Daniel Cotti, head of global transaction products at ABN AMRO, says this is why SWIFT developed a trade services utility (TSU) to help banks offer better trade services to their clients. "The trade services world is split into the competitive space and the collaborative space. The TSU is the collaborative space," he says.

Set up late last year, the TSU is approaching its pilot phase now. And as session moderator Jackie Keogh, head of banking markets and SWIFTSolutions at SWIFT, will explain, its commercial launch is expected in the second quarter of 2006.

The TSU is an inter-bank matching infrastructure built on open standards. Corporates have no direct access right now, but panel members expect this to be a topic of discussion during this session since more companies are working with third-party vendors on supply chain management solutions.

"Corporates currently only spend about 17% on improving the payments process in the settlement cycle of their supply chain. The other is spent on updating accounts receivables systems, keying in data for them, resolving disputes and discrepancies. If banks come up with viable straight-through processing solutions in what we call the open account space, the electronic matching of documents against the purchase orders would become so much more efficient in terms of time and money," Cotti explains.

Common ground

Panel members will go over what clients from different sectors have done to reduce time and costs on the physical side of the supply chain. This is important to discuss, Cotti says, because the physical side alone does not solve the problem. The financial side of the supply chain, which links the flow of information and money from the placement of the order to final payment, is not as efficient as it could be. "Companies might have very efficient physical supply chains, but they also have little visibility into their receivables," he points out.

Cotti says this is why banks and corporates are benefiting from the development of a common ground for payments. The TSU is already creating more community-based approaches rather than individual ones and the benefits of this coordination will be analysed in great detail during this session, he says.

"Each one of us on the panel will explain what we have learned and our different opinions will help foster some great discussions on how we can work together on this," says Bob Johnson, executive vice president in trade services at Bank of America. "Banks play an important part in the financial supply chain by providing payment processing and letters of credit. But banks also need to combine some physical supply chain services, for example logistics, shipping and inspection. We have to figure out a way to provide integrated solutions, and there is not going to be just one way to do it," he adds.

Providing a perspective from the Asian region on this issue, Akira Shima, general manager, forex & deposit business operations department, Mizuho Corporate Bank, will focus on the relationship between payments and trade. "Physical supply chains and financial supply chains are getting closer," he says. However, while there is common ground in terms of the adoption of XML and innovations in IT, differences exist in the speed and manner of the decision-making process of banks and corporates. "This could pose an obstacle to a more efficient financial supply chain," he warns. "Co-operations between corporates, banks and regulators is key," he adds.

Consolidation

Bank consolidation will also be addressed. "The big international banks are pushing ahead in trade as financial supply chain management becomes a lucrative service for them to sell to their customers. Below that is another tier of banks, perhaps with more regional and retail focuses, wondering how they are going to compete with some of these larger banks," Johnson explains.

Could there be ways for the smaller banks to outsource some of their processing and still stay hold of the business ? These are the questions the panel hopes to answer during this session.

Source : www.swift.com