One of the big buzzes around Sibos this year has been the Bank Payment Obligation (BPO) and the new ICC Uniform Rules for BPO (URBPO) released this April. (http://www.iccwbo.org/About-ICC/Policy-Commissions/Banking/Task-forces/Bank-Payment-Obligation-(BPO)/) It seems everyone was holding their breath for the dropping of the rule book, as if the giant switch will automatically turn the BPO instrument on around the world. However, those of us on the inside all know that this simply isn't possible.

The BPO will become a valuable instrument in supporting open account trade, as well as certain applications, instead of letters of credit, low value LCs as an example. This is what everybody knows, and this is what everybody is talking about. Most Trade Finance Software Providers are embracing BPO and have received the SWIFTReady Supply Chain Finance accreditation with only a few of the uninformed turning their backs on BPO.

I'd like to flip the perspective away from the bank and corporate BPO.

If you're a bank or other financial institution, have you ever thought of mirroring the bank to bank BPO in the same manner as we do the bank to bank reimbursement business?

What do I mean you say? Think of it in the same context as the reimbursement sphere - reimbursing the bank facilities payment without being party to the transaction.

In the BPO world there is significant potential for a BPO bank to provide this instrument in between the buyer bank and the seller bank, as is positioned in the reimbursement business. Not a party to the transaction, just providing the BPO instrument like we do in confirming letters of credit. So the model is a BPO bank with country credit line, for example, sitting between the buyer and seller's bank. We might call this the 'downstream BPO business'.

Ultimately, this would offer added value and necessary efficiency to the parties of the BPO.

Can you see yourself as a BPO model bank? Give it some thought and let me know.

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