1. The Bank Payment Obligation
Update on the BPO project
Dan Taylor and André Casterman
Co-chairs of ICC Bank Payment Obligation Project
Wednesday October 26th 2011
Beijing, China

2. Objectives of this session
• To update the Commission on the BPO project
• To demonstrate how the new BPO rules complement
the existing ICC rules
• To demonstrate how banks are taking advantage of a
new instrument in response to corporate needs
• To show BPO in action from a technology perspective
2

3. Speakers today
• Dan Taylor, Vice-Chair, ICC Banking Commission
• André Casterman, Head of Trade and Supply Chain, SWIFT
• David Hennah, Senior Product Manager, SWIFT
• David Meynell, Director, FI Product Management, Deutsche Bank
• Hiroyuki Watanabe, Hong Kong Trade Business Office, Trade
Business Division, The Bank of Tokyo-Mitsubishi UFJ, Ltd
• Xiong Yuanmeng, Global Trade Services Department, Bank of
China
• Michael Quinn, Managing Director, J.P. Morgan
• Olivier Berthier, Global Solutions Director, Misys
3

4. Agenda
• SWIFT / ICC Cooperation on BPO
– Dan Taylor, ICC Banking Commission and André Casterman, SWIFT
• BPO features and benefits
– David Hennah, Senior Product Manager, SWIFT
• BPO rules and ISO 20022 standards
– David Meynell, Director, FI Product Management, Deutsche Bank
• BPO-based supply chain finance services
– Hiroyuki Watanabe, Hong Kong Trade Business Office, Trade
Business Division, The Bank of Tokyo-Mitsubishi UFJ, Ltd
– Xiong Yuanmeng, Global Trade Services Department, Bank of China
– Michael Quinn, Managing Director, J.P. Morgan
• Technology solutions combining LC and BPO
– Olivier Berthier, Global Solutions Director, Misys
4

5. Cooperation Agreement
Both the ICC and SWIFT believe that by working
together and leveraging their respective positions
across the trade finance community, the BPO will have
an important role to play in supporting the
development of international trade in the 21st century
in addressing cost pressures in the face of increased
automation and changes in the regulatory environment.
5

6. Industry standards
… are those developed by international standardisation bodies
• Trade Finance instruments (UCP, URDG, …)
• Supply Chain Finance instrument (BPO)
• MT standards for LCs and Guarantees
• ISO 20022 registration authority
• ISO 9362 BIC registration authority, …
• ISO 20022 Financial Industry standards
• ISO 9362 Business Identifier Code (BIC), …
Industry standards are
technology-neutral and industry-owned
6

7. BPO combines the best of both worlds
Contract Contract Contract
Documents Documents
Buyer Seller Buyer Seller Buyer Seller
Documents
Application
Documents
Letter of Bank Open
Advice
Data
Data
Credit Payment Account
Obligation
Documents
Data
Issuance BPO BPO
LC Issuing LC Advising Obligor Recipient Buyer’s Seller’s
Bank Bank Bank Bank Bank Bank
Payment Payment Payment
Bank services based on paper Bank services based on Bank services limited to
document processing electronic trade data exchange payment processing
Array of risk, financing and processing services to address
both cash management and trade finance needs
7

8. Composition of ICC BPO Group
Corporates
Banks
8

9. ICC BPO Working Group (1/2)
Objectives Activities Timeline
To establish
the BPO as Legal Target
a technology
Education publication date:
neutral
Commercialisation Q1 2013
industry-wide
instrument
9

10. ICC BPO Working Group (2/2)
To establish the BPO as a new industry-wide and
technology neutral instrument owned by the ICC
Why How
• To complement the existing • New rules, independent of existing
instruments (UCP, URDG, ones (UCP, e-UCP, …)
ISBP) • No impact on LC and Demand
• To take advantage of increased Guarantee rules and business which
digitilization of trade data (PO, allows for faster establishment of
transport, invoice, certificates) rules
• To help banks address risk, • Use of public domain and
financing and processing technology-independent standards:
needs of their corporate ISO 20022 linking trade with
customers that UCP and URDG payments and cash management
cannot address, targeting mainly processes
open account transactions. • Technology decisions remain in
competitive space.
10

11. Timetable and tentative deadlines
• Ongoing from July 2011 – Draft ICC Rules
• October 2011 – Provide in-depth session on the use of a bank
payment obligation, ISO 20022 message standards and bank
presentations to the Banking Commission meeting in Beijing
• December 2011 – Create a Consulting group to provide input
and review draft text of rules
• Spring 2012 Banking Commission Meeting – present outline
of the drafting process and progress made to date
• Fall 2012 – Present proposed draft of the rules and review with
the contents with the members of the Banking Commission
• Spring 2013 – Depending on the status of the rules at this point
the rules could be presented to the Commission for approval.
11

12. Agenda
• SWIFT / ICC Cooperation on BPO
– Dan Taylor, ICC Banking Commission and André Casterman, SWIFT
• BPO features and benefits
– David Hennah, Senior Product Manager, SWIFT
• BPO rules and ISO 20022 standards
– David Meynell, Director, FI Product Management, Deutsche Bank
• BPO-based supply chain finance services
– Hiroyuki Watanabe, Hong Kong Trade Business Office, Trade
Business Division, The Bank of Tokyo-Mitsubishi UFJ, Ltd
– Xiong Yuanmeng, Global Trade Services Department, Bank of China
– Michael Quinn, Managing Director, J.P. Morgan
• Technology solutions combining LC and BPO
– Olivier Berthier, Global Solutions Director, Misys
12

13. What is a Bank Payment Obligation (BPO)?
A BPO is an irrevocable undertaking given
by a bank to another bank that payment
will be made on a specified date after a
successful electronic matching of data
according to a defined set of rules.
Therefore, a BPO offers:
- An assurance of payment
- Risk mitigation for all parties
- Possible use as collateral for finance
The key to offering finance and payment services is the ability for a
bank to give an obligation to another bank which can be turned into an
undertaking to the seller/exporter.
13

14. BPO features & benefits
End-to-end structured ISO 20022 messaging
Electronic matching
based on
ISO 20022
ISO 20022 ICC BPO rulebook ISO 20022
or proprietary or proprietary
1 2 3
Matching
Buyer’s Platform Seller's
Buyer Seller
bank(s) (e.g. TSU) bank
Channel
Paper, FileAct, web
or direct line
Electronic matching based
on ISO 20022 messaging
and ICC BPO rules
Open standardised exchange and matching of
structured data 14

15. BPO features & benefits
Managing the cash conversion cycle
DSO DIO
Sales
management Product
Cash development
management Contract Distribution
management Accounts payable Forecasting
Cash
collection REVENUE Sales order DPO Warehousing SUPPLY CHAIN
processing Order
MANAGEMENT MANAGEMENT processing
Billing
Credit Production
check Production
Order scheduling
fulfilment Cash Raw materials
Payment management planning
issuance
Budgeting &
forecasting
Invoice
From Order to Cash processing EXPENDITURE Selecting & From Production to Distribution
MANAGEMENT negotiating
Discrepancy
management Ordering &
Receiving & contracting
Evaluating
From Purchase to Pay
Optimising working capital/minimising operational risk & cost 15

16. BPO features & benefits
Supply Chain Management & Financing Trigger Points
Purchase Order Finance
BPO
Purchase Order Agreed
Documents
BUYER Trade Services Utility
Data Matching Application SELLER
Goods
Due date Payment warehoused
Documents Documents Documents
approved presented issued
Document & data management, matching & reconciliation processes including discrepancy
management and dispute resolution
Extended Approved Post Shipment Receivables Warehouse
Payables Finance Purchase Finance
BPOPayables BPO BPO BPO BPO
Finance Finance
Source: adapted from BAFT-IFSA Open Account Product Definitions

17. Case 1: Buyer mitigates the supplier default risk
Buyer supports purchase order finance for the supplier
I want my business-
critical supplier to increase I want to access cost-
2 its financial resilience and effective financing to
will confirm the purchase 1 cover my working
order capital expenditure
BPO
TSU
Buyer BPO Obligor BPO Recipient Seller
Bank Bank
I will guarantee the I will offer purchase
payment (BPO) to the order finance to my
3 seller’s bank upon the 4 customer based on
confirmed purchase order the BPO
Financing services 17

18. Case 2: Supplier mitigates liquidity risk
Supplier gets post-shipment finance
I want my business-
critical supplier to
2 increase its financial
resilience and will
confirm the transport or I want to be paid as
commercial data early as possible
1 after the shipment to
the buyer
BPO
TSU
Buyer BPO Obligor BPO Recipient Seller
Bank Bank
I will guarantee the payment I will offer post-shipment
(BPO) to the seller’s bank 4 finance to my customer
3 based on the submission of based on the BPO issued by
compliant transport or the buyer’s bank
commercial data
Financing services 18

19. Multi-bank BPO
Trade Asset Distribution Model e.g. ‘club’ structure’?
Importer informs lead obligor
Importer Exporter
bank of investor bank shares
Lead BPO Beneficiary
obligor bank bank
e.g. Importer informs the ‘club’
of investor banks of their pro
rata share in the BPO
Risk participation
Obligor bank Obligor bank Obligor bank Obligor bank

20. Agenda
• SWIFT / ICC Cooperation on BPO
– Dan Taylor, ICC Banking Commission and André Casterman, SWIFT
• BPO features and benefits
– David Hennah, Senior Product Manager, SWIFT
• BPO rules and ISO 20022 standards
– David Meynell, Director, FI Product Management, Deutsche Bank
• BPO-based supply chain finance services
– Hiroyuki Watanabe, Hong Kong Trade Business Office, Trade
Business Division, The Bank of Tokyo-Mitsubishi UFJ, Ltd
– Xiong Yuanmeng, Global Trade Services Department, Bank of China
– Michael Quinn, Managing Director, J.P. Morgan
• Technology solutions combining LC and BPO
– Olivier Berthier, Global Solutions Director, Misys
20

21. BPO rules and ISO 20022 standards
26 October 2011
David Meynell

22. Rules & Standards
 Joint initiative ICC / SWIFT to develop ICC Rules
• ICC noted that there was an increased demand for implementation of
ICC rules governing trade finance – Survey 2011
 Modify existing BPO rules to be independent of TSU
• Neutrality
 Inter-bank Transaction Matching Application implementing
ISO 20022 TSMT Matching Rules
 Banks involved in common transactions must be connected
to the same Transaction Matching Application
 Phase 1: Focus on B2B
 Phase 2: Incorporate Corporate interaction: buyer and obligor
bank; seller and recipient bank
 Compile all possible text sources for review and consolidation
David Meynell

23. Primary Sources
 UCP
 eUCP
 TSU Guidelines & Service Description
• Several re-usable definitions
 BPO Rulebook
• Guidance on existing roles and responsibilities
ISO 20022
• International Organisation for Standardisation provides the financial industry
with a common platform for the development of messages and allows
users to define message sets according to an internationally agreed
approach using agreed business standards – refer ISO website
 Other ICC Rules
• As applicable
 Market Practice
• To the extent that it exists
David Meynell

24. UCP 600 - examples
 Application
 Definitions
 Interpretations
 Obligation (Credit) v. sales and contracts
 Data (Documents) v. goods, services or performance
 Undertaking
 Amendments
 Disclaimers
 Force Majeure
David Meynell

25. eUCP Version 1.1 - examples
 Scope
 Definitions
 Format
 Notice of refusal (mismatch)
David Meynell

26. Tentative deadlines for BPO Working Group
Ongoing from July 2011 – Draft ICC Rules
October 2011 – Provide in-depth session on the use of a bank
payment obligation, ISO 20022 message standards and bank
presentations to the Banking Commission meeting in Beijing
December 2011 – Create a Consulting group to provide input and
review draft text of rules
Spring 2012 Banking Commission Meeting – present outline of the
drafting process and progress made to date
Fall 2012 – Present proposed draft of the rules and review with the
contents with the members of the Banking Commission
Spring 2013 – Depending on the status of the rules at this point the
rules could be presented to the Commission for approval.
ICC BPO Group meeting - 24 October 2011 - Beijing
26

27. Agenda
• SWIFT / ICC Cooperation on BPO
– Dan Taylor, ICC Banking Commission and André Casterman, SWIFT
• BPO features and benefits
– David Hennah, Senior Product Manager, SWIFT
• BPO rules and ISO 20022 standards
– David Meynell, Director, FI Product Management, Deutsche Bank
• BPO-based supply chain finance services
– Hiroyuki Watanabe, Hong Kong Trade Business Office, Trade
Business Division, The Bank of Tokyo-Mitsubishi UFJ, Ltd
– Xiong Yuanmeng, Global Trade Services Department, Bank of China
– Michael Quinn, Managing Director, J.P. Morgan
• Technology solutions combining LC and BPO
– Olivier Berthier, Global Solutions Director, Misys
27

28. 1. Trade transaction using TSU
Flow chart of L/C Flow chart of TSU
Importer Import Bank Export Bank Exporter
IMPORTER Importer's Bank Exporter's Bank EXPORTER
Purchase
Trade Contract Trade Contract Purchase
Order Trade Contract Trade Contract
Order
SWIFT
Prepare LC TSU
Application TSU ＴＳＵ Appli-
Appli-
TSU cation TSU
Application
cation Data Data
Input MATCHING Input P/O Applicatio
P/O
Copy Copy
Apply
LC LC Send Receive LC
LC ADVICE
Appl MT70X MT70X ADV.
Matching Notice Matching Result Matching Result Notice Matching
Result (Contract Info) (Contract Info) Result
Ship
Arrangement
Prepare
Matched
Ship Doc Shipment
Contract Data
Imp Arrival B/C
Appli-
Advice B/C cation
Receive Dispatch
Doc Import Export Doc Appl Present Shipping
Imp Doc
Checking Doc Doc Checking Ship Doc Data Ship Doc
Document
Arrival BL&INV Copy
Input
Present Copy
MATCHING
Arrival
Matching Notice Matching Result Matching Result Notice Matching
Order for Credit for Result (Shipping Info) (Shipping Info) Result
Settlement Send ReceiveM Receive
settlement T40X Bills for
Operation MT40X Payment
& 20X & 20X Credit Collection Automatic Payment
(Import Settlement without L/C) Receive
Imp Imp Operation for Payment
Doc Doc Settlement
Document Release Receiving the
Receive Operation
Delivery Payment

29. 2. Reduction of Settlement term
<Documentary Trade Flow>
No. of Date 1 2 3 4 5 6 7 8 9 10 11
Day of Week Monday Tuesday Wednesday Thursday Friday S S Monday Tuesday Wednesday Thursday
Applic ation Delivery &
Draft
Presentation
Export e r to Bank
B/L
Invoic e US$
(Fi i P/L t )
lD Dispatch
Applic ation
Draft Courier US$
EXP Bank
B/L
Invoic e
DOCs
P/L
A/N
Cover
Letter Draft B/L
IMP Bank Invoic e
B/L P/L
Invoic e US$
P/L
DOCs
A/N
US$
Impor t er B/L
Invoic e
P/L
<TSU Trade Flow>
No. of Date 1 2 3 4 5 6 7 8 9 10 11
Day of Week Monday Tuesday Wednesday Thursday Friday S S Monday Tuesday Wednesday Thursday
B/L
Invoic e
Copy
Copy
Expor t er
US$
TSU data
Input US$
EXP Bank
B/L Data
Invoic e
Data
TSU Data
B/L Data
IMP Bank
Invoic e
US$
Data
Impor t er B/L Data
Invoic e US$
Data

30. 3. Step to BPO
 BTMU completed step 1 & 2
 We are now challenging step 3 !
STEP 1 TSU Payment Service Inter-office
Completed
(without BPO)
STEP 2 TSU Payment Service Inter bank
Completed
(without BPO)
STEP 3 TSU Payment Service Inter bank &
To be
Inter-office
(with BPO) started

31. 4. L/C vs BPO
Documentary L/C TSU BPO Gap / Similarity
Bank guarantees the Bank guarantees the GAP Similar
Function payment of importer. payment of importer.
Presentation of the Data matching between GAP Similar
Payment documents according to Baseline and Dataset
Trigger L/C data on TSU system.
Primary Obligation Primary Obligation GAP Similar
Obligation
Original documents to Only the TSU data to GAP Similar
be handled be handled, and no
Documents
original docs are
requested
UCP by ICC Rule book by SWIFT GAP Similar
Rules

32. 5. Japanese Corporate interested in BPO
Requirement
BPO
Cor p K
Cor p B Cor p F Aut omobile
Cor p D
Elec t r ic Par t s Pr int ing
Mac hines
Cor p H Cor p L
Cor p E
Tr ading Ret ailer
Cor p C St eel Tr ading
Company 10
Tr ading Company Corp I
Cor p G Trading
St eel Company
Tr ading
Potential
Cor p M Cor p J Market which
Aut o Par t s
Fur nit ur e requires BPO
7 & I
Ret ailer Potential market
which BPO is not
necessary
=Export（ Corporates)
8 Cor p A
=Import（ Corporates)
6
Chemic al
Operat ional
Ef f iciency
JPY100billion JPY500billion JPY1trillion JPY5trillion Turn Over

33. BOC TSU BPO SERVICE
BOC, we know the world of trade
33

34. Milestone
• Oct 2006, member of Trade Services Advisory Group
• Jun 2007, membership of TSU
• Oct 2007, Shanghai Branch completed China’s first TSU business
• Apr 2009, signed the first TSU Bank-to-Bank Agreement globally
• Sep 2009, BOCHK joined TSU
• Mar 2010, draft the first Bank-Corporate TSU BPO service agreement
• Apr 2010, Shanghai Branch completed the world’s first TSU BPO Business
• Jul 2010, Shenzhen Branch and Shanghai Branch finished the first TSU BPO
post-shipment financing business globally
• Oct 2011, Shanghai Branch Conducted China’s first buyer BPO service with
Hua Nan bank
BOC, we know the world of trade

35. Expertise and Network of TSU
 TSU service points in 8 branches among 15 cities
 Member of drafting committee of TSU Ruling Book
 Member of ICC Banking Commission BPO Legal Task Force
JINA QINGDAO
N
NANJING
WUXI NANTONG
CHANGZHO
U
HANGZHOU
SHAOXIN
G
Brazil
HUIZHOU FOSHAN
GUANGZHOU
Sao Paulo HONG KONG
BOC, we know the world of trade

36. Cooperation with other banks
BOC Our Banking Partners
conducted China’s first TSU business
Shanghai Branch
conducted TSU business over 40 deals
Shandong Branch
carried out the world’s first PO financing
against BPO
Jiangsu Branch
Conducted China’s first buyer BPO service
Shanghai Branch
BOC, we know the world of trade

37. Case sharing
Oct. 2011, BOC Shanghai branch
conducted China’s first buyer
BPO services with Hua Nan
bank in Taiwan.
BOC, we know the world of trade
37

38. Backgrounds
buyer seller
1. T/T
Company S Group Y in Taiwan
2. L/C
BOC, we know the world of trade
38

39. Business Mode
T/T
Original
TT
TSU BPO
BOC, we know the world of trade
39

40. Service Process
Company S Group Y
1. Contract
2. Purchase 2. Purchase
Order TSU
Order
submitted submitted
5. BPO
BOC, we know the world of trade
40

41. Service Process
Company S Group Y
1. Shipment
6. Payment
6. Payment 2. Documents
TSU
submitted
6.Payment
BOC, we know the world of trade
41

42. Cooperation prospects on BPO
Pairing cooperation intention
Probing prospect customers
Digging more TSU BPO business
BOC, we know the world of trade
42

43. Thank You !
BOC, we know the world of trade

44. JPMorgan and the TSU Experience
26 October 2011
STRICTLY PRIVATE AND CONFIDENTIAL
Michael F. Quinn
Managing Director
JPMorgan Global Trade

45. This presentation is for discussion purposes only and is incomplete without reference to, and should be viewed solely in conjunction with, the oral briefing provided
by J.P. Morgan. Neither this presentation nor any of its contents may be disclosed or used for any other purpose. Any distribution, copy, reprints and/or forward
to others is strictly prohibited without expressed written consent. The statements in this presentation are confidential and proprietary to J.P. Morgan and are not
intended to be legally binding. Neither J.P. Morgan nor any of its directors, officers, employees or agents shall incur any responsibility or liability to you or any
other party with respect to the contents of this presentation or any matters referred to in, or discussed as a result of this document. J.P. Morgan makes no
representations as to the legal, regulatory, tax or accounting implications of the matters referred to in this presentation.
IRS Circular 230 Disclosure: JPMorgan Chase & Co. and its affiliates do not provide tax advice. Accordingly, any discussion of U.S. tax matters included herein
(including any attachments) is not intended or written to be used, and cannot be used, in connection with the promotion, marketing or recommendation by anyone
GLOBAL CORPORATE BANK
not affiliated with JPMorgan Chase & Co. of any of the matters addressed herein or for the purpose of avoiding U.S. tax-related penalties.
Additional information is available upon request. This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. J.P.
Morgan Securities Ltd. and J.P. Morgan Limited are authorised and regulated in the UK by the Financial Services Authority. J.P. Morgan is the marketing name for
JPMorgan Chase & Co. and its subsidiaries and affiliates worldwide. J.P. Morgan Cazenove is a marketing name for the U.K. investment banking businesses and
EMEA cash equities and equity research businesses of JPMorgan Chase & Co. and its subsidiaries.
J.P. Morgan Securities LLC. is a member of NYSE, FINRA and SIPC.
©2011 JPMorgan Chase & Co. All rights reserved.

46. JPMorgan and the TSU Experience
History
 JP Morgan was one of the initial five investors in the Trade Services Utility
 Advocate of an open account solution at the Trade Services Advisory Group
 Invested $’s and people in its development and launch
 2007 JP Morgan initiated the first TSU transactions in support of Dillards Inc.
 Importer who passed a high volume of LC and OA transactions through JPM
 Already had host to host PO transmission for LC and OA generation
 Transactions between Dillards and Hong Kong based supplier
 Though “successful” not completely satisfying
 Few banks active in the TSU
 Limited benefit on the supplier side
 2008 Launched TSU Champion Bank Program
 Arrangement with SWIFT facilitated recruitment of FI participants
 18 partner banks joined; no transactional activity
GLOBAL CORPORATE BANK
 2008 Launched TSU Connect
 White labeled web based capability available to FIs
 Provides linkages among all parties to the transaction
 End to end from PO initiation to document preparation
 Release 2.0 in 2009 with BPO functionality

47. JPMorgan and the TSU Experience
Challenges to Adaption
Lack of compelling business case for Open Account transactions
Many banks were unaware of the migration to OA
Few offered any OA services other than payments
Emerging Market bank acceptance weak with a few notable
exceptions
Customers not capable of electronic interface
Internal automation not a priority
Within JPM “competing” with proprietary solutions
Multiple applications with similar functionality
“Why bother?”
GLOBAL CORPORATE BANK

48. JPMorgan and the TSU Experience
Current State
 Customers are increasingly seeking ways to reduce paper and increase productivity
 Firm wide initiatives to take paper out of everything they do
 Recognition that the purchase and sales processes have much opportunity
 In cross border transactions recognition that delays are inherent to the process
 Reliance upon data that is contained in documents
 Lack of visibility to completion of the financial cycle
 Acknowledgement that confirming key data elements triggers conclusion of
commercial transaction; should do the same for the financial as well
 Addition of Bank Payment Obligation enhances the business case
 Customers seeking one business process for both OA and LC transactions
 See data interchange critical as supply chains extend globally
 Prefer the ability to selectively request risk mitigation
 6 Customers in the pipeline in various stages of the sales cycle
GLOBAL CORPORATE BANK
 Primarily exporters
 Common theme of improving DSO and productivity
 Full suite of “end to end” offerings

49. JPMorgan and the TSU Experience
Learnings
 Need to create awareness of the capabilities
 Internal and External
 Other constituents (Legal community; Technology companies, Logistics
companies)
 Need a commitment to change
 Fundamental change to the customer’s business process
 Affects the underlying commercial agreement for buyer and seller
 “Champion” in the customer’s office
 Not “plug and play”
 Requires conversations between buyer and suppliers
 Changes in agreements, documentation, third party providers roles
 Be not afraid!
GLOBAL CORPORATE BANK
 Everything that is needed already exists in the customer’s business processes
 TSU rule book and infrastructure provide means to do it TODAY
 There are banks and technology providers who can help you do it

50. Agenda
• SWIFT / ICC Cooperation on BPO
– Dan Taylor, ICC Banking Commission and André Casterman, SWIFT
• BPO features and benefits
– David Hennah, Senior Product Manager, SWIFT
• BPO rules and ISO 20022 standards
– David Meynell, Director, FI Product Management, Deutsche Bank
• BPO-based supply chain finance services
– Hiroyuki Watanabe, Hong Kong Trade Business Office, Trade
Business Division, The Bank of Tokyo-Mitsubishi UFJ, Ltd
– Xiong Yuanmeng, Global Trade Services Department, Bank of China
– Michael Quinn, Managing Director, J.P. Morgan
• Technology solutions combining LC and BPO
– Olivier Berthier, Global Solutions Director, Misys
50

51. A technology perspective on BPO and ISO 20022 messaging
Olivier Berthier
Global Solutions Director, Transaction Banking
olivier.berthier@misys.com
experience, solutions, results

52. The letter of credit analogy
experience, solutions, results
52

53. More evolution than revolution
Letter of Credit
• Bank services based on paper document processing… but already using a fair bit of
electronic data exchange!
 Goods and Services
Importer  Contract Exporter

 ApplicationChannels Documents Channels  Advice
 Documents
 Payment  Payment
 Documents
Back-office Back-office
Systems  Issuance  Payment Systems
LC Isssuing LC Advising
Bank Bank
experience, solutions, results
53

54. More evolution than revolution
Bank Payment Obligation
• Bank services based on electronic data exchange… from a buyer’s bank perspective
Buyer
Seller
 Invoice against PO
 Collection Channels
 Payment
 Invoice Acceptance  Intent To Pay
Back-office
Systems  Commercial Data Set
 Twin Baseline
 Baseline (+ BPO)
 Payment
Buyer’s Seller’s
Bank  Programme Establishment Bank
experience, solutions, results
54

55. More evolution than revolution
Bank Payment Obligation
• Bank services based on electronic data exchange… from a seller’s bank perspective
Buyer
Seller
 Invoice Data
 Collection Channels
 Payment
 Intent To Pay  Invoice Acceptance
Back-office
 Commercial Data Set Systems
 Established Baseline
 Initial Baseline Submission
 Payment
Buyer’s Seller’s
Bank  Programme Establishment Bank
experience, solutions, results
55

56. The benefits of richer structured data sets
experience, solutions, results
56

57. Catching up with cash management
ISO 20022 for Cash Management (since 2006)
Credit Transfer (pain.001, pacs.008, pacs.009, etc.)
Direct Debit (pain.008, pacs.003, etc.)
Account Statement (camt.05x)
ISO 20022 for Trade & Supply Chain Finance
Bank-to-bank: baseline establishment, data set submission,
baseline amendment, intent to pay, status change and
extension, etc. (tsmt.0xx)
Corporate-to-bank: new set of guidelines published in 2011
experience, solutions, results
57

58. Technology perspective on BPO and ISO 20022
Standards! “Fixing the LC” Proven and Familiar
Guarantee of interoperability Enabling greater granularity on Existing IT expertise, ability to
between participants (parties and transaction details, opening up leverage components already in
systems), larger pool of skilled opportunity for deeper data use for Cash Management,
resources, de-risking exploitation and related trigger familiarity with well-known flows
investment in proprietary points, extension to the similar to traditional trade.
technology. corporate-to-bank space.
BPO &
experience, solutions, results
58

59. NEXT
experience, solutions, results

60. Conclusion and Q&A
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