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Implementation & Centralization: Why Cigna Adopted SWIFT

  • By Andrew Deichler
  • Published: 8/21/2015
This21The following article is excerpted from the 2015 AFP SWIFT Buyer’s Guide, available here.

Scott Lambert, treasury senior director for global health service organization and health insurance provider Cigna, provided AFP with a glimpse into how implementing SWIFT is helping his organization handle an abundance of international payments and centralize treasury operations.

Cigna’s treasury function has 38 people in the U.S., two in a regional finance center in Hong Kong, a shared service center (SSC) in Europe, and a number of finance people in the Asia-Pacific region who  are not full-time treasury staff, but have treasury responsibilities.

Given the treasury function’s decentralized nature, Cigna is currently undergoing a three-year initiative, implementing a treasury workstation platform that it plans to use globally. It is interconnected with a bank administration platform so treasury can keep track of all of its bank accounts. As part of this process, Cigna is rolling out a payments hub.

Cigna has used a payments hub in the U.S. for a number of years, and it has made payments relatively easy, providing checks and balances and validation before Cigna sends out payments. Globally, however, this is more of a challenge so that is why the company enlisted SWIFT.

AFP: You signed up with SWIFT last year as part of an effort to improve international payments. Can you explain some of the issues you were having in this area?

Lambert:
At Cigna, all of our U.S. payments and EDI 820 transmissions are managed through a legacy treasury workstation that we manage ourselves with our own internal electronic commerce group. Each time there is a certificate change, it becomes a challenge to determine who is responsible for coordinating those changes with the banks. This process sometimes results in delays in payments. We decided if we were going to roll this out globally, we could not manage all of those connections and all the certificate changes that would be required.

Our treasury operations are somewhat fragmented; we have a shared services operation in Glasgow, Scotland that manages treasury functions for most of Europe. Then, when you consider our [Asia-Pacific] offices, it’s all very decentralized. There’s treasury personnel in those offices but they’re not dedicated to treasury; they’re doing [financial planning and analysis (FP&A)] and other finance functions, and they’re primarily using bank portals. We’re trying to leverage our existing payments hub in the U.S. and roll that out globally. In conjunction with that, we established connectivity to SWIFT. We’re working to adopt standardized formats; for wires, we’re trying to implement ISO 20022 globally.

AFP: Regarding ISO 20022—a lot of nations are still implementing their own version of the standard. Is that presenting difficulty for you as you roll it out?

Lambert:
It is interesting because I had always thought that ISO 20022 was a global standard. It’s essentially the same everywhere, but how each bank uses the tags within the ISO 20022 format is a little different. One bank’s European operation might have a slightly different format than its Asian operation. Implementing ISO 20022 with the large global banks is really not an issue at this point in time. When we start to evaluate implementation with the smaller banks—that may present a challenge.

AFP: I know it’s still early in the process, but have you seen any improvements in your payments process since implementing SWIFT?

Lambert:
Yes, having a single connection point has helped. We manage that connection point through our SWIFT service bureau, and the team coordinates all the connectivity to the various banks, so it’s certainly simplified the process.

AFP: Going forward, what are the next steps for you as you roll out your global payments hub?

Lambert:
Where we’re starting with our payments hub is our internal funding wires, or what we refer to as cash management wires. These move money between Cigna accounts. The plan now is to start rolling this out for third-party payments; making our payments hub more ‘self-service’. That’s where corporate reference data comes in; we will have that information loaded into our payments platform to get some validation up-front, before the payments get initiated. We’re also interfacing our payments hub with our internal authority system to ensure that the people that are approving payments have the right authority by currency translation to approve the payments to external third parties.   

Download the 2015 AFP SWIFT Buyer’s Guide.

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