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HSBC tackles transaction complexity with open connectivity standard

Bank claims new SAP-based system will aid integration for businesses

HSBC is promising its clients simpler transaction connectivity following a recent agreement with SAP, based around an open connectivity standard.

Under a deal made public two months ago, HSBC, SWIFT and SAP are jointly creating the next generation of HSBC Connect to SAP, the bank's corporate-to-bank integration and treasury offering for firms running SAP enterprise resource planning systems.

Connectivity is based on the ISO 20022 standard and related XML design rules.

Connect to SAP is currently available for firms running SAP ERP 6.0 and above, and is set to be extended soon for those running ERP systems from different vendors.

Ian Bryant, head of client integration consulting at HSBC, said last week that high complexity remained in transactional banking globally as the industry continued to use different messaging protocols and an array of different systems. This was creating major problems, he said, and needed to be tackled.

"Each bank wants specific formatting, which creates a high cost and complexity for customers," he stated, during a presentation at SAP's Financial Services conference in London. "It also results in connectivity issues, with different service level agreements out there. Additionally, the UK alone has three electronic standards - CHAPS, BACS and Faster Payments.""People are operating under resource constraints, and they want to have centralised, simple, integrated systems, clear information and transparent transactions," he added.

Key aims of the Connect to SAP system include helping reduce complexity and cost, and improving transparency.

With "most customers" being ERP equipped, HSBC said, the new arrangement delivered benefits to a high number of businesses.

The system comprises the SAP Bank Communication Management application and the SAP NetWeaver technology platform, as well as a pre-configured SWIFT component for optimised access to that network.

Connectivity is being rolled out in three phases: payment and select treasury services, then trade finance and remaining treasury services, and finally regulatory reporting services.

"With the new system, companies will have multibank capabilities, streamlined processes, lower cost of ownership, better security and transparency, simpler implementation and no constraint from proprietary gateways," added Charles Dubarry de Lassalle, HSBC's head of direct channel integration, at the event.

In 2007, HSBC moved to the ISO 20022 XML format, which was developed by the International Organisation for Standardisation, and it has been "steadily rolling out" customers on it since then, he said. The new Connect to SAP service is aimed at creating a "single harmonised message across banks" using the standard.

Asked why HSBC had centred efforts on the connectivity standard, Dubarry de Lassalle said: "We cannot afford to lock in customers. That would kill our market."

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