Article

by André Casterman

To be in dialogue with its customers, SWIFT organizes frequent webinars for banking and trade professionals. These offer free training and a discussion of the latest case studies, and participants include corporates, consultants, vendors, banks, associations and academics.

In past issues of DCInsight, I've described the Bank Payment Obligation (BPO), the joint SWIFT/ICC product that places a legal obligation on the issuing bank to pay the recipient bank subject to the successful electronic matching of compliant data. When it becomes widely operational, based on a set of ICC rules, the BPO is likely to revolutionize trade finance.

SWIFT's 2012 trade webinars cover a range of subjects - getting paid on time using the BPO, an overview of the BPO rules, the value proposition of the BPO for banks and corporates and multi-bank standards for letters of credit and guarantees (MT 798). Usually, around 200 persons participate in each webinar, which is delivered live twice in a day at regular periods to cater to both Asian and American audiences.

In September, the SWIFT webinar focused on the training and consulting services offered by SWIFT to banks that wish to adopt the BPO rules. This is very topical, as the role of technology in trade is becoming predominant, and SWIFT is well placed and skilled to train and advise banks on how to adopt these new innovations.

Joining the club of banks adopting the BPO is a key milestone for a bank. It enables the banking industry to demonstrate its commitment to such an innovation to the corporate market. It also offers immediate free-of-charge "club benefits" to the member banks, such as private webinars and priority access to experts and specific tools. Some 40 banking groups are members of the group today, and an additional 10 banks will join by the end of 2012.

During the webinars, participants are invited to raise questions which are usually answered immediately. In its September webinar, SWIFT received more than 60 questions. Following are examples of some of the key ones:

• How many banks are advanced in terms of BPO readiness? As of September, a total of 10 banks were live or ready for live for the BPO. Standard Chartered Bank, Bank of China and Bank of Tokyo Mitsubishi were live and had signed up more than 30 corporate customers, mostly in Asia but also in the EMEA. A total of seven banks were ready to go live, and this included Deutsche Bank, JPMorgan and Standard Bank of South Africa.·

• How different is the BPO/TSU from the eUCP? They are very different products. eUCP facilitates the dematerialization of documents required by the UCP rules, whereas the BPO is a separate set of rules. UCP aims at transactions in which paper documents are exchanged between corporates through the banks, whereas with the BPO, documents remain in the corporate-to-corporate space.

• Is the BPO available in all countries, or are there any restrictions? Similar to the L/C, there are no geographical restrictions for using the BPO. Over time, SWIFT expects that all trade banks will extend their portfolio of services from UCP 600 (L/Cs) to UR BPO.

• If a client wants to use BPO tomorrow, is SWIFT ready? The BPO rules have been available from SWIFT since April 2009. The move of those rules to ICC as UR BPO will increase their acceptance in the market. Banks can start adopting those rules any time. The change from SWIFT's BPO rules to UR BPO rules will be smooth and only impact the legal documentation (no technical/operational impact). Banks do not need to integrate the ISO 2002 messaging in their back offices. They can start using the BPO on the SWIFT's transaction matching application (Trade Services Utility or TSU) using the TSU interface provided for that purpose.

SWIFT will be repeating this webinar in the future and will organize additional ones. Feel free to join!

André Casterman is Head of Banking and Trade solutions at SWIFT and Co-Chair BPO Project at ICC. His e-mail is andre.casterman@swift.com