, upward contributions. 

Commenting on falling inflation stimulating the housing market, Daniel Austin, CEO and co-founder at ASK Partners, said: “This fall in inflation is significant. It takes us very near to the Bank of England's target of 2%, which means we might see an interest rate cut as early as next month. This potential rate cut is a crucial development, as lower interest rates typically reduce the cost of borrowing.”

Shane O’Neill, Head of Head of Interest Rate Trading at Validus Risk Management, offered a different perspective: “More worrying for [the BoE] will be the persistent core figures. Services inflation remains at 5.9%, hardly falling at all this month, and recent labour market data showed that wage inflation has now been over 6% since September 2022. Add to this the stronger-than-expected growth figures recently reported and unemployment levels close to all-time lows, and it starts to become clear why the BoE may be wise to ignore IMF advice to cut 2 or 3 times this year. Today’s figures confirm our fears that markets continue to be over-exuberant when it comes to pricing in cuts for global central banks - risks to the upside remain in our view.”


Factoring industry showed resilient growth trajectory in 2023

Last year, the world factoring industry saw a notable 3.6% increase in volume compared to 2022, according to an FCI market survey. This follows two consecutive years of double-digit growth, bringing the volume to €3,791bn, up from €3,659bn in the previous year. Although the growth rate has normalised compared to the volatility of recent years, it reflects a return to pre-pandemic stability.

Factoring has shown strength over the past two decades, with a compounded annual growth rate of 8.3%. Both domestic and international factoring have grown significantly, underscoring the industry's ability to support SMEs and corporates by providing liquidity, protecting against customer bankruptcies, and offering global collection support.

Europe remains the largest contributor to factoring globally, accounting for approximately 68% of the global volume with €2,555bn, showing an overall increase of 2.3%. Key markets include France (+1.2%), United Kingdom (+2.7%), Germany (+3.1%), Italy (+0.9%), and Spain (+5%). Exceptional growth was seen in Hungary (+14.7%), North Macedonia (+52%), Romania (+10.4%), Serbia (+24.3%), Slovenia (+14.2%), and Turkey (+10.6%). Some markets did experience declines, however, including Armenia (-42.1%), Denmark (-23.6%), Georgia (-26.3%), Latvia (-12.8%), Moldova (-60%), and Norway (-15.3%).

The Asia Pacific region represents 25% of global volume, with €942bn, marking a 6.9% increase. Greater China region saw mixed results: Mainland China (+10%), Hong Kong (-20.2%), and Taiwan (-14%). Japan rebounded with a 5.8% increase to €60bn, while India grew by 10.2% to €17.3bn. Singapore posted the highest regional increase at 36.4%, reaching €60bn.

The Americas saw a 4.1% increase, representing 6% of the global volume at €237bn. South and Central America, with a 3% share at €144bn, grew by 16.4%. Leading markets include Chile (+2.4%), Brazil (+16%), and Mexico (+3.9%). North America, representing close to 3% of the market at €92.8bn, experienced a decline of 10.7%.

Africa accounts for 1.2% of the global volume at €47bn, with a growth rate of 13.5%. South Africa, the dominant market, saw a 14% increase, reflecting the continent’s strong growth trajectory. The Middle East, with 0.3% of the global volume, remained flat, largely due to data collection challenges.


Deloitte and Basware form e-invoicing alliance 

Deloitte and Basware have announced an alliance to enhance touchless invoice processing for global customers. The partnership will combine accounts payable (AP) expertise to accelerate automation and finance transformation.

E-invoicing is increasingly taking priority within CFO departments alongside e-reporting requirements from local governments or tax authorities. Accounting teams must comply with specific legislation when sending and receiving electronic invoices. The new legislation will replace paper processes and reporting as the EU and other regions trend towards a harmonised approach and centralised government databases to compare reported data.

The new alliance will focus on key challenges, opportunities, and regulatory requirements in the finance domain. It will combine Basware’s experience in AP automation with Deloitte’s access to its network of finance, procurement, and tax experts. The partnership is also designed to provide enterprises with the latest trends and best practices around finance transformation through the integration of AP automation services.

Finance teams in large enterprises that process and pay thousands of invoices per week often face challenges around late payments to suppliers, duplicate invoices and even fraudulent payments. As a result, according to an Ardent Partners’ Performance Benchmark, only 32% of invoices on average pass through finance teams without requiring manual intervention, compared to 89% through Basware’s AP automation platform. A completely touchless invoice process eliminates the need for AP staff to spend extensive time matching and approving invoices, freeing them up to deliver operational and financial insights.

The alliance between Deloitte and Basware will work on developing a joint go-to-market strategy to reach a wider audience, creating co-innovation opportunities to address evolving legislative e-invoicing requirements, and building a pool of certified Deloitte consultants trained on Basware solutions for project delivery.


IFC and Ecobank to support trade finance in seven African countries

To promote trade and foster economic growth in Africa, IFC has announced trade finance facilities with seven Ecobank Transnational Incorporated (ETI) subsidiaries operating in Burkina Faso, Cameroon, Cote d’Ivoire, Ghana, Malawi, Mali, and Togo.

IFC’s US$140m trade finance guarantee facility aims to help strengthen the participating affiliates’ trade finance operations and leverage ETI’s wide-spanning footprint in Africa to assist in developing new trade partnerships for businesses in these countries. 

Strengthening Africa’s trade lines should help reduce the continent’s reliance on imports and contribute to economic development. The trade line is part of IFC’s US$1bn African Trade and Supply Chain Finance Program (ATRI), which is supporting Africa's regional trade development. 

Under this partnership, IFC will also provide advisory services to Ecobank and its subsidiaries, focusing on helping the banks boost their support for small and medium-sized enterprises (SMEs) and increase access to finance for businesses owned or run by women.


42% of companies ready to adopt digital ID

Digital identity is considered a way to improve the efficiency and security of services, reduce fraud, and enhance access to public services, ensuring that they are delivered quickly and to the right people. A digital ID is an online representation of an individual that contains personal information, credentials, and attributes used to establish and authenticate identity in digital spaces. As such, digital identity is already a well-recognised concept in different sectors.

According to a Forrester Consulting study commissioned by Regula, 81% of large and enterprise-level companies from the aviation, banking, government, IT, and telecom sectors have at least a basic awareness of this technology, with almost half possessing a thorough understanding. Moreover, some countries and sectors, primarily those with advanced digital infrastructures and regulatory frameworks, as well as high customer online interaction frequencies, have already made a leap towards its adoption.

Currently, 42% of organisations worldwide are actively integrating digital ID technologies into their systems, and 31% are in the early stages of implementation. Another 17% of respondents are now developing a strategic plan to begin this transformation.

The United Arab Emirates shows higher integration rates, where the majority of businesses (54%) have already moved to active integration. At the same time, places with stricter regulations, such as the US and Europe, are taking a more cautious approach, with only 37% and 39% of companies respectively claiming to be at the integration stage.


Crown Agents Bank to provide FX payments to emerging markets via AbbeyCross platform

Crown Agents Bank, a UK-regulated bank specialising in FX and cross-border payments for emerging markets, has announced a strategic partnership with AbbeyCross to provide FX payments to emerging markets via its ABX platform. 

Crown Agents Bank handles cross-border payments in over 100 currencies across more than 700 currency pairs. Through the ABX platform, the bank will provide AbbeyCross users with emerging market FX (EM FX) rates, access to its global network and cross-border payments solutions designed for fast and efficient settlement.

The ABX Platform provides direct access to multiple payment providers for competitive, payment-relevant FX rates in emerging market currencies. Through a single integration, wholesale market participants, including commercial banks, money services businesses (MSBs), NGOs and charitable trusts, can access transparent and relevant pricing information for EM currencies. Users will be able to compare multiple rates and service providers and in turn, payments providers will be able to reach a much wider and deeper network of potential customers.


A new reason to clear derivatives: workflow automation

As buy-side firms use artificial intelligence and other digital tools to remake trading infrastructure, the drive to automate operations is causing many firms to take a second look at clearing more of their derivatives trades, according to Coalition Greenwich. This can create new workflow efficiencies.

Regulators have been pushing derivatives trading away from bilateral transactions and toward central clearing since at least 2008 when credit default swaps played a leading role in the global financial crisis. Since then, clearing has permeated the most-liquid corners of the swaps market, such as vanilla interest-rate and credit indices, and is now taking root in the long tail of more complex instrument types.

Tight mandates on clearing have moved upwards of 80% of interest-rate derivatives trades to central clearing, yet clearing has not gained as much ground in security-based credit derivatives. As of the end of Q1 2024, however, almost 50% of this instrument was cleared.

Some of that rapid clearing uptake can be explained by continued regulatory pressure. Provisions in the Basel III endgame and the final two phases of the Uncleared Margin Rules (UMR) encourage clearing via punitive capital and margin regimes for uncleared swaps. However, data from Coalition Greenwich shows that buy-side market participants increasingly see clearing as a tool to enhance operational efficiency.

“Most buy-side firms have a decade of experience with clearing swaps,” says Stephen Bruel, Senior Analyst in the Market Structure & Technology group at Coalition Greenwich and author of The Buy Side’s Views on Derivatives Clearing. “And while clearing derivatives isn’t an operational panacea, it can improve workflow efficiency in many cases. That’s a critical factor at a time when investors are working to upgrade platforms and rein in costs.”

More than 80% of the buy-side market participants in a recent Coalition Greenwich study cite increased operational efficiency as an important reason to use clearing. “Buy-side firms now see efficiencies associated with clearing as important, making it a key driver to clear - even over factors like reducing counterparty risk and lowering margin costs,” added Bruel.


AmEx and Emburse deliver integrated expense management solution 

American Express and Emburse are partnering to offer end-to-end virtual card issuance, card reconciliation, and expense management in Emburse Spend, an expense management solution, to American Express customers.

AmEx customers can connect their card programmes to Emburse Spend. They can enrol their eligible commercial American Express card to issue virtual Cards on demand within the platform. Expenses from cards and virtual cards will automatically enter the accounting system for easy reconciliation. The solution is offered to eligible American Express Business, Corporate, or Corporate Purchasing Card customers. 

The integration pre-codes every eligible American Express transaction with important expense information (category codes, custom expense fields), making expense submissions and approvals far easier. Virtual cards help businesses maintain control over budgets and securely manage recurring expenses and one-off vendor payments through unique tokens that have pre-set parameters for budget, expiration, and per-transaction limits.

This integration brings transactions from eligible AmEx cards, both physical and virtual,, and other payment methods into Emburse Spend, so finance leaders can better understand and optimise their spending across payment methods and minimise out-of-policy transactions.


Capchase secures €105m for flexible financing of European SaaS firms

Capchase has announced it has secured a €105m credit facility warehouse led by Deutsche Bank. This new financing contributes to the more than US$1bn in combined debt and equity financing it has received since its founding in 2020.

The financing from Deutsche Bank comes at a crucial time. New data from Capchase reveals that non-dilutive funding activity for European startups surged by nearly 50% in 2023 compared to 2022, despite venture capital funding in the region declining by more than 45% during the same period. The new financial backing should allow Capchase to expand its support for UK and European SaaS businesses through Capchase Grow, which offers eligible companies access to non-dilutive financing, fostering business growth without sacrificing equity.

“Over the past year, there has been a growing interest among European startups in non-dilutive funding as founders seek alternative ways to enhance their cash flow amidst increasingly challenging conditions for securing venture capital,” said Miguel Fernandez, co-founder and CEO of Capchase. “With the latest €105m of debt financing, we can continue to serve as a key financial partner to UK and European SaaS businesses, supporting their growth in the current economic climate.”


Lendscape launches data-driven invoice finance solution 

Lendscape has launched its CONNECT solution, designed to widen access to invoice finance by removing the traditional barriers for lenders and their clients. Lendscape CONNECT brings together open accounting technology and shadow ledger functionality to digitalise and automate invoice finance operations for banks and lenders, which may drive down costs and provide improved risk control. 

The firm says the solution can eliminate month-end reconciliations, saving up to around four hours per client per month. Automated synchronisation between the lender’s view of the sales ledger and their clients’ should eliminate the need for month-end reconciliations and manual disapprovals.

Lendscape CONNECT offers instant access to live financial data from clients’ accounting packages. The firm says this provides the day-to-day simplicity of invoice discounting with the risk controls usually associated with factoring.

Other features include live data access, automated disapproval calculations, and seamless integration with various third-party services for enhanced reporting and risk management.

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