But those connections have been limited in use-no payment instructions, no exceptions processing-and still require corporates to adopt a proprietary interface to each SWIFT member's network. Since each bank on a corporate roster may require different levels of integration and security, treasurers have drawers filled with security tokens and key fobs for authorized log-ins and transaction approvals.
But a newly launched SWIFT pilot program involving Citigroup and digital-identity vendor IdenTrust may start to unclutter those drawers.
At last October's SIBOS show in Australia, Citigroup and IdenTrust showcased a new double-digital signature information delivery model in which a corporate-payment order file, layered with SWIFT's PKI security protocol, as well as an IdenTrust digital certificate identifying a specific corporate employee, was delivered and then verified by two separate institutions.
The job was a "proof of concept" that Citigroup executive Gary E. Greenwald says could break down barriers to interoperable identities among institutions and greatly ease the auditing and document-management burdens on corporate treasury departments.
"Every time I talk about this [with clients], it's 'What have you been waiting for?'" says Greenwald, global head of information products for Citi's global transaction services. "Digital signatures are the means by which I can have a controlled, more visible and more streamlined process for managing something that has a lot of risk and control issues associated with it."
Normally, digital signatures issued by banks are only usable for that institution. And in the European-hosted SWIFT system, digital signatures are limited to bank- or company-name identities-not the individuals signing the order.
Having that added level of detail, says IdenTrust CMO Andrea Klein, is critical not only for paper reduction, but also for protecting preauthorized transactions where value dates are set days, or up to a month, in advance. "You could be posting a significant number of fraudulent transactions, so that's key," says Klein. "You've never been able to identify who actually was signing for it."
IdenTrust CEO Karen Wendel says IdenTrust and Citi decided to work with SWIFT since the multi-bank communications gateways were already in place. "All we had to do was add the IdenTrust credential into the SWIFT-messaging instruction component and give that capability to the applications that the end corporates were using," she says. "It didn't require us changing back- office systems in banks."
Citi's experiment with BNP Paribas, using a payment file from Italian corporation Danone, fits into SWIFT's plans to enhance corporate-access offerings, letting companies handle multiple bank relationships for cash management and treasury services. According to SWIFT, additional bank services in exceptions, investigations, trade services and securities are in the works. Besides Citi, banks exploring pilot projects for advanced SWIFT use include ABN Amro, Bank of America, Barclays, BNP, Deutsche Bank, HSBC, ING, JPMorgan Chase, Nordea, Soci?t? G?n?rale and UBS.
The genesis of the pilot with Citi and IdenTrust started almost two years ago when a pharmaceutical client sought Citi's help in developing a double-digital signature platform to submit clinical trial data to the Food and Drug Administration.
Double-digital signatures issued by institutions - a more common feature in Europe and Asia than in the U.S. - do more than carry a person's encrypted identity. They include Know-Your-Customer affirmation, and they carry the same legal and compliance assurances as a pen-and-ink signature. That's why many in the industry consider bank-issued digital identities the most promising means of creating a cross-industry identity program.
Citi is conducting more double-digital signature pilots before officially launching digital-identity issuance programs for new clients and new services, such as new account openings. Greenwald says that by 2008 Citi expects the institution's digital-signatures business to reach a critical mass in the corporate financial-supply chain. "For Citigroup and other banks, this will be both a good client-satisfaction play, and a key part of our transaction banking business," he says. (c) 2007 U.S. Banker and SourceMedia, Inc. All Rights Reserved. http://www.us-banker.com http://www.sourcemedia.com
