Republic of Korea User Group Meeting Debbie Lee, Michael Cheung Commercial Division, Asia North Seoul - 19 May 2005 Slide 1

Agenda 1. Latest update 2. Changes to SWIFT Invoicing Procedures 3. SWIFTNet Migration Phase 2 4. SWIFTNet Business Solutions 5. Education 6. Q & A

Slide 2

Latest Update

Slide 3

Changes to SWIFT invoicing procedures in Korea

Slide 4

Changes to SWIFT invoicing procedures in KR  Today’s  What  Who

invoicing rules

will change? will be effected?

 What

do you have to do?

 Your

Questions, please . . .

Slide 5

Today’s invoicing rules 

License fees and annual maintenance for SWIFTAlliance Access & Entry is indirectly invoiced, i.e. via Comas Inc. – Currency and invoice frequency may differ from standard SWIFT invoicing



All other license fees, product maintenance and service charges are invoiced directly from SWIFT in Belgium – Always in USD, recurring maintenance charges invoiced according to SWIFT pricing policy (monthly or annually) – SWIFTNet Link (SNL), SWIFTAlliance Gateway (SAG) etc. Slide 6

What will change? 

Effective from 1st January, 2006



ALL SWIFT license fees and product maintenance and service charges will be invoiced directly from SWIFT – Always in USD – Recurring maintenance charges invoiced according to SWIFT pricing policy (i.e. monthly or annually) – SAA, SAE, SAG, SNL & all service fees – Same invoice layout for all invoiced items – Direct debit function MUST be used for all payments – Use of Online-billing possible! Slide 7

Who will be effected? 

ALL Korean SWIFT customers using SAA / SAE



ALL new purchases processed as from 1st January, 2006



SAA/SAE 2006 annual maintenance invoices due by end of January, 2006

Slide 8

What will you have to do? 

Advise your internal administration / people involved in processing and effecting invoices and payments – Standard invoice layout for all SWIFT invoices – Direct debit as standard invoice settlement means – Withholding tax handling similar to SNL related invoices

Slide 9

Questions

& Answers Slide 10

SWIFTNet Phase 2

Slide 11

SWIFTNet Phase 1 SLS: FIN Access control MAC: e2e security BKE: relationship mgt.

IP protocol

Phase 2 driver:

SWIFTNet

Progress the single window strategy

PKI SCR/ICC

SWIFTNet FIN interface

Phase 2 driver:

SLS existing Upgrade security technology MAC BKE

FIN SLS

SCR/ICC

Phase 2 driver:

FIN - BKE too complex interface - BKE not granular -X.25 Need relationship protocol management for other services

Slide 12

SWIFTNet FIN Phase 2 PKI: FIN Access control PKI: e2e security RMA: relationship mgt.

SWIFTNet PKI HSM

PKI

FIN PKI

PKI

SWIFTNet FIN interface

HSM

SWIFTNet FIN interface

PKI RMA Slide 13

Evolution of SWIFT Security 1977

Relationship Management

1991

1995

Bilateral keys (paper)

Message Bilateral keys (paper) Authentication Encryption

STEN

Access to Access codes (paper) SWIFT

1996

2003

2007

RMA

Bilateral keys (BKE)

Bilateral keys (BKE) disc PKI keys disc Cylink

ICC cards/Card Reader

PKI HSM

SNL/VPN Box

PKI HSM

INCREASED SECURITY Slide 14

HSM (Hardware Security Module) 

Tamper-resistant hardware to secure PKI secrets



Dedicated device for PKI signing operations

high-end option Box type HSM, high performance LAN based

low-end option

Card Reader/ Smart-card or USB token

Slide 15

BKE versus PKI/RMA BKE world End to End Security (based on Bilateral Keys + MAC) + Relationship management (traffic control) PKI world – PKI offers only End to End Security (based on Certificates + Digital Signatures) – Characteristics – Everybody can send signed messages to everybody – Everybody can verify signed messages from everybody

– Therefore need for separate Relationship Mgt. Application (RMA) Slide 16

Relationship management application (RMA) Managing correspondents in a many-to-many world – RMA as mechanism to control WHO can send you traffic – preventing “unwanted traffic”

Managing the correspondent’s business – RMA as mechanism to control WHAT a correspondent can send to you – Example, for FIN: – Authorisations only apply to authenticated traffic – Authorisations can be granular to the level of MT/MT

category Slide 17

SWIFTNet Phase 2 Preliminary timeline

2004

2005

2006

2007

2008

Design/build/test Pilots Migration

Slide 18

Status & planning update SWIFTNet Phase 2 – Where we are

 Design

completed

 External

security review completed

 FIN

Interface vendors

– Vendor specifications released – Preparation phase started

Slide 19

Status & planning update SWIFTNet Phase 2 – What’s next? 

Finalize contract negotiation with HSM vendors



Define migration strategy and finalise customer TCO (total cost of ownership)





June Board paper



Migration strategy and planning



December Pricing Board paper



Start migration preparation



SIBOS

2006: roadshows to prepare and plan for 2007 migration Slide 20

SWIFTNet Business Solutions

Debbie Lee Regional Account Manager Commercial Division, Asia North [email protected]

Slide 21

SWIFTNet Bulk Payments A cost-effective, format-independent way of exchanging files with counterparties

Slide 22

how SWIFT is helping the industry reduce costs and increase efficiency in the area of low value / retail payments Slide 23

Bulk payments 

Usually low to medium value and/or non-urgent payments – Credit transfers: salaries, pension payments, retail and commercial payments – Direct debits – Cheque clearing and truncation



Formatted in a variety of file structures



Exchanged in electronic files



Cleared through correspondent relationships and Automated Clearing Houses (ACHs) Slide 24

FileAct supports your bulk payments’ needs ACHs and STEP2 Correspondent banking Corporate and financial institution customers

Multiple ACH formats

Slide 25

All solutions are based on SWIFTNet FileAct Sender

File transfer status

Receiver

1

File transfer initiation

2

Actual file transfer

3

Delivery notification (optional)

File transfer status



Authenticity, integrity, confidentiality, non-repudiation



Flexible central routing



Any type of file up to 250Mb, compression supported Slide 26

SWIFTNet solution for bank-to-ACH bulk payments 

1

ACH acting as a service provider: – Administers its dedicated SWIFTNet closed user group – Defines use of FileAct in many-to-one or many-to-many topology

ACH

Solution for bank-toACH bulk payments

– Decides on use of InterAct, Browse and FIN – Develops and sells bulk payments processing service 

Financial institutions access ACH over existing SWIFTNet connectivity

SWIFTNet FileAct Slide 27

SWIFTNet solution for ‘free-format’ bilateral bulk payments 

2

Financial institutions: – Register to SWIFTNet FileAct for bilateral transfer (real-time mode and/or store-andforward mode) – Exchange files bilaterally with selected correspondents

Bank-to-bank exchanges

– Agree bilaterally on business formats and service levels

Solution designed for bilateral bulk payments in any format

SWIFTNet FileAct Slide 28

SWIFTNet solution for corporate-to-bank bulk payments 

3

Financial institution: – Administers its dedicated SWIFTNet closed user group

Member Bank

– Defines use of FileAct in many-to-one – Decides on use of InterAct, Browse and FIN in many-toone – Develops and sells proprietary payments service to own end customers

Solution designed for corporateto-bank bulk payments 

End customers access financial institution’s service over SWIFTNet

SWIFTNet FileAct Slide 29

SWIFTNet file transfer interfaces Applications

SWIFTAlliance Gateway

File transfer middleware

FTA

Applications in

out

File transfer GUI browser

SWIFTAlliance Gateway

SWIFTNet

SWIFTAlliance WebStation

SWIFTNet FileAct enables seamless transfers between different architectures, between different middlewares Slide 30

SWIFTAlliance WebStation File Transfer GUI

Slide 31

SWIFTNet FileAct for Check 21 International cash letter project status

SWIFT Check 21 Overview Feb 05 v4 .ppt

Slide 32

International Cash Letter opportunity International transmission models US $ cheque deposit

US $ cheque transmission Paper cheque

Paper cheque $

1

Image cheque

2 US $ cheque capture bank

US $ cheque clearing

$

US Bank Proprietary Network

Image cheque

Image cheque One US bank of first deposit

Image cheque

3

US bank clearing of first deposit

Any US bank of first deposit

SWIFTNet FileAct Any US clearing institution

1.

Status quo: paper check transportation

2.

Image exchange with only one US correspondent bank

3.

Image exchange with any US correspondent bank or any US clearing institution Slide 33

International Cash Letter opportunity

Check 21 benefits for the non-US banks 

Streamline operations by reducing the number of times physical checks must be handled

Accelerate delivery to U.S. and extend processing window  Accelerate funds availability by reducing the float  Eliminate transmit loss rate and reduces reliance on 

the physical transportation of checks by ground and air 

Reduce transportation costs – Reduces costs and expedites handling within bank or customer operations – Reduces costs and quicker collection and return of checks between banks Slide 34

Proposed deployment schedule for new SWIFT Check 21 solution

Mar 04 – Oct 04

Oct 04 – Mar 05

Opportunity identification

ESG Sibos’04 project (11 - 15 initation Oct) (1 Sep)

Solution definition and validation

Board Pricing Task Force (2 Mar)

Mar 05 –May 05

Jun 05 onwards

Pilot

Live

Pilot Bank

Slide 35

SWIFTNet Cash Reporting

Slide 36

What is SWIFTNet Cash Reporting? FIN MT 103 / MT 202

Intraday FIN MT 900/910/942

SWIFTNet Cash Reporting ! W E N

Account servicing institution

Account owner

End of day FIN MT 950

Slide 37

SWIFTNet Cash Reporting a modular solution Standards

Cash Management SWIFTStandards XML

SWIFTNet

SWIFTNet messaging Closed User Group

Rules

Market practice and R&L

Vendors

Integration in back office applications Enabling straight-through processing Slide 38

SWIFTNet Cash Reporting supports your real-time information needs

Market infrastructure cash management Real-time Nostro account information Real-time cash reporting for corporates

SWIFTStandards XML

Slide 39

Real-time Nostro account information information flows: ‘push’ Information is pushed to the Service User by the Service Provider 

at prearranged times or



in real-time as soon as an entry occurs on the Service User Nostro account

Return Account/Transaction



Information received: unsolicited

Acknowledgement



Frequency negotiated between the parties



Information on events as negotiated between the parties

Service Provider

Service User Treasury

Slide 40

Real-time Nostro account information information flows: ‘pull’ 

Information updated in real-time is made available to the Service User



Service User being able to pull the information required when needed Get Account/Transaction



Information requested manually

Return Account/Transaction



Information only viewed



Sensitive times e.g. cutoffs



Specific queries



Information requested automatically e.g. every ‘x’ min/hrs; close to cutoffs,…



Information integrated in back office applications

Service Provider

Service User Get Account/Transaction

Return Account/Transaction

Service Provider

Service User

Slide 41

Real-time Nostro account information directory - sample BIC

Description ABSAZAJJ BBVAESMM BCITITMM BCOEESMM BCOMPTPL BKAUATWW BLUXULL CAIXESBB

Absa Bank Limited Banco Bilbao Vizcaya Argentaria S.A. Banca Intesa SPA Banco Cooperativo Espanol s.a Millennium BCP Bank Austria Creditanstalt AG Banque de Luxembourg s.a. La caixa

CCDQCAMM

La Caisse Centrale Desjardins du Quebec

CGDIPTPL COBADEFF DEUTDEFF ESPCESMM NATAAU33 POPUESMM ROYCCAT2 SBZAZAJJ SOGEFRPP UNCRITMM

Caixa Geral de deposito Commerzbank AG Deutsche bank AG Banco Espanol de Credito National Australia Bank Limited Banco Popular Espanol s.a Royal Bank of Canada Standard Bank of South Africa limited Société Générale Unicredito Italiano SPA

Role PROV, USER USER PROV, USER PROV, USER PROV, USER PROV USER PROV, USER USER PROV, USER USER PROV, USER PROV, USER PROV PROV, USER PROV PROV PROV PROV, USER

Delivery mechanism

Destination DN

PL & PS PL PL PL PL PL & PS PL PL

o=absazajj,o=swift o=bbvaesmm,o=swift o=bcititmm,o=swift o=bcoeesmm,o=swift o=bcomptpl,o=swift o=bkauatww,o=swift ou=cashrep,o=bluxlull,o=swift o=caixesbb,o=swift

PL PL PL & PS PL & PS PL PL PL PL PL PL PL

o=ccdqcamm,o=swift o=cgdiptpl,o=swift o=cobadeff,o=swift ou=nostro-account-info,ou=test,o=deutdeff, o=swift o=espcesmm,o=swift o=nataau33,o=swift o=popuesmm,o=swift ou=cashreporting,o=royccat2,o=swift ou=vostro,o=sbzazajj,o=swift ou=finp,o=sogefrpp,o=swift o=uncritmm,o=swift

Slide 42

SWIFTNet Cash Reporting supports your real-time information needs

Market infrastructure cash management Real-time Nostro account information Real-time cash reporting for corporates

SWIFTStandards XML

Slide 43

Provide true end-to-end real-time information to customers

SWIFTNet

SWIFTNet

XML Corporate customer Cash reporting messages containing information (balances/transactions) re corporate’s account

Account servicing institution

MA-CUG

End to end with SWIFTNet Cash Reporting Slide 44

SWIFTNet real-time Nostro account information How do I join?  Joining

the service is for free

– Sign the Subscription Form  Discuss

with your vendor how to integrate the real-time information in your application(s)

 You

only pay standard InterAct low traffic fees

 Traffic

aggregated towards your Global Tier calculation!

Slide 45

Using SWIFT for financial messaging with corporates

Slide 46

Banks offering MA-CUG services ABN AMRO BANK A.O., ZAO ABN AMRO Bank N.V ABSA Bank Limited American Express Bank Ltd Australia and New Zealand Banking Group Banca Intesa Banco Bilbao Vizcaya Argentaria, S.A. Banco Comercial Portugues, S.A. Banco Cooperativo Espanol, S.A. Banco Espanol de Credito S.A. Banco Popular Espanol Bank for Foreign Trade Bank of America N.A. Bankinter, S.A. Banque Algérienne du Commerce Extérieur Banque Fédérative du Crédit Mutuel Barclays Bank plc Bayerische Hypo- und Vereinsbank BBVA Bancomer, S.A. de C.V. BNP Paribas Caisse Centrale Desjardins Caixa d'Estalvis i Pensions de Barcelona "La Caixa“ Caixa Geral de Depositos, Lisboa CDC IXIS Citibank NA Crédit Agricole Crédit Lyonnais SA Credit Suisse, Zürich Danske Bank A/S Deutsche Bank AG Deutsche Bank Trust Co. Americas Deutsche Postbank AG Dresdner Bank AG

First Rand Bank Fortis Bank N.V. HSBC Bank plc HSH Nordbank AG ING BANK (EURASIA) ZAO ING Belgium NV/SA JPMorgan Chase Bank KAS Bank KBC Bank N.V. Korea Exchange Bank Laurentian Bank of Canada Mellon Bank NA Mizuho Corporate Bank Ltd. Natexis Banques Populaires National Australia Bank Nedcor Bank Limited Raiffeisen Zentralbank Österreich Royal Bank of Canada Samba Financial Group Santander Central Hispano Investment S.A. SKB-Bank Sobinbank Société Générale Standard Bank of South Africa Standard Chartered Bank The Bank of New York The Bank of Tokyo-Mitsubishi, Ltd. The Royal Bank of Scotland plc UFJ Bank Limited Unicredit Banca d’Impresa Wachovia Bank Wells Fargo Westdeutsche Landesbank Westpac Banking Corporation

Slide 47

Corporates on SWIFT Aegon Anglo American Corporation of South Africa Anglo American Platinum Aramco Arcelor BP Bridgestone Espana Cap Gemini Espana Cargill Cimpor Citco DaimlerChrysler Danone Debswanna Diamond Company Eskom Holdings European Aeronautic Defense and Space - EADS FINClear FZ-LLC Ford Motor Company France Telecom Gaz de France General Electric Glencore International Hertz HIFX PLC Ingram Micro

Johnson and Johnson Korea Exchange Bank (3 entities) Legal and Finance Mastercard Moravski Penezni Ustav Nestle Espana Norsk Hydro Nyenburgh Beheer N.V. Omnicom Rural Grupo Asegurador Sanoma SAP Shell Sonatrach Sverdlovenergo Synergex Telkom Tetra Laval Thales SA The Dow Chemical Company Total Transnet Limited Travelex (4 entities) UNI 2 Visteon Corporation Yara International Yves Rocher Slide 48

Trade enablement Finance

1

Bank

SWIFT solutions for corporates

Purchase order financing

Supporting Corporate interbank SWIFT solution

Assure

2

Risk management

Fulfillment

Corporate

Supporting the financial supply chain Invest

Trade settlement Pay

3

Analyze

Manage

4

5

Commercial Treasury payments Investment and and portfolio cash invoice management management reconciliation

payment, cash management and trade services

Corporate custody services

Slide 49

SWIFTNet messaging services Service

Characteristics

Typical business application

FIN

Message transfer, store and forward, FIN message standards (e.g. MT101, MT940...)

Treasury and cash management.

FileAct

File transfer, bulk/batched messages

Payments, collections, payroll etc

InterAct

Query-response messaging using XML standards

SWIFTSolutions : e.g. cash reporting

Browse

Secure browsing using HTML GUIs. Manual input of messages.

Reporting

Slide 50

Trends in corporate financial messaging  Centralization

of cash management functions

and systems  Increased

use of cross-border low value

payments  Standardisation  Single

and control

messaging gateway to banks

Slide 51

Connecting to SWIFT

1.

Join and connect

16 week typical leadtime

2.

Register in your bank’s MA-CUG

3 weeks per MA-CUG

Slide 52

Help you to maximise your SWIFT connection – Customer Education 2005

Slide 53

SWIFT Education Media



Classroom Courses – Scheduled standard training



On-site Courses – Arrange per your request and customized to fit your needs



eLearning - Quick Start downloadable modules which brings SWIFT Training to your desktop at your own pace

Slide 54

Training Solutions

We offer training solutions for different business segments „ General Knowledge „ Payments market „ Securities market „ Treasury market „ Trade services market „ SWIFTNet and FIN interfaces „ Audit Slide 55

Where To Find The Information?

www.swift.com/education Your one-stop-shop to SWIFT Education products and information! – – – –

Online course schedule, descriptions Course registration Latest news on training Access to and ordering of e-learning products downloadable modules and CD-ROMs - Quick start – Education newsletter registration

Slide 56

Education Email Newsletter  The

newsletter offers you:

– Information on our latest products that will help you optimise your SWIFT connection – The latest Education schedule

 Available  All

for 6 different regions

you need to register is an email address

– Go to www.swift.com/training – Select ‘Newsletter registration’ in the drop down menu

Slide 57

Education Contact – Asia Pacific 

Ms Tammy Tsang email: [email protected] Tel: +852 2107 87 00 Fax: +852 2107 87 99



SWIFT BIC: SWHQ HK HH EDU

Slide 58

Questions and answers Slide 59

Thank You

Slide 60