Outsourcing Provides a SWIFT Way to Reach South Asia Banks | Article

traditional indian dressLike many corporations in North American and Europe, SWIFT was eager to do business with the burgeoning South Asia market. “The Indian economy developed, which fueled a boom in banking and securities. We realized we needed to pay more attention to that part of the globe,” says Charles LeGrand, Regional Head for the Middle East and the Indian subcontinent for SWIFT.

SWIFT is a cooperative owned by its members who are financial institutions. SWIFT provides a secure platform to send financial messages globally. A typical message would be a wire transfer of funds from institution A to institution B. With the advent of SwiftNet, a shared services bureau, it also saw an opportunity to increase the opportunities to encompass business solutions.

But the Belgium-based company did not have deep contacts in India, Nepal, Sri Lanka, Bangladesh, Bhutan, and the Maldives, so it sought a business partner who knew the region who could sell SWIFT’s services to local banks.

“Financial institutions (FI) are very conservative. They don’t want to assume any risk. If they try something new, they want to succeed on the first try,” explains LeGrand. So it was important that the financial institutions-owned consortium select an outsourcing supplier who could hit a home run the first time at the plate. SWIFT pitched this job to Scandent Solutions, which recently merged with Cambridge Integrated Services Inc.; the new entity is now called Cambridge Solutions Ltd.

Business Challenges the Buyer Faced

“This was our challenge,” says Dilip Keshu, Cambridge’s Chief Strategy and Corporate Development Officer. “We had to walk into a new territory and not make a mistake because we were dealing with banks.”

Cambridge faced another obstacle in the South Asian market. To use the SWIFT gateway, participating banks had to move from their existing platforms to an IP services environment. “We needed a supplier who had IT expertise, so they could help our new clients migrate to our environment,” LeGrand reports.

Keshu says many of SWIFT’s customers used legacy code that wouldn’t communicate with SWIFT’s platform. Cambridge built a middleware product called SWIFT Connect to solve this problem for the region’s banks.

When Cambridge took over the region in 1997, SWIFT had a few bank customers. Today about 100 banks have 150 end points or direct connections between banks and their trading partners through SWIFT. India, Sri Lanka, and Bangladesh were the source of the largest growth, reports LeGrand. “We have grown our market share in both traffic and solutions in those six countries,” he adds.

One reason SWIFT selected Cambridge was some members of its leadership team were well-known names in the Indian business world. Satyen Patel, founder of Scandent Solutions, was the former managing director of Nike/SouthEast Asia, and Chris Sinclair was the former Chairman and CEO of The Pepsi Cola Company. “These people came from companies banks felt they could trust with a new business model,” says Keshu. He says Cambridge was able to sign its first bank soon after it opened its doors partly because of this reputation.

The Beauty of a Service Bureau

In addition to selling SWIFT services to banks in the region, Cambridge also provides the infrastructure for the SWIFT gateway, which includes data redundancy and recovery, in a service bureau. “We set up everything on our dime and these customers just pay for the usage,” explains Keshu. He says this option is “tremendously useful” for banks in an emerging economy because it provides an affordable entry into the global marketplace.

Cambridge launched the service bureau last year. Today it has 15 customers in five countries.

“Small and mid-sized banks who do not have the financial resources to set up their own hubs need to leverage service providers,” says Sreeram Iyer, CEO, Scope International, a wholly-owned subsidiary of Standard Chartered Bank, UK. Iyer heads the Chennai, India hub. These smaller FIs can access the expertise of SWIFT’s subject matter and processing experts, who can help them as they grow. Outsourcing “enables them to concentrate on their core competency–growing their business and customer base–while allowing the supplier to support operations from the back-end,” says Iyer.

The supplier also runs a help desk. “We outsource this function because we want a local person to deal with our clients,” LeGrand explains. The help desk also provides training “which furthers SWIFT’s penetration” by educating banks about the advantages of doing business with the consortium, adds Keshu.

Cambridge currently has four centers throughout India. This produces cost savings for SWIFT since “we don’t have travel expenses for our sales,” says LeGrand.

LeGrand says SWIFT currently has over 20 “business partners” like Cambridge to sell and run its services worldwide. The company is lean, employing only 2,000 people. Outsourcing these functions to the partners “allows us to reach more clients on a day-to-day basis, as our business partner colleagues are an extension of our sales force,” he says.

Lessons from the Outsourcing Journal:

  • American and European companies want to do business with the emerging South Asian market. But it’s difficult when they are so far away and the culture is different. Outsourcing the sales function to a firm with deep roots in the business community hastens adoption.
  • Banks are conservative, eschewing risk. Buyers must be careful when hiring a supplier because the margin for error in the financial institution community is small.
  • Banks in emerging countries often have legacy code. Suppliers may have to build middleware to help these banks be able to use their service.
  • Service bureaus are a good solution for banks in emerging economies because they may not have the funds to afford the license but can pay as they go.


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