Josh Weisberg, Senior Product Manager, E-Business Server Marketing.
Kenny McBride, Global Industry Managing Director for Securities and Capital Markets. Click image for high-res version.
SINGAPORE, Oct. 20, 2003 — At Sibos 2003, one of the year’s largest international financial services conferences, Microsoft is announcing Microsoft BizTalk Accelerator for SWIFT, a new messaging platform for securities and banking transactions. In developing the platform, Microsoft consulted with the Society for Worldwide Interbank Financial Telecommunications (SWIFT), a financial-services industry cooperative that provides standardized messaging services and interface software to financial institutions around the world.
BizTalk Accelerator for SWIFT is the latest addition to the accelerator product line for Microsoft BizTalk Server. The accelerators augment BizTalk Server by supporting a broad spectrum of business scenarios and industries, from financial services to manufacturing to healthcare, reducing the time, effort and cost associated with application integration. BizTalk Accelerator for SWIFT, which is expected be available in February 2004, extends the capabilities of BizTalk Server for the financial industry by providing financial institutions with a single extensible infrastructure for integrating business processes, both within the organization and with external partners and customers.
Microsoft is taking an active role at Sibos 2003, addressing key topics such as payment automation, straight through processing (STP), compliance, and other wider issues facing the financial services industry. PressPass spoke with Josh Weisberg , senior product manager for Microsoft’s E-Business Server Marketing, and Kenny McBride , Microsoft’s managing director for Securities and Capital Markets, about the significance of BizTalk Accelerator for SWIFT and Microsoft’s overall strategy for serving the financial-services industry.
PressPass: What are some of the technology challenges the financial-services industry faces that makes a solution like BizTalk Accelerator for SWIFT important?
McBride: Because the global economy is weaker than it was in the late 1990s, a lot of financial institutions are watching their bottom lines much more closely. So while the technology issues in this sector have remained the same — how to get a variety of networks, systems, standards and applications to work together — the approach to solving them has changed.
Weisberg: Financial institutions typically spend 50 percent more on information technology (IT) than other industries, with the exception of telecommunications companies, according to a recent study from the Gartner Group. So obviously IT spending is one place where these institutions can really cut costs, which is exactly what they’re doing. Rather than throwing a lot of money at complex, enterprise-wide integration projects like they did before, financial institutions are looking to be much more specific about the IT problems they address. The overall theme in the industry is to simplify IT structures so that you can be as agile as possible in this challenging economic climate. As a result, financial institutions are looking to specific solutions in an effort to produce shorter time frames on IT projects and higher returns on investment.
PressPass: How does BizTalk Accelerator for SWIFT address those challenges?
Weisberg: Nearly every financial institution — whether it’s a bank, broker, securities firm or a large corporation — needs to be able to send and receive financial transactions that are widely understood by other systems, networks and applications. For instance, a bank in the United States that needs to settle a transaction with a bank in Europe will send an electronic payment message over a secure financial network. That network is usually SWIFTNet, which is SWIFT’s IP-based network messaging solution that handles financial information and transactional data for financial institutions. SWIFT is the de-facto messaging standard in the financial-services industry for payment processing, securities, trade and treasury services, so using solutions that support SWIFT is one of the fundamental steps in getting all these disparate systems and applications to work together. However, SWIFT-enabled solutions traditionally have been very expensive to implement and maintain, so, for the most part, only the biggest banks and securities firms have been able to afford them. Until now, that is.
Microsoft BizTalk Server lowers the overall cost of implementing integration solutions by reducing the complexity of enterprise integration application. It provides organizations with the server, tools, adapters and industry-specific accelerators needed to integrate and automate their business. BizTalk Accelerator for SWIFT is an “out-of-the-box” solution for customers who need SWIFT messaging capabilities. It extends the capabilities of BizTalk Server for the financial industry by delivering enhanced messaging capabilities, specific formats and schemas for financial services standards, run-time infrastructure, and middleware integration tools focused on payment settlement and securities trade settlement.
Using BizTalk Server and the BizTalk Accelerator for SWIFT, financial institutions of all sizes can derive the same benefits that traditional integration solutions have been providing — the same functionality, performance, scalability, and reliability — but at a much better value. And by value, I mean not only price, but also the time in which it takes to implement the solution, ongoing maintenance costs, added flexibility to handle new standards, and Microsoft’s ongoing commitment to support those standards.
How does the BizTalk accelerator integrate with SWIFT services?
Weisberg: BizTalk Accelerator for SWIFT uses the latest Microsoft technology to provide a complete SWIFT connectivity solution with support for SWIFT interfaces and all SWIFT messages, including FIN, which is SWIFT’s core, bank-to-bank messaging service. It also supports both the migration requirements for SWIFTNet network connectivity and the interface requirements for all new SWIFT services.
At a high level, this integration is very simple. BizTalk Accelerator for SWIFT comprises two main components. One is a connection to SWIFTNet using an adapter that goes from BizTalk to the SWIFTNet network. The second is the accelerator’s messaging capabilities, or the ability to translate in and out of the SWIFT message format, to or from whatever the native message format is of the back-end applications that are in use.
For example, a financial institution, such as a bank or securities firm, often has numerous applications and systems in use for each line-of-business in the organization. Each of these applications and systems typically has its own native, often proprietary transaction format — the structure of the data used for transactions like stock trades or bank payments. In order to exchange this transaction data with another financial institution, a standard format must be used — of which SWIFT is one of the most prevalent. The challenge that BizTalk Server and the Accelerator for SWIFT address is how to get the message in and out of the standardized format. This includes more than message translation — it includes validation that the data is correct, meets with a set of rules for the particular type of transaction, logging and auditing of the transaction and other related processes. By using BizTalk for this type of integration, a financial institution can simplify its IT architecture by having a central messaging infrastructure, which reduces the amount of changes that need to be made to its back-end systems and applications on an ongoing basis.
What other technologies are behind BizTalk Accelerator for SWIFT?
Weisberg: Support for eXtensible Markup Language (XML) and Microsoft InfoPath, an information-gathering application that is part of the Microsoft Office System, play huge roles in the ability of the BizTalk accelerators to deliver a simplified, cost-effective integration solution.
At its simplest level, XML improves Web functionality by providing a much richer way of describing and identifying the information you’re working with. XML is a meta-language, or a language that describes itself, which enables industries and businesses to design their own customized markup languages for myriad types of documents. BizTalk Accelerator for SWIFT uses XML as an interchange format because it can handle a lot of the nuances of various proprietary message formats. So whenever a message comes in to BizTalk from an outside system, regardless of what type of format it’s in, BizTalk first converts it to XML before converting it to the native SWIFT message format. It’s important to note that SWIFT is in the midst of converting its FIN messaging standard from a flat-file format, which is fairly difficult to parse, into XML, so moving forward all the standards SWIFT pursues will be XML-based, making connectivity all the more seamless.
Now one of the primary visions of XML-based Web services is to enable applications running behind the scenes to be capable of communicating with one another. But of course, that’s a real challenge today, given that many older systems don’t speak XML and may not even have a mechanism for implementing it. This is especially true in the financial-services industry, where many of the core systems in use are older mainframe systems. So, unlike the complex and expensive integration solutions whose approach has been try to force these existing systems into an aggregated architecture, BizTalk Accelerator for SWIFT functions like a junction box, accommodating not only different file formats but also the different industry-specific flavors of XML, and insulates existing back-end systems from having to deal with these changes. So you change the junction box once, rather than having to change 21 applications every time something changes.
PressPass: And how does Microsoft InfoPath come into play?
Weisberg: Normally, when we think of system integration, we think of automated, machine-to-machine interfaces that facilitate connectivity. But what happens when one of the systems is not an automated system at all, but instead is a human being? There are a lot of situations like this. For example, a remote branch office of a bank that isn’t connected to the main core banking system may occasionally need to send a payment message through an automated clearing-house. Or a broker may need to follow up on a trade while on the road. In both these cases, the information worker at the remote end doesn’t have access to in-house applications to accomplish the task at hand, so they have to somehow enter the data manually. People also get involved when errors in the automated process occur. Until Microsoft InfoPath, there hasn’t been an easy solution for automatically gathering and integrating this manually-created data into back-end systems and applications.
InfoPath, which natively supports XML, is an information gathering application in the Microsoft Office System that combines the familiarity of a traditional word-processing program with the rigorous data-capture capabilities of a forms package. The underlying structure of the information that is gathered using an InfoPath template is described using a schema. A schema describes how the data is constructed, much like a blueprint illustrates how a building is designed.
Using XML, industry standards bodies and organizations can define their own business-specific schema in standard business-process documents, using the latest XML data standards. This is a significant advantage because it lets industries and organizations determine for themselves what kind of manually entered data they want to gather. Native support of XML also means that InfoPath can send data using these industry-defined schemas to back-end systems or across the enterprise via XML Web services.
So with BizTalk Accelerator for SWIFT, we’ve created InfoPath form templates — almost 500 of them — so that BizTalk can accommodate a human-to-machine workflow. For example, if a bank employee in a branch office needs to generate a one-off message to send a payment to another bank in another country, or to initiate a securities transaction such as stock or equities trade, working within the familiar Microsoft Office environment he or she can create a message based on a behind-the-scenes template that enables the information in the message to be converted to the appropriate format and submitted to the correct system, and so on.
Because we can do this at a very low price point, what we’ve done with BizTalk Accelerator for SWIFT is to provide a solution that is an option for all financial institutions, not just the larger corporations.
PressPass: What tools does BizTalk Server Accelerator for SWIFT include?
Weisberg: The tool we’re very excited about is the RosettaNet Payments Toolkit, a software solution based on the SWIFT standard that provides financial institutions and their corporate customers with a simple, cost-efficient way of automating the corporate-to-bank payment process. Today, most of these payments are done manually, meaning someone goes in and triggers this process in their finance system. For large corporate banking customers who most likely have relationships with several banks on many different levels, payment processing costs can be huge.
In an effort to reduce the cost of payment processing on both sides of the supply chain, Microsoft is participating in a RosettaNet Payments pilot program with SWIFT and several large financial institutions and their corporate customers. RosettaNet is a standards organization that has developed an offering called RosettaNet Payments, which through payment automation, spells out how manufacturers and their suppliers can link a supply-chain transaction to a payment. By focusing on providing technology that is simple to implement and marketed at a price point that we believe will help to dramatically accelerate cross-industry adoption, Microsoft hopes the benefits of payment automation to the industry as a whole will be enormous.
Using the RosettaNet Payments Toolkit, corporations will be able to route SWIFT payment messages directly into internal treasury, enterprise resource planning (ERP) and accounting systems, allowing for more advanced cash and payment management. Banks will no longer be required to manage multiple proprietary connections with their customers and will be able to minimize resources required to handle exceptions, dramatically cutting the cost per transaction.
PressPass: How significant is this joint effort, from a financial-services industry perspective?
McBride: I’ve been in the banking industry for 20 years, but this is the first paradigm shift I’ve seen in this direction. Banks aren’t in the business of providing technology for sale to potential and existing clients. They exist to provide a service, and their clients are demanding a better, easier service to connect into and make automatic payments. So the RosettaNet Payments Toolkit initiative is basically a financial services form of supply chain management for cash management that will allow major corporations to measure their treasury operations in a much more efficient manner.
PressPass: Can you provide a little background information on SWIFT and how Microsoft is working with this organization?
Weisberg: Microsoft’s relationship with SWIFT has been a mutually beneficial one. While SWIFT provides standardized messaging services and software to more than 7,500 financial institutions in 200 countries, it has had a lot of challenges getting all but the top tier and some of the larger medium-sized financial institutions connected to its network because of the high price of today’s integration solutions. The only way that it can reach the economy of scale it’s trying to achieve is to get a high volume of customers connected. So Microsoft is a logical choice for them to partner with — we provide software platforms on which custom solutions can be affordably built.
From Microsoft’s point of view, we’ve been working very hard to increase the relevance and value of our products to the vertical industries. Because the financial-services industry relies on IT systems to the extent that it does, support for this industry in particular is critical. To that end, we’ve created the Securities and Capital Markets Group at Microsoft and hired financial-industry experts like Kenny McBride and Fredda Cole, who can speak the language of financial institutions, so that we can then build products for this segment based on their input. Incorporating the SWIFT standard into the BizTalk Accelerator for SWIFT is just one of results of that input.
PressPass: What is Microsoft’s strategy for delivering technology solutions geared to the financial-services industry moving forward?
Weisberg: Microsoft wants to make it easy to create, access and share data among different applications, networks and systems. The heart of financial services problems is integration — connecting up all the different business units, partners, systems and applications and making them tick. What we’re doing with BizTalk Accelerator for SWIFT is offering the first commoditized solution in which financial institutions can achieve SWIFT connectivity in a simplified, cost-effective manner.
McBride: Moving forward we’ll focus on how we can improve the SWIFT environment, not just now but in the future. So as we’re pushing BizTalk Accelerator for SWIFT, we’re hoping SWIFT enhances its Microsoft capabilities and infrastructure. We’re also looking at new technologies and how we can deploy them with SWIFT. Right now we’ve got a lot of traction and a very good understanding between SWIFT and Microsoft, and we’re looking to move forward from here.