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Treasury Technology

SWIFT, SAP Band Together for Efficiency

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April 12, 2018

SAP inks agreement to provide SWIFT connectivity to ERP clients

E-commerceIt’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, solution management treasury, 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, and 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 that 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 travels 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/4 HANA 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.

SWIFT also recently announced that it has extended its gpi or global payments innovation Tracker service to cover all payments, and not just gpi payments. The payment network launched gpi service early last year, improving the speed, transparency of fees, and end-to-end tracking of payment instructions. The tracking element, available since last May, has enabled banks to track their gpi payments in real-time, and now they can also track their the non-gpi payments they are transacting for corporate customers.

According to SWIFT, the Tracker should facilitate more accurate reconciliation of payments and invoices, optimize liquidity and reduce exposure to FX risk, while providing same-day processing of funds in beneficiaries’ time zones

“Until last year, it was impossible for banks to gather this information on behalf of their customers, but the introduction of the gpi Tracker has addressed this challenge head on, transforming cross-border payments and dramatically improving the service that banks can offer to their customers in a very cost-efficient way,” said Lars Sjögren, global head of transaction banking, Danske Bank.

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