The TSU is nearing launch after several years in the pipeline being developed by Swift and the Trade Services Advisory Group (TSAG), comprising representatives from 13 of the world's leading trade service bank providers. The utility is a centralised matching and workflow engine that banks can use to support the matching of trade-related transaction data. It is designed to help banks offer advanced supply chain services to their corporate customers involved in open account trading.
Swift says it hopes to launch the utility by the end of 2006, but won't be drawn on an exact date as the banks need to address certain technical testing, legal and commercial issues before they can offer TSU-enabled services to their corporate clients.
The 18 banks that have contracted for the commercial product in advance of live launch are: ABN AMRO, ANZ, Banco do Brasil, Bangkok Bank, BNP Paribas, The Bank of Tokyo-Mitsubishi UFJ, Citigroup, Deutsche Bank, First Rand, HSBC, JPMorgan Chase, Banco Popular, Korea Exchange Bank, The Royal Bank of Scotland, SMBC, Société Générale, Standard Chartered Bank and The Bank of New York.
Some of these banks were not among the 19 that have been piloting the utility since February, and Jackie Keogh, head of supply chain management for Swift says she expects that others who were in the pilot but have yet to sign up for launch will do so soon.
The move away from traditional instruments, such as letters of credit and collections towards open account trading threatens banks with potential loss of revenue and disintermediation. But Antonio Bizzo Lima, head of FX and trade products at Banco do Brasil, says it should also be viewed as an opportunity, and that by using the TSU, banks can cross-sell value-added services to their corporate customers.
The TSU, which operates over SwiftNet FileAct and Browse, will match and standardise elements of corporate documents including purchase orders and invoices as well as transport documents. The utility reports and advises banks that a match has been achieved and that there is an underlying authenticated document. It also reports on the history of transactions, which a bank can use to provide services around risk mitigation and tracking transactions.
SwiftNet TSU does not cover the corporate to bank communication aspect of the financial supply chain, leaving this for banks to deploy their own interfaces and document management and reporting tools, or use those from a vendor. In this way it is different to previous trade-related initiatives that Swift has been involved with in the past, such as Bolero.net. Swift previously had a 34% stake in this company, but in 2005 it impaired its investment for its carrying amount in 2000. Bolero was refinanced by its other shareholders and continues to compete with other vendors, such as Tradocs, to provide corporates and banks with a platform for secure electronic handling of trade and trade finance related documentation.
With the imminent launch of the TSU, and much discussion about trade at Sibos 2006, vendors are lining up to promote financial supply chain solutions that integrate with the utility.
For example, Tradocs has launched a TSU Connector Suite package for inter-corporate information exchange and routing of trade documents to banks through the TSU platform using PDF files. It incorporates the Adobe LiveCycle software for electronic forms, process orchestration, and document rights management. The vendor has been working with HSBC to refine the service.
Alan Beattie, global head of supply chain business at HSBC, says: "We have successfully piloted the connectivity of Tradocs to the Swift TSU on an integrated basis. The development work undertaken by Adobe and Tradocs has enabled HSBC to be in a state of readiness for live TSU operations in keeping with the Swift roll out."
Similarly, Misys says two of the banks that have signed up for the TSU's commercial launch - BNP Paribas and Société Générale - are using its Misys Trade Portal, which enables banks to handle purchase orders automatically, eliminating re-keying of data and reducing discrepancy rates when handling Letters of Credit (LCs) as well as open account transactions.
Intel has also joined the fray, partnering with SCF Capital - a supply chain financing company headed up by former PepsiCo and Apple boss John Sculley - to develop a joint reference architecture for using Intel-enabled mobile devices as a platform for presenting forms and documents related to the financing of corporate supply chains. Sculley, now managing partner NY of SCF Capital, says: "We believe that vertical form-based applications will do for mobile adoption what desktop publishing did for graphics PCs."
On the bank side, JPMorgan Chase Treasury Services has enhanced its TradeDoc solution to interface with the TSU, and says it is the only bank-offered connectivity solution that is being made available to other banks on a white label basis, enabling end-to-end connectivity of the financial supply chain.
"The TSU will level the competitive marketplace and allow all banks to enter the open account space," says Bruce Proctor, head of JPMorgan Chase global trade services. "By helping our corporate customers and their counterparties' banks along the supply chain we are introducing significant business efficiency into the market and reducing costs."
HSBC is also exploring the white label route. "Global corporates are looking for holistic solutions that cannot necessarily be provided by any one financial institution," says HSBC's Beattie. "If banks are able to service these demands collaboratively, there is much to be gained for all parties."