In a move that lets it support international messaging standards, show off its BizTalk integration server and streamline its internal treasury activities, Microsoft at Sibos today announced it has become the first corporate treasury to implement an ISO standard format for receiving its bank statements.
Microsoft collaborated with Bank of America Merrill Lynch, Citi and SWIFT to develop a unified format that lets it receive electronic bank statements from all its banking providers in the same format.
Extensible Markup Language is a way of formatting, parsing and tagging data such that computer programs can read and act on the information. (For instance, a customer name might be tagged ). The ISO 20022 standard provides a common schema for such messages, so that everyone uses the same tags and formats. It was developed mainly by European banks to handle new payment structures for Single European Payments Area payments sent between banks. But the standard has taken time to mature and crystallize. "Even within 20022, there are still lots of different variants, based on what country you're working in and banks' data processing requirements once the payment or cash reporting gets to the back end," says Colin Kerr, Microsoft industry solutions manager. "That places a huge burden on the corporate treasury that has to work with multiple banks." Microsoft works with eight major banks around the world and another 90 banks locally.
To make its treasury operations more efficient, Microsoft began approaching the major banks it work with, starting with Citi and Bank of America, to develop a unified standard. "This will give us flexibility in terms of onboarding or switching transactions from bank to bank," Kerr says. "It will give us a better, more streamlined, integrated view of our cash on a daily basis." Internally, Microsoft is using the SWIFT accelerator built into its BizTalk server to connect to SWIFT servers and banking partners through the SWIFT network.
In April, Microsoft went live with global cash reporting using the ISO-standard XML messages, starting with SWIFT MT 940 end-of-day account balance statements. That data is now represented in the 20022 XML format and fed directly and consistently into Microsoft's treasury systems, Kerr says. In the second phase, which is currently under development, outgoing, high-value payments will be sent from Microsoft Treasury to banking partners using the same format.
For a bank like Bank of America, which has been building a global payments hub for its corporate customers for years, the ISO-standard message will be an additional format they take into their hub. "This format has the ability to consolidate a lot of those old, proprietary formats as well," Kerr says. "That would allow the bank in turn to offer a simpler integration solution across the board to customers whatever country they're located in."
Bank of America Merrill Lynch is a supporter of ISO 20022. "Timely, accurate and complete bank account information is of increasing value to companies of all sizes," says Cindy Murray, Bank of America Merrill Lynch head of global treasury product infrastructure, platforms and ecommerce. "For global companies like Microsoft, receiving bank account information in the same format from multiple banks enables significantly streamlined financial operations. We have leveraged our investment in the latest banking technology in order to be a leader in implementing the new international standards for communicating with clients and have collaborated closely with Microsoft and Citi to achieve this ISO 20022 milestone. We look forward to helping additional corporate clients realize the benefits of implementing this global bank financial standard."
Citi joined in this initiative to develop and implement CitiConnect Straight Through Reconciliation, a solution across 88 branches that will benefit Microsoft and other multibanked corporations seeking to achieve visibility and control over their cash across the globe. "Our participation in this standards development initiative strongly supports our view that proprietary bank technology and integration formats no longer provide strategic differentiation when we are engaging with large, multibanked customers," said Julie Monaco, North America region head, global transaction services at Citi. "Instead, communication is becoming largely commoditized, with the value-add derived from the content that is exchanged, and the seamless integration of this content into core enterprise resource planning processes. As a result, our close collaboration with Microsoft has been key to our success in achieving our common vision of integration and the streamlined exchange of data."
The XML standard has been of more interest to large global banks than to smaller U.S. banks. "It's also fair to say that U.S. banks, other than the ones that operate at a global transaction banking level, have been less interested in ISO 20022 than European and big banks in Asia," acknowledges Kerr. "It's traditionally been viewed as a very Euro-centric schema. But the reality is that you can map any kind of payment through 20022. The potential for being adopted within the domestic U.S. market is very high - it would increase banking compatibility with the rest of the world."
