How SWIFT can help you with SEPA? Vincent Questiaux SEPA Program Manager 3rd SEPA Conference, Warsaw October 2007

Agenda SEPA Testing Programme SWIFTNet Bulk Payments Solution Interoperability support Be ready for SEPA – SWIFT Training

SEPA Testing programmes for the EPC Testing phases SAL IV Bank-to-CSM-to-Bank … CSM specific business & operational testing programmes End-to-end operational testing programmes within and across CSM communities SAL III Bank-to-CSM … CSM specific business & operational testing programmes … SAL II Bank-to-Bank … CSM specific business & operational testing programmes Specific business & operational testing programmes bilaterally agreed SAL I Bank internal CSM internal … CSM specific business & operational testing programmes Bank or CSM internal Application testing programmes Note: SAL stands for Self Assessment Level in the EPC SEPA Testing Framework

SEPA Testing programme is an initiative of the SEPA testing Advisory Group (STAG) Dresdner Bank Deutsche Bank Fortis Hypo VereinsBank ING Bank JPMorgan Chase Natixis Nordea Intesa San Paolo SEB Société Générale UBS ABN Amro Bank of America Bank Austria Creditanstalt Banco Bilbao, Vizcaya Argentaria (BBVA) Banco Popular Español Banco Santander Central Hispano Caisse Nationale des Caisses d’Epargne CitiGroup Commerzbank Credit Mutuel (CIC) Created at SIBOS 06, the STAG provide advice and guidance to develop the SEPA Testing Programme Seceti

A common SEPA Testing Programme to support SEPA Standards Compliance testing EPC Testing phases SAL IV Bank-to-CSM-to-Bank … CSM specific business & operational testing programmes End-to-end operational testing programmes within and across CSM communities SAL III Bank-to-CSM … CSM specific business & operational testing programmes SAL II Bank-to-Bank … CSM specific business & operational testing programmes Specific business & operational testing programmes bilaterally agreed SAL I Bank internal CSM internal ISO Standard rules testing Testing EPC rules for SEPA Testing CSM Market Practices File exchange headers Testing

Cooperation agreement between the CSMs and SWIFT VocaLink Equens STET EuroSIC Dias Seceti SIBS IberPay SEPA Standards internal testing (SAL I), complementing banks and ACH’s operational and business end-to-end testing testing (SAL II to IV) Common testing tools reduces the cost of testing the SEPA Core Service with each different partner Single facilities provided by a neutral 3rd party Reduce the inconsistencies between implementations and the operational risks Facilitates the interoperability at the SEPA core service level within an SEPA community and across communities Testing at own pace : no window Reduce testing programmes overlap and promote interoperability with their members

Bank/CSM Testing with the CSMs and with the SEPA Testing Programme SAL II SAL III Business and Operational Testing Iberpay specific STET specific …. Equens specific SAL I Bank internal CSM internal Non SEPA Service Messages AOS Standard EPC SEPA Scheme rulebooks and Implementation Guidelines V2.3 (TVS) File Exchange Headers Standards under discussion CSM Market Practices Standards submitted to the EPC for endorsement Core SEPA Standard EPC SEPA Scheme rulebooks and Implementation Guidelines V2.3 (TVS)

SWIFT SEPA Testing Programme value proposition Standards Non SEPA Service reports CSM specific fields Future EPC SEPA Additional Optional Services (AOS) Additional Optional Services (AOS) (White Fields) Bulking SEPA Messages Standardised File exchange header Release 1.x SEPA CSM market practice CSM market practices Core EPC SEPA Schemes Core SEPA (Yellow Fields) Proprietary messaging CSM specific fields Value SEPA AOS compliance Proprietary protocol Standardised CSM topologies Core SEPA Compliance Messaging Interoperability Value added services

Pragmatic testing approach with proven testing methodology Testing strategy Extensive coverage of EPC rules for SEPA Testing the ability of the application to generate valid SEPA messages Testing the robustness of the application to receive messages Validation of more than one rule per test case, if possible Specific CSM test cases roadmap Structured testing methodology Identification of logical and physical Test Cases (Word/XML files) Decision tables and equivalence patitioning techniques, with value boundaries analysis Any constraint on Core fields (“yellow” fields) in the EPC IG that overrules the ISO20022, i.e.: Mandatory indication Rules, i.e. “usage rules” , “format rules” Number of occurrences All valid code values One invalid value. The absence of at least one AOS fields (“white” fields) in a structured field The absence of all non-SEPA fields (“red fields”) Cross element rules Optimised test cases to reduce the effort while offering the coverage required for the SEPA compliance certification

Simulation Test and Qualification Service for SEPA (STaQS) A comprehensive and practical set of testing tools and services SWIFTStandards Smart Test Messages Internal Application Testing SEPA BICPlusIBAN & Routing directories Simulation Test and Qualification Service for SEPA (STaQS) Standards Compliance Testing SWIFTStandards Smart Test Messages for SEPA: Samples of ready prefilled test messages with realistic business data for internal application testing Simulation Testing and Qualification Service (STaQS) for SEPA Central testing facility that plays the role of sparring partner able to exchange messages, execute scripted test cases based on EPC test scenarios and report on tests execution. SWIFTNet messaging Proven file transfer and light browsing messaging infrastructure Reference data directories for SEPA: Samples of BICPlusIBAN and SEPA routing directories BIC and IBAN relationships and clearing routing path information Self-assessment communication A Programme Management Office (PMO) which monitors the progress and reports the Self-Assessment compliance declaration. Operational Readiness Testing Bilateral ACH

Positioning the testing tools of the SEPA Testing Programme Smart Test Messages Simulation Test & Qualification Inbound message test only Free self testing only Customisable test data Manual test execution Test validation document No connection needed Hand-holdimg support 300+ messages EPC Core Standard only No file headers support Useful test messages for SEPA testing Basic SEPA workflow (in & out) Free/scripted test cases Customisable test data Scheduling test execution Test results reporting Connectivity (SN FileAct) Hand-Holding Support +350 Test Cases EPC and CSM market practices EBA file headers support Mandatory set of test cases for SEPA compliance

SEPA Testing Programme benefits The industry reference for testing SEPA core standards Mitigate operational risk through extensive and optimised testing with high risk coverage level Ensure “standard” interoperability by testing strictly the SEPA core standard with SWIFT as a neutral 3rd party, independent from any clearing channel. Reduce the testing costs by testing the SEPA Standards compliance once with a programme that does not overlap with the CSM tests Leverage existing investment with integrated testing tools that are easy to use Test at your own pace thanks to services available 24/7d that allow standalone testing As a neutral service, the programme represents the industry testing reference that ensures interoperability between all players for the core SEPA standards, independently of the clearing and settlement channel used Consistent SEPA core standard testing approach By working closely with all industry players, the EPC, the SEPA Testing Advisory Group (STAG), the European Banking Association (EBA), the European Automated Clearing House Association (EACHA), and most national automated clearing houses (ACHs), the programme guarantees strict compliance with the EPC SEPA standards and reduces the risk of divergent implementation behaviours Ensure interoperability independently of the clearing channel As a neutral service, the programme represents the industry testing reference that ensures interoperability between all players for the core SEPA standards, independently of the clearing and settlement channel used. Employing accredited partners SWIFT’s global partnering programme provides access to accredited vendors, consultants and application providers for our SEPA offering. Support Dedicated hand-holding support to eligible participants to assist them in their SEPA testing according to a practical roadmap Single and integrated testing approach Consistent, robust and interoperable implementation Open to all Aligned with EPC testing framework Promotes consistent SEPA implementation Reduces effort and cost at institution and industry levels Comprehensive testing tools Stand-alone 24h/24h and 7d/7d availability

SEPA Testing Programme Deliverables timeline July 07 Aug-Sep 07 Oct 07 2007-2008 Future Release 1.0/1.1 SCT bank-to-bank TVS and ISO Directories specifications Release 1.1.2 EBA File Headers Enh. ITB for Partners Corporate-to-bank AOS fields File Headers EPC rules Release 1.1.1 SCT CSM Market Practices EBA File Headers support Release for SDD SN FileAct 6.1 = completed = to be completed 157 early adopters registered (512 destinations) incl. 8 ACHs and 11 users start testing (Oct 07)

Agenda SEPA Testing Programme SWIFTNet Bulk Payments Solution Interoperability support Be ready for SEPA – SWIFT Training

The SWIFTNet Bulk Payments solution SWIFTNet Bulk Payments is aiming at harmonising exchange of bulk payments, in order to decrease development costs and facilitate interoperability between payments systems Standards 1 UNIFI ISO 20022 standards SWIFTNet FileAct SWIFTNet InterAct for single/urgent messages Messaging 2 Promoting market best practices and increased harmonisation Rulebook 3 Pricing 4 Price per payment leg

The SWIFTNet Bulk Payments solution - pricing Price per payment instruction Between 0.02 and 0.07 eurocent per payment instruction transported, which means between 1,430 and 5,000 payments for 1 Euro Supporting different message formats without impact on prices Independent from compression level, payment length and file size (min 100 payments/file) Close to actual payment business model Determined by The annual volume of the community, closed user group of entities encompassing the same set of business rules and common standards to clear a single currency The annual volume of the institution within the closed user group Contributing to the calculation of the global tier of the financial institution

Agenda SEPA Testing Programme SWIFTNet Bulk Payments Solution Interoperability support Be ready for SEPA – SWIFT Training

Interoperability - components and issues Cooperative space = business rules and standards Business rules Instrument def. Rulebook CSM Market Practices Chosen syntax and version Opt. Implementation Guidelines Standards “Competitive” space = implementation considerations Infrastructure Transport mechanisms and protocols File header and structure Exchange Payload Header

CSM Market Practices – status STAG identified interoperability enabler Provides topology based expected layout of defined SEPA XML core messages Supplements the EPC Implementation Guidelines Endorsed by and published as an EPC document Slide 19

Exchange Payload Header - Status Provides a generic solution and messaging layer-independent way of declaring the content of an exchange between parties and the structure of the exchange payload. Common Headers Requirements Common Logical Model Service Profiles Giovannini, SEPA, ETC… Specifications Service Profiles Published on www.swift.com for public consultation. Next version available soon

Exchange payload headers – Status published on www.swift.com for public consultation deadline for comments set for 14th Sept little feedback to date except from STET and EBA Requests for further information received from inside SWIFT and some committed customers. Next version will be issued based on the received feedback. Slide 21

SWIFTNet FileAct – Header Info implementation To date, two profiles are defined… Transaction count: allows automated pricing for Bulk Payments solution Payment file summary: allows for confidentiality, authorisation, based on summary (risk management), audit trail, etc… … but the solution remains flexible: additional fields can be added (and usually taken from the logical Exchange payload header model).

Agenda SEPA Testing Programme SWIFTNet Bulk Payments Solution Interoperability support Be ready for SEPA – SWIFT Training

Be ready for SEPA – what you need to know How does SEPA impact your institution? What is this new ISO 20022 XML standard? How do I populate the SEPA XML credit transfer and direct debit messages? What are the EPC implementation guidelines and rules relating to these messages? How do these XML elements relate to the MT 103? ….

SWIFT Training offering Open classroom and customised, on-site courses Available Available Jan 2008 Understanding SEPA Using ISO 20022 standards for SEPA credit transfers Receive detailed information on the ISO 20022 messages, flows, rules and guidelines Learn how to correctly process the XML messages for SEPA credit transfers Using ISO 20022 standards for SEPA direct debits Receive detailed information on the ISO 20022 messages, flows, rules and guidelines Learn how to correctly process the XML messages for SEPA direct debits Receive a good general understanding about SEPA and what it means for your financial institution Learn about SWIFT's several new offerings in the context of SEPA For information and registration: www.swift.com/training