STP in Financial Supply Chain: Emerging Standards,

Technologies & Practices

IBA & FINSIGHTPayments Summit 2009

Ravishankar

Group EVP & Country Head

Cash Management & Direct Banking

2Strictly Confidential

Raw Materials

Sales

Account ReceivablesCash & Bank

Balances

Finished GoodsDemand Drafts

Letters of Credit

Import Financing

Physical Collections

E- Collect

FX Remittances

Export Finance

Liquidity Services

Investment Management

Financial Supply Chain Management

RTGS Transfers

MISFaster,

Accurate, Standard

FX Trading and Risk solution

Debit/Credit/Cards / Electronic/Mobile

Payments

3Strictly Confidential

Supply Chain Management Challenges

4Strictly Confidential

Supply Chain Management Solutions

5

Banks may use different formats

Customer A

Bank 1

Bank 2

Bank 3

IFX Format

Proprietary Format

SWIFTMT 101

6

…And so will Customers

IFX Format

Proprietary Format

SWIFT

MT 101

Bank 1Customer A

Customer B

Customer C

7

ISO20022 – A unified global standard

UNIFI - ISO20022

Global Industry standard

Inter-operability between FI’s, Governments, Corporates,

Intermediaries etc.

Being adopted and supported by banks and financial application providers all over the world – SEPA, SWIFT, JP Morgan, SAP, Oracle, ISTH, Euro clear, etc.

Will enable clients to integrate core treasury, payable and receivable applications with buyers, suppliers and banking partners

Advantages in Payments for clients:

Improved STP

Standardized access to the Global Payments Landscape.

Enhanced Information Capture= Better Reconciliation

Better Intra-day payment information management = enabling improved cash positioning and reconciliation

8

ISO 20022 – What does it cover?

PAYMENTS – Credit Transfers, Cheques, Direct Debits

Services: Payment Initiation, Clearing and Settlement, Cash management between parties

CARDS – Debit cards, prepaid cards, charge cards and Credit cards

Services: ATM processing, transactions and messages between acquirers, merchants & customers

TRADE SERVICES – Collections, LC, Guarantees, Documentary Credit

Services Covered – Open Account Trading, Reconciliation, Remittances, e-Invoicing, pre/post shipment financing

SECURITIES – Equities, Fixed income, Funds, Derivatives

Services: Issuance, Pre-trade, Initiation, Post-trade, Clearing and Settlement, Custody, Collateral management, account management

FOREX – Spots, Swaps, Forwards, Currency Options

Services: Pre-trade, trade, post-trade instructions and notifications, trigger events, third party notifications, clearing and settlement

9

Convergence tables for single format

ISO 20022 Core Payment Kernel

TWIST

Proprietary

SWIFT MTIFX

OAGi

10

ISO 20022 – Integrates Communication

Core Payment

Kernel

Core Payment

Kernel

Core Payment

Kernel

ISO

20022

IFX

IFX

MT 101

MT 101

11

Shared Service Models

Consolidation of Cash Management Systems / Banks

Cash Pooling

Consolidation of Bank accounts across countries and banks

Host to Host Integration

Multiple systems within group companies

Accounting systems to Bank systems

Economic Downturn- An Opportunity to Learn

International partnerships

Federal Reserve Bank – Equens tie-up for US -Eur

SEPA

Standardized Formats

SWIFT, MULTICASH, EDI, BAI-2

ERP Integrations

Zero authorization

STP capability

Cross Border/Intra country Retail Payment Platforms

Faster settlement systems

RTGS, NEFT, NECS, CTS

Corporates Banks

12

Adoption Trends

Web-enabled, Universal payment channel

Multi-bank access through single, standard open channel

Direct EDI enabled channel/Proprietary Networks

North America

West Europe, Japan, HK, SGP, Aus

APAC, East/central

Europe, Africa

Low Integration/Automation Capability

High Integration/Automation Capability

India Leapfrog

RTGS

NEFT

Stock Exchange Settlements

India Laggard

B2B exchanges

B2C/P2P - Electronic/ Payments

Card based Payments

INDIA FUTURE :

ISO 20022

13

P2P, P2B,G2P,B2P

Cards

E-commerce

M-commerce

B2B,B2C,B2G,B2E

B2B,B2C,B2G,B2E

E-commerce

M-commerce

Supply Chain

E-commerce

Supply Chain

Online Exchanges

Two Factor

Multi Factor

Multi Factor and Biometrics

Ind

ivid

ual

s &

Sm

all

B

usi

nes

s

Mid

siz

e

Bu

sin

ess

Go

vt &

Lar

ge

Bu

sin

ess RTGS Online

Single Sign-On

Multi Security

THANK YOU