Corporate expectations for electronic payment solutions Moderator: Claus F. Hilles, EBA CLEARING Speakers: Petri Aalto, Pohjola Bank Marc Braet, SWIFT Mervi Mäkelä, Finnair

Corporate expectations for electronic payment solutions Mervi Mäkelä, Director, Cash Management, Finnair

Trends in payment automation & new banking services needed E-Invoices automated ‛Order to Pay’-process automated settlement reconciliation on-line banking even in B2B Finnair Group: global retailer, sales in 34 countries, total 2.2 billion € in 2007, 10,000 empl., national carrier, state ownership 55.8 %, listed in Helsinki Stock Exchange since 1989, ‛Art of flying’ since 1923

Finnair networking First interface between banks & Finnair in 1985 Today banks are linking companies with customers vendors employees shareholders

Finnair networking Banks Finnair bank accounts Vendors Shareholders Customers Credit card companies SAP Financials Treasury Planning tool E-Procurement Sales System SAP HR Multibank connection Invoice Processing Travel & Expense Management Employees SAP Financials & systems linking with SAP Financials

A message to banks: how to help companies in payment automation to transport – receive and to forward – accounting information between companies; payment reference, information on bank statement To speed up payments; charge transactions fees, no bank float to develop on-line banking, even B2B

Buyers companies 25 million Banks 8,000 on-line payments Vendors companies 25 million Consumers > 300 millions XML + ISO standards Credit card companies E-Invoices, invoice-standards on-line payments, Order = Settlement > less invoices on-line payments > less credit card transactions Networking in euro area: B2B & B2C

FINNAIR ‛MAX {e-Invoices}’ now 28% of domestic invoices are e-Invoices, 60% in 2009 FUTURE: MIN {e-Invoices} ‛Order = Settlement = Accounting’ on-line payments for B2B Finnair straight-through process VENDORS E-Invoice Settlement + payment reference Scanning Operator Receiving e-Invoices E-Invoice Process E-Archive SAP Fico Bank connection paper invoice

SEPA –Banking industry is investing 10 billion euros to our common payment language & grammar and products, this will be a huge benefit to us all; to consumers, to companies and eventually to banks SEPA & Finnair –Three payment file formats of today to XML during (no benefit if a quick replacing) –No impact on bank account structure –Euro area outgoing payments already centralised, and cross border euros BIC/IBAN Benefits to Finnair –Faster payment traffic –A lot of competition, possibly even lower transaction fees… –On-line banking, chip cards Waiting for new common products…. Thank you!

Corporate expectations for electronic payment solutions A Bank’s perspective Petri Aalto, Pohjola Bank plc

Corporate expectations for electronic payment solutions Agenda Current status of SEPA migration Corporate expectations; remember the service level Additional benefits and SEPA enablers for corporate customers Conclusions

Current status of SEPA migration National Migration plans published SEPA Credit Transfer successfully launched at January 28 th 2008 Over 4,300 banks have signed the EPC SEPA Credit Transfer Adherence Agreement Close follow-up of SEPA implementation and progress in the member countries European and National Stakeholder Forums established Dialogue among consumers, corporate customers and public sector has started Migration Period and SEPA End Date are under discussion The SEPA End Date: is it coming too soon?

Corporate expectations; remember the service level Maintain the good national payment service level Enable continued development of better services –Automated reconciliation of incoming payments –Integration beyond the payment transaction level, e.g. e-Invoicing Final goal: full STP end-to-end No change for the sake of change –Services must improve if and when technology changes

Additional benefits and SEPA enablers for corporate customers Structured Creditor Reference Globally standardised remittance information will bring added value for corporate customers with cross-border invoicing Invoice number and customer’s identification number are generally used as part of the Creditor Reference Creditor Reference Number is key element in reconciliation and making internal processes efficient

SEEBACH SEEBACH = SEPA + EBA + PE-ACH Finnish Banking Community approached EBA in 2006 Drivers for the project are –utilise the night time processing capacity –improves liquidity management and customer service: incoming payments and liquidity is available from the beginning of the day Win-Win for both customers and banks

SEEBACH SEEBACH data elements Data elements Settlement mode Settlement Settlement cycles File exchange NetGross TARGET2EURO1/STEP1 Day-time settlements 7:30 & 14:00 CET Night-time settlement 1:30 CET 2 settlements 7:30 & 14:00 CET Multilateral Bilateral Delivery 1 Delivery 2 Jan 2008Nov Delivery 3

Conclusions There is room for value-added services on top of the standard SEPA Credit Transfer Full STP end-to-end is key success factor and prerequisite for corporate customers SEEBACH project ensures additional benefits for moving to SEPA Structured Creditor Reference is a powerful tool to improve efficiency and STP Start moving to SEPA to avoid last minute rush and shortage of delivery capacity in the market

SWIFT for Corporates: Current situation & key developments Marc Braet Head of Northern Europe SWIFT

What is SWIFT? A co-operative organisation serving the financial services industry A provider of highly secure financial messaging services The financial standardisation body

e-banking Y host to host X e-banking Z VAN “fax-banking” Internet Leased line PSTN Corporate Accounts payable Accounts receivable Treasury Other Typical corporate-to-bank messaging landscape – Today’s situation

SWIFT: A secure, standardised global single window to the financial industry SWIFTNet Corporate Accounts payable Accounts receivable Treasury Other Single gateway Lower costs/STP Better funds visibility Control/security/reliabil ity Compliance KEY BENEFITS:

Corporates on SWIFT – where do we stand today # registered corporate entities Geographical split EMEA Americas 69% 22% Asia Pacific 9% Q1 2008

Corporate entities on SWIFT Examples of users which joined recently Large But also “mid-size” North America Google, PayPal, Ebay, Delphi, IBM, UPS, Chevron Europe STMicroelectronics, Telefonica, Tesco, Air France, Nokia, Siemens, Iberdrola, Deutsche Telekom, Ingram-Micro, Johnson & Johnson Asia Matsushita, Petronas, Samsung, China Petroleum Finance Company Limited Decathlon Autostrade Alten Belcorp Also suited to corporates with only domestic traffic and/or a few banks

Bank adoption: on the rise Already more than 830 banks currently interacting with corporates … From 98 countries! New programme in place to support banks in offering their services over SWIFTNet

Treasury Workstation ERP SWIFTNet infrastructure Typical implementation Payment factory/ middleware FIN (individual messages) Payments (MT101), statements (MT940/2) and FX confirmations (MT3xx) FileAct (File transfer) Transport any format; payments files, iDOC, ISO20022, ACHs, BAI formats, … SWIFTNet ERP(s)

Going forward: Delivering value to all users XML ISO 20022, Bank Mandates, Bank contract SWIFT as key corporate-to-bank standard setter Standards Back-office integration Broader set of services Enablement of key vendors Certification programme Low-value payments, Securities, Trade, Exception & Investigation, SWIFTNet Mail Personal digital signature

Two ways to connect to SWIFT Direct Connectivity: –SWIFT Interface platform –Alliance Lite Indirect connectivity –Member Concentrator model –Service Bureau NEW

A new hassle-free way for customers to connect to SWIFT Accessible in a secure way Over the Internet Targeted at new low volume customers Alliance Lite: what is it?

Easy In business in days Full SWIFTNet access Standard desktop Secure Manual operations Automated operations SWIFTNet SWIFT Internet Alliance Lite Customer ManualAuto SWIFTNet Customer General Availability: October 2008 Alliance Lite

Lite³ ‘Lite’ footprint ‘Lite’ total cost of ownership ‘Lite’ on-boarding