Connectivity - with Jacques Yana Mbene, Head of Presales Europe

When asked to describe Connectivity, Jacques explains, “this refers to a mix of both back-end system integrations such as ERPs as well as bank connectivity for corporate clients. ?Corporates need to have secure and stable channels to communicate with their chosen or dedicated banks.” An important question is how to optimize these connections. Jacques notes that a company can, of course, set up direct connections to all their banks via SWIFT, H2H, EBICS and API; however, they can also outsource this connectivity to a professional such as TIS.?TIS can reach more than 11,000 banks worldwide, 900 with direct H2H connections. TIS works with each bank, branch and/or country to establish the most appropriate connectivity for the customer and the bank. Jacque explains that these approaches may differ significantly as each option has its specificity, complexity, and cost. Advising a customer on the impact of selecting any particular option is key. For example, the decision to use SWIFT instead of EBICS may have consequences regarding formatting, implementation time, and costs.

“Streamlining connectivity through a treasury aggregator that supports growth and change is vital. This ensures better data quality (analytics) for financial decision-making, more informed governance, and faster post-merger integrations,” explains Jacques. In addition, banking costs can be reduced while better banking-wallet-management is achieved.?Smarter connectivity allows greater transparency and control, which reduces risk in the payment process.?Organizations can standardize and centralize information without having to centralize their physical structure etc. It is important to add that streamlined connectivity enables agility and innovation, also in case of regulatory and technological changes.

Is this kind of structure relevant for all corporates? Does size matter? What does the typical client look like, and who can derive real advantages from outsourcing complexity, including connectivity? Jacques explains that “average” size may have limited significance as size can vary. “A client can be working with one ERP system reaching out to 200 banks or 100 ERP systems working with 300 financial institutions etc.?Clients who are looking for a partner to take over the complexity of their daily payments’ process and optimize their order-to-cash or procure-to-pay process, nationally and or globally, are typically companies who can benefit.”?

Jacques explains, “when looking at choices regarding connectivity, there are a few key factors. This will depend on the corporate footprint, i.e., its size and business model plus the global connectivity strategy.” A middle-size company in the DACH region may prefer to connect via EBICS; a global corporate may choose H2H because it covers more of its banks. The largest corporations with significant payment volumes and money market transactions may choose to work directly with SWIFT. ?Each connectivity option has pros and cons regarding implementation and cost. In addition, some banks are extremely prescriptive as to what form of connectivity they will accept. Jacques reminds us, “some types of connectivity may be quicker to implement yet more expensive to maintain.”?These factors should be discussed and clarified. However, one point stands out: why would a company implement and maintain connections to, e.g. 300 banks when this is not a core competency? If a corporate hosts a channel on their end, they may also be in charge of the specific format requirements of their bank. This means ensuring that the relevant resources on both the business and IT sides are planned and available.

To minimize both time and money, Jacques recommends that establishing and maintaining bank connectivity should be handled by an expert, a vendor who specializes in doing this. “By outsourcing connectivity, the company gains increased flexibility and agility.?They are no longer constrained to choose bank partners based on IT availability.” Changes in systems, i.e., an ERP migration, the change from SWIFT MT to ISO 20022, can be decoupled from the payment process and, therefore, easier to handle and implement. The right provider can assure that needed formats are created and maintained as a company grows. There are many other benefits as well, such as creating centralized information that, in turn, supports better decision making and more structured fraud prevention.

?