A test of a Swift network service for transmitting international corporate payments and related documents is moving more slowly than bankers expected.
Twenty-five banks in the United States and Europe are sending test messages related to corporate trade. Swift inaugurated the test in September 1991, and so far volume has been "insignificant," according to a network official.
Banks involved said they have had difficulties signing up multinational corporations for the service, called electronic data interchange, or EDI. Also, the time needed to develop the complex software required to communicate with corporate clients is slowing down the effort.
Units of Chase Manhattan Corp., Chemical Banking Corp., Citicorp, First Chicago Corp., and PNC Financial Corp. are the U.S. banks involved in the pilot.
The Swift test is the first large-scale project aimed at automating flow of payment and trade information among banks and corporations across national borders. Swift - the Society for Worldwide Interbank Financial Telecommunication - is a Brussels-based bank consortium.
Most banks have been reluctant to offer EDI, even domestically, because of limited corporate demand and the need for big software investments for a service that even today is at best marginally profitable.
Of the 55 banks that have said they want to participate in the Swift trial, only the 25 test participants have sent messages.
U.S. bankers experienced at offering EDI services said they were not surprised the project was moving slowly. "The problem with doing EDI on Swift is that it takes four to tango," said Mary McKenney, vice president of payment products at Citibank Delaware.
Banks must be able to exchange messages with another bank, and with two corporate trading partners, one customer for each bank.
Citibank has sent test messages on Swift, but is simultaneously using its own network to send financial EDI messages in production with several customers. "We're anxiously looking forward to using Swift" to send cross-border payment data, Ms. McKenney said.
A Link Down Under
First National Bank of Chicago began sending electronic payments with the additional information last September to and from Commonwealth Bank of Australia on behalf of Quantas Airways and two of its principal U.S. suppliers, GE Aircraft Engines and Pratt & Whitney Aircraft Engines.
Right now, First Chicago is using standard telephone lines, not Swift, because Australia is not yet on Swift 2, an enhanced version of the network that is a prerequisite for financial EDI.
First Chicago' will begin using Swift once the switch to Swift 2 is made this fall. "We're working to identify other suppliers of Quantas in the United States," said Christopher L. Wagner, senior vice president and head of product marketing for cash management at First Chicago.
Participation in the trial requires an up-front investment, which bankers estimated at between $25,000 and several hundred thousand dollars, to revamp software to handle the Swift message formats.
Swift's EDI message uses a different format than the traditional Swift message, which is of a fixed length. The EDI message contains records of varying lengths, to accommodate the different information needs of different industries or corporations.