Facilitating multi-banking solutions in documentary trade finance

1. Trade Finance for Corporates
Facilitating multi-banking solutions
in documentary trade finance
SWIFT’s Trade and Supply Chain team
Webinar, July 2012
supplychain@swift.com
Join our LinkedIn group Supply Chain on SWIFT

2. Content
• Rationale for MNCs to adopt multi-bank solutions in trade finance
• Role of standardisation bodies
• Portfolio of industry standards
• Scope of SWIFT’s MT 798 standards
• Use of SWIFT’s FIN and FileAct
• Adoption by corporates, banks and vendors
• Best practices for corporates
• Future developments
• Benefits
• Training and Consulting Services
• Conclusion
• Contacts
Trade finance for corporates – Webinar 12 July 2012 2

3. Trade Finance for Corporates
MNCs and multi-banking in
trade and supply chain finance
SWIFT and your
payments business
3

4. Corporate challenges with traditional trade
instruments (1/2)
Export documentary credit Import documentary credit
• Difficult to manage advices of export L/Cs • Treasury lacks visibility to the allocation of
and amendments received from multiple credit facilities to business units for import
banks in paper form and via different banks L/C issuance
portals
• Lack of standardised approval process for
• Internally, difficult to collaborate between import L/C issuance
treasury and various business units on L/C
• Delays in import L/C issuance
allocation and preparation of documents
• No electronic global data base of import L/Cs
• Lack of visibility of each step in the
for real time reporting of outstanding L/Cs.
transaction process
Ideally by Business Unit, Bank, Product,
• Too many discrepancies, slowing down Counter Party
document compliance checking
• Difficult to link import L/Cs with export L/Cs
• Delayed receipt of payment for back to back transactions
• Challenging to set up permanent and
transactional alarms on key L/C dates
Trade finance for corporates – Webinar 12 July 2012 4

5. Corporate challenges with traditional trade
instruments (2/2)
Standby L/C and Demand Guarantee issuance
• Management is decentralized and handled independently by each subsidiary
– Difficult for central treasury to monitor the terms and the availability of Standby L/C and
Guarantee facilities and improve the diversification of business allocation between the
banks
– How to offer flexibility for subsidiaries but enforce standard policies moving forward?
• Reconciliation of related data and settlement of fees is time consuming and prone to errors
• Complex documentation management will result in increased charges
• Transparency is not optimal and will result in differences between the banks‘ and treasury‘s
records
• With different technology solutions, more challenging to on-board subsidiaries and banks
Trade finance for corporates – Webinar 12 July 2012 5

6. Rationale for MNCs to adopt multi-banking
solutions for trade finance
Digitise and
automate
Improve Consolidate
control information
Standardise
Accelerate
bank
decisions
interface
Trade finance for corporates – Webinar 12 July 2012 6

7. Trade Finance for Corporates
Role of ICC, SWIFT and ISO
7

8. Industry standards
Developed by international standardisation bodies
• Trade Finance instruments
(E.g. UCP 600, URDG 758, ISP98, URC 522, URBPO)
• MT standards
(for L/Cs, Demand Guarantees, Collections)
• ISO 20022 standards
• ISO 9362 Business Identifier Code (BIC)
• ISO Country codes, Currency codes, …
Industry standards are industry-owned and technology-neutral.
They offer a dependable legal and operational framework.
Trade finance for corporates – Webinar 12 July 2012 8

9. Trade Finance for Corporates
Portfolio of Industry Standards
SWIFT and your
payments business
9

10. 1
Industry standards for L/Cs and Guarantees
UCP 600
URDG 758
ISP98
MT 798 Documents MT 7XX MT 798 Documents
1 2 3
Buyer Seller
Buyer’s Seller’s
bank(s) bank(s)
SWIFT's MT 7xx are industry owned and technology FIN MT 7xx
neutral standards in support of ICC's rules for L/Cs,
FIN MT 798
Standby L/Cs and Demand Guarantees
Trade finance for corporates – Webinar 12 July 2012
FileAct10

11. 2
Public Domain
Industry standards for Bank Payment Obligation
Bank
Payment
Obligation
1 2 3
Buyer Seller
Any channel / Trade Any channel /
Commercial
any format / Matching any format /
any solution Application any solution
• Bank portal • SWIFT's Trade Services • Bank portal
• SWIFT's SCORE Utility (TSU) • SWIFT's SCORE
• Paper • Any other inter-bank • Paper
trade matching
application (TMA)
Trade finance for corporates – Webinar 12 July 2012 ISO 20022 optional 11
ISO 20022 mandatory

12. Industry standards support end-to-end flows
MT 798 MT 7XX MT 798
ISO 20022 ISO 20022 ISO 20022
Internet Internet
Buyers Issuing banks Advising / confirming banks Sellers
Application, Inter-bank flows Advice, confirmation,
amendment, … amendment, …
Streamline the L/C, Guarantees and open account trade transactions
Automate workflow of the trade life cycle to reduce cost
Accelerate handling of discrepancies and settlement
Move to paperless transaction processing
Enhance visibility on credit lines
Trade finance for corporates – Webinar 12 July 2012 12

13. Industry standards enable competitive vendor
solutions to interoperate
MT 798 MT 7XX MT 798
ISO 20022 ISO 20022 ISO 20022
Internet Internet
Buyers Issuing banks Advising / confirming banks Sellers
Application, Inter-bank flows Advice, confirmation,
amendment, … amendment, …
Business process-level interoperability between various software solutions
Increased choice of vendor solutions in competitive space
No need for banks to join multiple corporate portals
Reduced technical, operational and legal costs
No vendor lock-in
Trade finance for corporates – Webinar 12 July 2012 13

14. Trade Finance for Corporates
Scope of MT 798 standards
SWIFT and your
payments business
14

15. IMPORT DOCUMENTARY CREDITS Corporate-to-Bank
Bank-to-Corporate
Applicant Import Documentary Credits Bank
MT 798<770>
APPLICATION
MT 798<700>
MT 798<701>
MT 798<771>
ISSUANCE NOTIFICATION MT 798<700>
MT 798<701>
MT 798<772>
AMENDMENT REQUEST
MT 798<707>
AMENDMENT NOTIFICATION MT 798<773>
MT 798<707>
AMENDMENT ACCEPTANCE NOTIFICATION
MT 798<736>
DISCREPANCY ADVICE MT 798<748>
MT 798<750>
MT 798<749>
DISCREPANCY ADVICE RESPONSE
COMPLIANCE ADVICE NOTIFICATION MT 798<753>
MT 798<754>
DISCHARGE ADVICE NOTIFICATION MT 798<731>
MT 798<732>
REFUSAL ADVICE NOTIFICATION MT 798<733>
MT 798<734>
MT 798<755>
PAYMENT ADVICE NOTIFICATION
MT 798<756>
IMPORT PAYMENT SETTLEMENT ADVICE MT 798<757> 15

16. EXPORT DOCUMENTARY CREDITS Corporate-to-Bank
Bank-to-Corporate
Bank Beneficiary
MT 798<774>
Export Documentary Credits
MT 798<700> CREDIT ADVICE
MT 798<701>
MT 798<776> AMENDMENT ADVICE
MT 798<707>
AMENDMENT ACCEPT/REFUSAL ADVICE MT 798<735>
MT 798<780>
MT 798<710> THIRD BANK ADVICE
MT 798<711>
MT 798<737> PRESENTATION RESPONSE
MT 798<751> A U T H O R I S A T I ON A D V I C E N O T I F I CA T I O N
MT 798<752>
MT 798<753> COMPLIANCE ADVICE NOTIFICATION
MT 798<754>
MT 798<731> DISCHARGE ADVICE NOTIFICATION
MT 798<732>
MT 798<733> REFUSAL ADVICE NOTIFICATION
MT 798<734>
MT 798<755> PAYMENT ADVICE NOTIFICATION
MT 798<756>
TRANSFER REQUEST MT 798<722>
MT 798<782>
MT 798<720> TRANSFER ADVICE
MT 798<721>
EXPORT PAYMENT SETTLEMENT ADVICE 16
MT 798<758>

17. GUARANTEES / STANDBY LETTERS OF CREDIT Corporate-to-Bank
Bank-to-Corporate
Applicant Guarantees/Standby Letters of Credit Bank
MT 798<761 or 784 > APPLICATION
MT 798<760>
NOTIFICATION MT 798<762 or 785 >
MT 798<760>
MT 798<763 or 786 > AMENDMENT REQUEST
MT 798<767>
MT 798<764 or 787 >
AMENDMENT NOTIFICATION
MT 798<767>
EXTEND / PAY QUERY
MT 798<777>
MT 798<778> EXTEND / PAY RESPONSE
CLAIM NOTIFICATION MT 798<779>
CLAIM / CHARGES SETTLEMENT MT 798<781>
MT 798<783> REDUCTION / RELEASE REQUEST
REDUCTION / RELEASE ADVICE MT 798<766 >
MT 798<769>
17

18. GUARANTEES / STANDBY LETTERS OF CREDIT cont. Corporate-to-Bank
Bank-to-Corporate
Bank Guarantees/Standby Letters of Credit Beneficiary
MT 798<745 or 746 > ADVICE
MT 798<760>
MT 798<743 or 744 > AMENDMENT ADVICE
MT 798<767>
PAYMENT CL AIM MT 798<712>
MT 798<714> CLAIM ACKNOWLEDGEMENT
18

19. COMMON GROUP Corporate-to-Bank
Bank-to-Corporate
Applicant Bank
C H A R G E S S E T T L E M E N T N O T I CE MT 798<793>
MT 798<790>
CHARGES SETTLEMENT REQUEST MT 798<794>
MT 798<791>
MT 798<788> F R E E F O R M AT
MT 798<799>
FREE FORMAT MT 798<789>
MT 798<799>
Corporate-to-Bank
Bank-to-Corporate
Bank Beneficiary
MT 798<793> C H A R G E S S E T T L E M E N T N O T I CE
MT 798<790>
MT 798<794>
CHARGES SETTLEMENT REQUEST
MT 798<791>
F R E E F O R M AT MT 798<788>
MT 798<799>
MT 798<789> FREE FORMAT
MT 798<799>
19

20. Trade Finance for Corporates
Use of FIN and FileAct
20

21. Use of FIN and FileAct for C2B
documentary trade finance flows
FIN FileAct
• Structured MT 798 messages • Facilitates document
between the banks and the exchange between banks
corporates (content defined and corporates
by instrument) • Any document type in any
• MT7XX messages between preferred or required format
the banks – Stand-by L/Cs & Guarantees:
• Enables higher level of • Draft guarantee text
automation and back-office • Scanned copy of the issued or
received guarantee/amendment
integration
– Export L/Cs:
• Commercial documents related
to the transaction
Trade finance for corporates – Webinar 12 July 2012 21

22. Trade Finance for Corporates
Adoption of MT 798 standards
SWIFT and your
payments business
22

23. Corporates adopting the MT 798 standards
Most are already using SWIFT for payments but this is not a pre-requisite
Corporates Use of MT 798 Use of MT 798 Live Multi-bank
for … as … Usage Solution
Alcatel-Lucent Guarantees Exporter Live Surecomp
Saudi Aramco Export LCs Exporter Live In-house
ArcelorMittal Export LCs Exporter Live Misys
International
Metro Group Import LCs Importer Live In-house
Buying
Metsä Finance Export LCs Exporter Q4 2012 GlobalTrade
Corporation
Safran Guarantees, LCs Exporter and Q4 2012 GlobalTrade
importer Corporation
Voith Guarantees, LCs Exporter and Q4 2012 Surecomp
importer
Close to 10 additional corporates will publicly disclose
their adoption of MT 798 in H2 2012
Trade finance for corporates – Webinar 12 July 2012 23

24. 25 banks adopting the MT 798 standards
12 from the top20 Trade banks
Trade finance for corporates – Webinar 12 July 2012
24

25. All leading Trade Finance vendors are
accredited by SWIFT
SWIFTReady for
SWIFTReady Trade
Corporates – Trade
Finance
Finance
• Bank-to-bank standards • Corporate-to-bank
• Corporate-to-bank standards
standards Bank Corporates
Vendor Trade Finance Vendor Trade Finance
Solution Solution
China Systems Eximbills GTC GlobalTrade Corporate
CSI BankTrade Misys Misys Trade Portal
Misys Trade Innovation Pinnacle Synergy Trade Services
Plus Solutions (TS) Multi-bank
Incorporated Corporate Site
MIT CREDOC
(PSI)
Sopra Evolan IB
Note: Surecomp is ready but not certified in 2011
Surecomp DOKA 5, IMEX
Trade finance for corporates – Webinar 12 July 2012 25

26. Trade Finance for Corporates
Best practices for multi-banking
Trade finance for corporates – Webinar 12 July 2012 26

27. Best practices for multi-banking in trade finance
Rules • ICC Banking Commission's rules
• MT Cat4/7 standards
Messages • ISO 20022 standards
Identity • Business Identifier Code for banks and
corporates (BIC or ISO 9362)
• SWIFT for bank-to-bank (FIN)
Channel • SWIFT or Internet for corporate-to-bank
• SWIFTReady vendors
Solutions • In-house development
Industry standards enable banks and corporates to increase efficiency and
minimise costs when respecting all of the above best practices
Trade finance for corporates – Webinar 12 July 2012 27

28. Issues for corporates with non standardised multi-bank options
Scenarios: Corporate using a Corporate re-using Corporate using a Corporate using
vendor platform its FI BIC and the vendor BIC and
forcing banks to MT 7xx messages the MT 798 MT 798 standards with
Major issues own BIC in SCORE
adopt proprietary on the bank-to- standards on the
for formats, security bank FIN service bank-to-bank FIN
corporates: and rules service
Increased Need for multiple Proprietary Re-use SWIFT
vendor and solutions when any development: so connectivity in use for
of the banks packaged solutions
technical treasury and cash
required do not and costs cannot be
costs support the vendor shared management
platform
Not following Dependency on Not able to benefit Corporate does not Single process with all
industry single vendor from full MT 798 benefit from banking partners
solution: less functionality SWIFT's FIN
standards
competition and Responsibility and
and best technical lock-in Liability (R&L)
practices
Increased Parties need to Parties need to Corporate cannot Standardised SCORE
legal develop vendor- develop corporate- benefit from agreement for cash and
specific contractual specific contractual standardised legal
complexity trade
arrangements arrangements documentation
and costs
Increased Depends on vendor- Lack of visibility on Lack of full visibility Standardised SWIFT
KYC risks owned legal corporate identity, to corporate registration for corporates
frameworks resulting with likely identity, resulting
and re-use of BIC by
KYC issues with likely KYC
issues corporate 28

29. Trade Finance for Corporates
Next MT 798 features
29

30. Next version of MT 798 standards (1/2)
General
• Incremental changes
• Further clarification
• Editorial corrections
Discrepancy Settlement
• MT 798<749> Response to Advice of Discrepancy
Waiving of discrepancies by applicant pending adjustment of amount payable.
To be agreed and accepted by Beneficiary.
Presentation
• MT 798<737> Response to Documentary Credit Presentation
Additional fields.
Trade finance for corporates – Webinar 12 July 2012 30

31. Next version of MT 798 standards (2/2)
Lead Bank Model
• Addition of 3 optional fields at the end of every MT 798 Index Message
– Customer Identifier
– Processing Bank Identifier
– Lead Bank Identifier
Requested new functionality (for review)
• Multi-currency guarantees
• Drafting of Applications and Amendments (Guarantees & Standbys)
• Settlement of Guarantee/Standby Claim
• Amendment of Export L/C Transfer
Analysis and Review
• 2/3 Community Review Cycles
• 3 week review period
• 1st Draft, end July 2012
• Final Publication, November 2012 31

32. Trade Finance for Corporates
Benefits
32

33. Win-win benefits for corporates and banks
Benefits Corporates Banks
Consolidated Trade finance positions and increased visibility
Single multi-bank & multi-business channel
Dematerialization & standardization
Re-use bank-to-bank FIN MT7xx data fields with Corporates
Re-use of FileAct for any needed documents
to be included in the information flows
Overall cost reduction
Improved straight-through processing end-to-end
Improved overall transaction time
Only one interface development to integrate to Bank back
office (no need for vendor-specific interfaces, procedures,
contracts, formats)
Corporates and banks can make independent decisions
on technical platforms and implementations
Trade finance for corporates – Webinar 12 July 2012 33

34. Trade Finance for Corporates
Training and Consulting
Services
34

35. Training and Consulting Services
• On-site courses on MT 798 standards
• SWIFT Consulting Services puts at your disposal a dedicated
team of experts who provide extensive knowledge of financial
markets, message standards and back office integration
• Our consultants can lead and support every phase of your
project:
– From assessment and analysis of your processes and needs
– Design and implementation of the right solution
– Support you through “go live” and maintenance following
launch
• Great asset if you decide to up-grade and integrate your in-
house systems
Trade finance for corporates – Webinar 12 July 2012 35

36. SWIFT’s Consulting portfolio
Common problems, unique solutions
Business
Do you need knowledgeable and dedicated
assistance during your SWIFT projects?
How to use SWIFT Do you need help Do you have
data to get to strategic with optimal usage of Redundant & manual
insights? Standards? interventions?
Technical
What is the right How to get to 5x9’s How can you further
sourcing model for operational reduce your Cost of
SWIFT infrastructure? excellence? Ownership?
Implementation
How to get to an easy Who can guarantee Can you provide me
integration of your risk-free installations peace of mind post
applications & SWIFT and field services? ‘go live’?
36

37. Trade Finance for Corporates
Conclusion
37

38. Conclusion
Multi-banking in trade finance is now a reality
• All trade banks in the world use SWIFT's MT7xx standards with
their correspondent banks
• The leading trade finance banks are now extending the use of
those standards to the corporate world through the MT 798; all
leading vendors have adopted the MT 798
• The MT 798 can be used on any channel (Internet, SWIFT) and
with any software solution; the SWIFTReady certification ensures
inter-operability between competitive vendor solutions
• The growing adoption by all leading players confirms the
immediate relevance of the MT 798 industry standards to the trade
finance market
Avoid vendor lock-in by pushing back on proprietary portals/formats
Trade finance for corporates – Webinar 12 July 2012 38

39. Trade Finance for Corporates
Contacts
39

40. Contact the MT 798 bank product teams
Banks adopting MT 798 Country MT 798 Product contact
Bank of America US Paul Johnson
Banque Saudi Fransi SA Shafeek H. Al-Manameen
Bayerische Landesbank DE Florian Seitz
BNP Paribas FR Eric Henry
BNY Mellon US Andres Ramos
Citibank US Fran Martell
CM CIC FR Tony Croizer
Commerzbank DE Sven Mueller
Crédit Agricole CIB FR Patrick Boiteau
Danske Bank DK John Enemark
Deutsche Bank DE Frank Bothe
Gulf International Bank SA Mathew Silva
HSBC HK Kate Han
JP Morgan Chase US Merlin Dowse
KBC BE Karen Sterckx
LBBW Landesbank Baden Württemberg DE Rolf Seidel
Nordea FI Soren Andresen
RBS US Deborah Seliski
Riyad Bank SA Medhat Sanuri
Samba SA Abdulkader A. Bazara
Société Générale FR Corinne Bakok
Standard Chartered SG Ashutosh Kumar
The National Commercial Bank SA Omar Yassine
UBSfinance for corporates – Webinar 12 July 2012
Trade
AG CH Erwin Freiburghaus 40
Unicredit AT Markus Wohlgeschaffen

41. Contact our SWIFTReady Trade Finance
2011 partners
Partner Solution Contact
Joel Schrevens, Digby Bennett
joel@chinasystems.com
digby@chinasystems-me.com
+32 475 904413
Selene Chan, James Tindall
schan@banktrade.com
jtindall@banktrade.com
+ 44 7941 325716
Olivier Berthier, Stephan Nouy
Misys TI Plus Olivier.berthier@misys.com
Stephane.Nouy@misys.com
+33 (0)1 53 00 70 13
Jean-Luc Spinardi
sales@mitsa.ch
+ 41 213 188 181
Marina Singlard
Evolan IB msinglard@sopragroup.com
+33 5 6573 4651
Murray Freeman
DOKA 5, IMEX Murray.freeman@surecomp.com
+1 201 716 1236 41

42. Contact our SWIFTReady for Corporates -
Trade Finance 2011 partners
Partner Solution Contact
Jacob Katsman, Nick Pachnev
katsman@globaltradecorp.com
GlobalTrade Corporate pachnev@globaltradecorp.com
+1 416 627 8520 / +1 416 661 8520
Olivier Berthier, Stéphane Nouy
Olivier.Berthier@misys.com
Misys Trade Portal +65 6416 4095
Stephane.Nouy@misys.com
+33 (0)1 53 00 70 13
Pinnacle Synergy Trade John Nash
Solutions Services (TS) Multi-bank +44 7587 088 049
john.nash@psi-nj.com
Incorporated (PSI) Corporate Site
Note: Surecomp is ready but not certified in 2011
Trade finance for corporates – Webinar 12 July 2012 42

43. Contact us now!
André Casterman Head of Banking and Trade solutions
Patrick Krekels Legal Counsel
Nadine Louis Supply Chain Finance and Business Intelligence
Marie-Christine Diaz Supply Chain Finance
David Hennah Supply Chain Finance
Aline Henrard Supply Chain Finance
Raimo Naatsaari Documentary Trade Finance and e-invoicing
David Dobbing Standards
Robert Marchal Standards
Kineth Yuen Standards – Asia Pacific
Angéline Tan Standards – Asia Pacific
Filip Versluys Partner Management
Chris Conn Business Development – Americas
James Wills Business Development – Americas
Connie Leung Business Development – Asia Pacific
Vivian Zeng Business Development – Asia Pacific
Robert Schneider Business Development – EMEA
Urs Kern Business Development – EMEA Neil Gray Corporate Sales – UK/Ireland/Nordics
Matt Monaco Corporate Sales – Americas Jan Heinsbroek Corporate Sales – Nordics
Zelda Anthony Corporate Sales – Asia/Pacific Roger Inderbitzin Corporate Sales – Switzerland
Thomas Peeters Corporate Sales – Benelux Ashley Schmidt Media Relations – Americas
Sebastian Niemeyer Corporate Sales – AT/DE/CH Sandra Gavard Media Relations – Asia Pacific
Arnaud Dupuy Corporate Sales – France Thea George Media Relations – EMEA 43
E-mail: firstname.lastname@swift.com