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SWIFTNet: Can it Catch Corporates in its Net(work)?

SWIFTNet: Can it Catch Corporates in its Net(work)?

Aite Group forecasts that the actions being taken by the Society for Worldwide Interbank Financial Telecommunications (SWIFT) to make corporate access to their robust, secure network easier and more attractive will result in 3,000 corporate participants b

Boston, MA, June 12, 2006 – In a new report, SWIFTNet: Can it Catch Corporates in its Net(work)?, Aite Group analyzes the market drivers and actions taken by SWIFT and its member banks to expand the value of its network to corporates as participants. SWIFT is an international, cooperatively owned financial services organization that provides standards development and management and a secure, robust network for transmission of messages among members and external participants. SWIFT has supported secure, timely communication between banks for over 30 years. Corporates' heightened awareness of the importance of privacy and security has led to demand for access to the established, open-standards-based SWIFT network.
Corporate Access to SWIFT

SWIFT has expanded the reach of its network to allow corporates to have access through Member Administered-Closed User Groups (MA-CUGs). While adoption was slow in the early stages (1998-2002), the introduction of SWIFTNet, a virtual private network leveraging Internet protocols, has greatly increased corporate use. For some member banks, this corporate access is a cause for concern as they fear common access will weaken their ties to their corporate clients and could potentially lead to disintermediation of their role between corporates. Other, more forward-looking banks see the opportunity to reduce internal costs by replacing proprietary connections to corporates and to introduce value-added services to the corporates.

"The opportunities for the financial services industry far outweigh the potential risks of allowing corporates to have broader access to SWIFT," notes Nancy Atkinson, a senior analyst with Aite Group and author of the report. "Being able to leverage existing SWIFT connections and evolving message types to interface with corporate clients allows banks to creatively offer value-added services. Market drivers will overcome resistance and make this channel a terrific advantage for those banks that embrace the corporate access."

This is a 33-page Impact Report. Clients of Aite Group's Wholesale Banking service can download the report.