PNC Employs SWIFT Business Assessment Program to Ease Some M&A Integration

The SWIFT Business Assessment Program has been quietly evolving and gaining steam over the past decade as a means of helping banks improve efficiencies in their operations. With today's emphasis on doing more with less, the Business Assessment Program is garnering more attention from SWIFT's constituent banks.

According to David Pryce, managing director, Americas, for SWIFT (Brussels; New York), when the program was initially conceived, it was focused more on promoting the use of SWIFT, straight-through processing and standards. "SWIFT would visit a client and review the quality of their [payment] messages from an STP point of view," Pryce explains. "It was successful and over time, the banks asked us to become more involved with business flows. Now, it's about efficiency and allowing them to leverage investments in SWIFT infrastructure."

SWIFT has teams of experts worldwide who specialize in the Business Assessment Program examinations. They perform analysis on areas where SWIFT feels it can add value, such as payments flows, securities flows and technology integration. In addition to reaching conclusions on the efficiencies at a given bank, the program also tries to benchmark institutions against their peers from various measures, such as data processing.

There is no technology implementation or purchasing involved in the program, says Pryce. It's more of a consultation/data analysis exercise.

"We send a team to work with the bank and perform the analysis and benchmarking," he says. "We do much of this offsite and then present a report at the senior management level on how institutions can save money and be more efficient. That's our value proposition since we're a cooperative directly involved in standards and infrastructure and are not a generic consultancy."

Pryce has noticed an uptick in requests for assistance from the Business Assessment Program with the economic crisis, particularly with merger activity. PNC Bank (Pittsburgh; $291 billion in assets), for example, enlisted help from the program as it sought to integrate the SWIFT systems from the acquired National City (Cleveland).

Scott Frazer, VP, SWIFT network manager, funds transfer, with Pittsburgh-based PNC said after its purchase of National City at the end of 2008, the bank called upon SWIFT to review its integration plan.

"PNC acquired National City at the end of 2008, with plans to integrate PNC Bank and National City Bank over a period of 18 months," Frazer says. "Because of the scale, scope, size and complexity of the integration, PNC Bank engaged SWIFT to review our integration strategy for SWIFT and to provide guidance and to recommend best practices for the integration."

Zeroing in on specific areas within a bank is how the SWIFT teams work best, according to Pryce. "We do one project within one area of the financial institution. It they're happy with the outcome, they come back to us and ask for help in another area. [The program] can be used in any part of banks' operations."

It was this subject matter expertise that prompted PNC to contact SWIFT about the program. Although Frazer says the bank probably could have performed the same duties on its own, having SWIFT subject matter and infrastructure experts on the job gave the bank a certain measure of comfort "that our integration strategy for SWIFT was sound."

Pryce notes that the program has the potential to save financial institutions thousands of dollars by helping them work more efficiently. PNC's Frazer, however, says it's too early to tell what the final outcome of using the program will be, but says so far, so good.

"The initial engagement was very well received internally at PNC," he notes. "Aside from confirming our basic strategy for SWIFT, it's still very early on in the integration and we have not yet had an opportunity to apply all of SWIFT's recommendations. With that said, SWIFT provided sample content for general communications and helped PNC Bank focus the timing of our SWIFT broadcast messages to announce the merger and the strategy for the integration. Additionally, SWIFT reviewed the bandwidth of PNC Bank's current connection to SWIFT and determined that it is more than sufficient to handle existing message traffic volumes and National City's incremental volume that will migrate to PNC Bank."