Probably the most significant step forward was the opening up of the SWIFT network to corporates – in 2006 SWIFT finally opened its doors properly and gave corporates the ability to connect to all of their banks using the SWIFT network. There were corporates
connected to SWIFT before then, but only the very largest corporates could afford the investment and make it work. SWIFT was the biggest single change because, although the idea and concept of payment factories were around before SWIFT, it really helped the
business case because as well as centralising or optimising the payments process internally, which is what a payment factory enabled you to do, SWIFT provided that single connectivity mechanism to the banks.
The next biggest change in Corporate payments was the advent of the payment factory and the idea of moving to a single solution to optimise the payments initiation process. That has gone hand-in-hand with some of the changes that happened in the payment
space – SEPA, for example. As more regulation has come down the line in the last ten years, corporates have struggled to manage that without having a centralised solution in place. And as more Corporates have adopted the Shared Service Center concept, a single
solution and process became key.
Over the last two to three years, we’ve seen the increase in XML messaging (often referred to as ISO20022), and what that really means is that we’re starting to now see the replacement of domestic formats. Payments used to be a formats challenge, so ten
years ago at the very start of payment factories being in existence, the discussion would centre around which local formats you support, and how does your solution work with this format or that format. It used to be a real formats challenge, especially for
global corporates that had to have a different domestic format in every single country, and it was a nightmare to manage. What the use of XML and standard implementation guidelines (like CGI) will do is take away those domestic formats and replace them with
a common structure and a common format. We’re starting to see the move away from payments as being a formats challenge and allowing corporates to focus much more on efficiency gains from things like least-cost routing and payments-on-behalf-of structures.
Another key development in the payment space is that this move to SWIFT and payment factories has increased the ability for corporate to become a little more independent of their banks. Ten years ago there was a lot of lock-in – corporates were tied to bank-specific
solutions and it was not easy to move. Whereas now, corporates can, in theory, be a lot more fluid in terms of their banking relationships. They can have a bit more leverage when it comes to discussions with their banks because they haven’t got that deep,
ingrained integration with the bank-specific solutions that they did have ten years ago.
So we have seen many changes in the last ten years, more than I have mentioned here, and in the next blog, we’ll look at what potentially lies in store over the next ten years.