Working towards a central financial messaging hub for Swiss Re

Switzerland’s Swiss Re is the world’s second largest provider of reinsurance and insurance-related risk products. Traditionally the company insures events that can lead to huge losses, such as natural disasters. Two years ago, this reinsurer decided to further strengthen its payment processes.

Swiss Re has engaged the support of Zanders, in several areas, since 2012. At first, this was mainly related to Group Treasury’s balance sheet management and risk reporting processes. Among others, a new liquidity risk measurement and reporting system was put in place using a combination of an in-house built data warehouse, a vendor risk management system and modern business intelligence (BI) technology.

Connectivity ‘on par’

At the time, account manager Jeroen van der Heide was already Group Treasury’s main point of contact. “Since 2017, we’ve also been helping Swiss Re to improve their operational treasury processes,” Van der Heide says. In early 2017, the reinsurer organized several workshops on bank connectivity. “We participated in those workshops and provided our point of view assessment on their as-is. Swiss Re’s connectivity demonstrated to be ‘on par’ with the market standard. However, our other feedback during those workshops strengthened their resolve to work towards a new central financial messaging hub in the medium term. We were chosen to support them in the realization of that ambition.”

Single source of truth

A central financial messaging hub is a considerable undertaking, given that the company has at least a dozen different systems from which payments are initiated and where bank statements are consumed. Like many big financial multinationals, Swiss Re has grown substantially over the years, partially through acquisitions. One of Zanders’ first tasks was to analyze the presence of bank account information in the various systems – and the consistencies and inconsistencies between them. This analysis then served as the basis for a blueprint of the 'to be' data model. “It’s crucial to designate a single source of truth for different types of master data," explains Nicolas Andres, head of Group Finance Transformation at Swiss Re. "Simply because that avoids getting stuck in master data reconciliation, it really is the starting point for any move towards operational excellence.”

Jeroen van der Heide (Zanders, left) and Nicolas Andres (Swiss Re)

SWIFT network

In the fall of 2017, the focus shifted to connectivity with the SWIFT network. Zanders made sure that compliance with the Customer Security Programme (CSP) was achieved without problems and, with an eye on improving business continuity, an initial analysis was carried out on the SWIFT Alliance Lifeline program. Then it was time to support the switchover to a new SWIFT Service Bureau (SSB). Zanders provided both the project management and subject matter expertise to support the requirements analysis, drafted the RfP document and guided the selection process towards choosing a new SSB. Throughout this process, special consideration was given to complementary services, which a new hub could benefit from. Andres explains: “As the single exit point towards the wider financial system, the hub is naturally well-suited for complementary controls, for example to detect payment fraud.”

Feasibility study

On this topic, Zanders was asked to assess the benefit of leveraging modern machine learning techniques on the traffic to and from the SSB gateway. “Nowadays, advances in machine learning and artificial intelligence receive attention nearly on a daily basis,” says Van der Heide. “Vendors have been quick to take advantage of this development, and they promise a lot.” Andres continuous: “We were curious to what extent these techniques would actually bring us forward. We know Zanders prefers to segregate hype from benefit. Plus they’re well acquainted with our infrastructure and have relevant experience from their risk advisory practice, so they were the natural partner to ask this question. Their advice on what to do next, and particularly on what not to do, was totally appropriate.”

Electronic banking tools

Meanwhile, as the SSB selection project slowly drew to a conclusion, an analysis was made of the various electronic banking tools that had worked their way into the organization over the years. “The analysis was an important step in the preparation process for the financial messaging hub. It turned out there were quite a few more tools in use than expected.” concedes Andres. “The vast majority are actually only used to collect statements from individual banking partners. That confirmed our viewpoint that proper bank statement distribution would be an important feature of the new 'to be' solution.”

Webservice-centric approach

At the start of 2019, the implementation of the new financial messaging hub finally kicked off. “An important benefit of the 'to be' solution is that we move from a batch-centric approach to a webservice-centric approach. This means that upstream systems can basically deliver their messages whenever they want,” says Andres. The first step of the project includes implementing the switchover to the new SSB, finding an adequate compliance-filtering solution, rationalizing the Bank Identifier Codes (BICs), implementing the SWIFT Alliance Lifeline and putting the first REST APIs in place. Two years later, Zanders is still involved, coordinating progress surrounding the six workflows and ensuring that all stakeholders are adequately involved.

Trust

When asked what makes the collaboration work, Andres says: “I believe in resourceful and intelligent junior consultants, supported by pragmatic experts where needed. Zanders offers both.” Jeroen feels the relationship is largely built on trust – and that is something that works both ways. “Nicolas trusts me on the quality we provide. That is something I am proud of and we are pulling out all the stops to ensure we continue to justify that.” Andres summarizes: “It is the engagement and skill shown to get the job done after the initial Powerpoints that convinces.”

If you would like to know more about the treasury challenges faced by insurers, email Jeroen van der Heide or call him at +31 35 692 89 89.