Swift, the international banking telecommunications network, wants to play a bigger role in trade finance and the exchange of related documentation.
Sources said the Brussels-based organization will soon take a position - perhaps as early as its September board meeting - on whether to work on trade automation in cooperation with another consortium, called Bolero.
Such a move would involve an increase in nonbank participants on a bank-owned network that has approached such liberalization cautiously.
Swift, formally the Society for Worldwide Interbank Financial Telecommunication, is used by 5,300 banks for exchanging messages in such areas as funds transfer, foreign exchange, and securities.
The network averaged about 2.7 million messages a day in July, representing daily dollar volumes exceeding $2 trillion.
Officials said Swift is nearing a decision to work with the Bolero Association, which is forming an electronic registry for the so-called "dematerializing" of trade documents. Swift could provide the "platform" for allowing banks and corporations to exchange such documentation as letters of credit and bills of lading.
Bolero was formed in 1994 with funding from the European Commission, but has not formulated concrete operating plans. Its members include Citicorp, Barclays Bank PLC, and other multinational banks and corporations.
Peter Scott, trade services market director at Swift, said it has been in discussions with London-based Bolero since December 1995 about joining forces to automate the exchange of trade documents.
"Bankers are beginning to sense both the opportunities in those areas and the threats to them from an intermediary stepping in and potentially taking away the business," Mr. Scott said.
Trade-document capability "is not a heavily utilized area within Swift at the present time," he said.
The potential in automation is obvious to Bolero officials. At the New York Banktrade Conference recently, John McKessy, the association's North American representative, said the annual value of goods moved internationally approaches $4 trillion.
He estimated current international trade requires some three billion documents to be issued and managed.
The cost of dealing with paper alone eats up about 7% of the total value of those goods, as much as $280 billion, Mr. McKessy said.
Bank revenues from issuing letters of credit last year were just over $1 billion, according to a soon-to-be-released survey by the U.S. Council on International Banking.
Anthony K. Brown, senior vice president of trade services at MTB Bank, described trade transaction processing as "extremely cumbersome and tedious, prone to mistakes and delays (that) can be a hindrance to the completion of a transaction."
MTB is a $400 million-asset merchant bank based in New York. About 80% of its $100 million in loans are trade-related.
The paper-shuffling costs are not borne entirely by banks. Import/export companies, insurers, freight forwarders, and various government inspection agencies are also involved.
"The question is whether Swift wants to do it," said Dan Taylor, president of the New York-based U.S. Council.
"Swift is going to act fairly quickly on this," he added.
Mr. Taylor said Swift officials will likely grapple once again with the political and philosophical issues of giving nonbanks more access to Swift, and to payment systems generally. In 1995, the network granted partial access to nonbanks after years of heated debate.
"You always have this push and pull, where some banks would like Swift to do certain things" while others want the network to focus on the money transfer business, Mr. Taylor said.
"If Bolero succeeds and Swift joins, I think it will move fairly rapidly, but I'm not sure that Bolero is going to be the only thing out there."
He said Bolero might evolve using value-added networks - or intranets - like the IBM Global Network and General Electric Information Services Co., or perhaps even the Internet.
Indeed, another member of Bolero, CSI Complex Systems Inc., New York, is apparently talking to several providers of private, value-added networks and may soon enter a contract with one.
CSI letter-of-credit software leads the pack in banking, with about a 16% market share, Mr. Taylor said.
The company recently formed a business unit called Electronic Documents International, which has developed an Internet-based system for initiating letters of credit. CSI spokesman George Capsis said the software, Import.com, creates "about 30 key documents involved in international trade."
The Internet, enhanced with security features, may help the trade industry reduce paper-related costs, especially at smaller companies overseas.
CSI managing director Andre Cardinale said customers need only to "dial into a bank's Internet server, pull up the Import.com application, and actually fill in the details to create a new letter of credit or an amendment to an existing one."
While Bolero may find a place on the Internet or a GE-type network, Mr. Cardinale said the ultimate push may yet come from the banking industry working collectively through Swift.
He said Swift opposition from nonbank constituencies that are concerned the telecommunications cooperative will be more sympathetic to banks when disputes arise.
But "if Swift does it," he added, "it will bring banks into the universe far more - pardon the pun - swiftly."
