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FileAct for SWIFTNet

Helping financial services gain savings from their network

As in any vertical industry, there are business drivers in financial services that require automated and reliable movement of data between applications and between organizations. Repetitive credit transfers such as pension or salary payments, ACH processing, securities clearing and settlement instructions, reports sent to regulatory bodies, and cash management are a few examples. Maximizing profit on every exchange is gained by moving the transactions closer to real-time processing.

Automated transactions are often routed through the S.W.I.F.T. (Society for Worldwide Interbank Financial Telecommunications) network, an industry-owned cooperative supplying secure messaging services and interface software to 7,000 financial institutions worldwide.

SwiftML, or the S.W.I.F.T. Markup Language, is an XML vocabulary used to automate Swift messages. The design of SwiftML accounts for the interoperability issue between different financial XML implementations through the use of SWIFTStandards Modeling. This new standardization approach allows the separation of the business standard from its physical representation in XML syntax. All this information is stored in the SWIFTStandards Repository. This allows different languages, even those that are non-XML, to interoperate through the use of the common business model. SwiftML is in line with major XML standardization initiatives (e.g., ebXML, a global initiative to achieve common and predictable usage of XML cross-industry). Consistent and uniform SwiftML messages come from the structured approach of SwiftML adoption. For example, business information is always expressed as XML elements/values; metadata information is expressed as XML attributes.

While many financial industry IT decision makers are familiar with S.W.I.F.T.'s comprehensive messaging standards, security, reliability, and common platform of advanced technology, fewer may be intimate with the benefits and advantages of SWIFTNet's FileAct for mission-critical file exchange. For financial institutions looking for methods of leveraging an investment already in place with SWIFTNet, moving files is a primary avenue to efficiency and savings since it's considerably less expensive than messaging.

FileAct enables secure and reliable transfer of files and is ideal for exchanging batches of structured financial messages, large reports, images, etc. It also supports targeted solutions for market infrastructure communities, closed user groups, and financial institutions. While FileAct can support any file type, applications that are proving popular include bulk payments, securities value-added information, and reporting.

Several progressive banks, such as Wachovia Corporation, are already subscribing to FileAct and by doing so are seeking to maximize opportunities provided by FileAct, Browse, Interact, and the Closed User Group concepts offered by S.W.I.F.T. FileAct is actually a fairly straightforward "out-of-the-box" service. Once registered and the necessary SWIFTNet connectivity and interface structure is in place, exchanging files can begin almost immediately, with the required connectivity and interface infrastructure similar to SWIFTNet FIN and other SWIFTNet services.

For forward-looking financial institutions, the eye is on getting FIN traffic moved to meet the S.W.I.F.T.-mandated migration schedule. The looming migration is from the S.W.I.F.T. FIN network, an X.25 physical network, to SWIFTNet FIN, a secure Internet-type network. All current users of the FIN network are required by S.W.I.F.T. to migrate to SWIFTNet FIN no later than December 2004, with country and volume windows already established for the migration. The global implementation of SWIFTNet and SWIFTNet FIN continues the enhancement and integration of S.W.I.F.T.'s family of messaging services, enabling more interactivity, store-and-forward and file transfer messaging, and secure browsing capabilities. (Figure 1 shows the file transfer interface, and Figure 2 shows the remote adapter interface.)

 

 

In addition to FileAct, S.W.I.F.T.'s InterAct includes both an interactive transmission - the ability to query another participant and receive an immediate response - and, eventually, the replacement of SWIFTNet FIN for the transmission of single transaction transmissions as required by the sender and underlying business function. The Browse capability offered by the global implementation of SWIFTNet and SWIFTNet FIN allows clients or designated entities to enter a data domain and extract information within identified parameters under specified circumstances.

On top of such advancements and enhancements, S.W.I.F.T. recently announced a comprehensive set of price reductions for FileAct, InterAct, and Browse as well as SWIFTNet FIN prices - the biggest overall price-reduction initiative since 1996, when FIN prices were cut by 30%. The reductions include a 45-67% price reduction for both InterAct and FileAct for domestic traffic. Value-added features such as nonrepudiation, message priority, store and forward, and delivery notification will be unbundled.

To encourage wider adoption of S.W.I.F.T. standards and messaging, S.W.I.F.T. has introduced new packages that substantially lower the entry barriers and complexity for smaller banks and financial institutions that connect to S.W.I.F.T. Some of the pricing initiatives include dropping several up-front fees for software and security.

In addition to channeling main network traffic, another critical ROI factor is extending the value proposition of S.W.I.F.T.'s suite of services to participants' back-end systems. With S.W.I.F.T.'s introduction of "alliance gateways," there is a need to consolidate back-end traffic from such gateway points of presence on the network - a huge consolidation effort.

Some third-party network products, such as Sterling Commerce's Connect:Direct for SWIFTNet, integrate the delivery and receipt of files with the back-end applications - the real consumers of the data. Connect:Direct for S.W.I.F.T. interoperates with FileAct and integrates seamlessly with back-end applications. It also can provide decreased pricing for SWIFTNet usage, enhanced by efficient compression.

The advantages of SWIFTNet's FileAct and its complementary services along with recent price reductions give banks and financial institutions an effective way to squeeze more efficiency and savings from their SWIFTNet migration investment and SWIFTNet infrastructure. By combining a reliable network solution that integrates the back end with points of presence, an organization is well on the way to staying competitive in a challenging and ever-changing financial services market.

SWIFT in Action
Wachovia Corporation is one of the largest full-service financial services firms in the United States. The company provides a broad range of banking, asset management, wealth management, and corporate and investment banking products and services. For a number of years, Wachovia has partnered with banking entities in Europe to provide national pension payment services in North America and Latin America. Wachovia receives the pension payments in bulk files. Upon receipt, the bulk payment data is broken down by Wachovia internal applications into individual transactions that are then processed and disbursed via multiple delivery methods, including ACH, EFT (Canada), Fedwire/CHIPS, book credit, and check.

Historically, Wachovia used the S.W.I.F.T. Integrated File Transfer (IFT) product for receipt of bulk payment data over the S.W.I.F.T. X.25 network. With the decommissioning of the IFT product by S.W.I.F.T., and the migration to the IP-based SWIFTNet, Wachovia found itself in need of a viable replacement solution. This solution would have to support the new S.W.I.F.T. FileAct Service, provide nonintrusive integration with their back-office applications for payment disbursements, and support future applications.

A Winning Combination
Wachovia decided to deploy a combination of Connect:Direct for SWIFTNet and Connect:Direct - both by Sterling Commerce - because of its automation capabilities, management, security, and reliability features. Connect:Direct also provided Wachovia the flexibility they needed to support their back-office systems involved in trade services and payment processing, including AS/400 and Tandem.

Connect:Direct made the integration of existing back-office applications with SWIFTNet FileAct Service simple. Connect:Direct for SWIFTNet provided all the base capabilities of the SWIFTNet FileAct Service through its command set to enable the following file exchanges: Sending a file - a request to send a file to a counterparty over SWIFTNet; Getting a file - a request to retrieve a file from a counterparty over SWIFTNet; Receiving a file - respond to a file transfer request by a counterparty that wishes to send a file over SWIFTNet; and Downloading a file - respond to a file transfer request by a counterparty that wishes to download a file from the local SWIFTAlliance Gateway over SWIFTNet.

Connect:Direct enabled Wachovia to automate the business processes involved in moving files bidirectionally between various internal applications and the SWIFTAlliance Gateway as well as sending and receiving files via the SWIFTNet FileAct Service in conjunction with correspondent banks.

With the combination of Connect:Direct and S.W.I.F.T.'s FileAct Service, Wachovia enjoys improved bandwidth over current IFT implementation; support for any file type; automated, integrated business process that embraces back-end applications; decreased pricing for SWIFTNet usage enhanced by efficient compression; and single protocol with SWIFTNet.

The combined solution also provides Wachovia a data exchange infrastructure to support existing and future business applications. These applications could extend beyond the data now exchanged with correspondents to include other payment types, settlements, image transfers, trade documents, consolidated statements, and securities-related information.

More Stories By Cathy Kingeter

Cathy Kingeter is solutions manager for SWIFT at Sterling Commerce.

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