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Treasurer’s Choice: Alliance Lite2 or SWIFT Service Bureaus?

  • By Andrew Deichler
  • Published: 8/17/2015
swift2 This article is excerpted from the 2015 AFP SWIFT Buyer’s Guide, available here.

As more companies become accustomed to connecting directly to SWIFT through Alliance Lite2, adoption of the platform has surged. Though SWIFT service bureaus are still an important player in the landscape, corporate treasury departments see clear advantages to adopting Alliance Lite2 (AL2) and Alliance Remote Gateway (ARG) from SWIFT.

While some treasurers have criticized Alliance Lite2, claiming that it does not afford them the same level of guidance that service bureaus provide, that view appears to be changing. Matt Monaco, head of corporate sales North America for SWIFT acknowledged that in the early days of Alliance Lite2, integration may have been difficult for some clients. “But now, we’ve bundled all types of services around it, so there’s assistance throughout the process—as much as the client wants,” he said.   

Many treasurers agree. According to Brad Vollmer, treasurer for medical therapy provider Gilead Sciences, Alliance Lite2 is incredibly easy to use and SWIFT provides adequate guidance and support. Gilead’s treasury team adopted Alliance Lite2 in 2013 as part of its AFP Pinnacle Award-winning automation project.
“You don’t need to install anything, nor do you need to have space on somebody else’s server to access it,” Vollmer said. “You just directly connect. It’s completely integrated into our treasury management system, so all treasury movements are done through SWIFT, which I think is pretty impressive.”

Vollmer sees Alliance Lite2 as a way of eliminating one of the middle men in the process. “If you don’t use a service bureau, you can eliminate the communications with the service bureau, as well as the communications between the service bureau and SWIFT,” he said. “Why would you add that complexity to your infrastructure if you don’t need it? If you have direct communication with SWIFT, you know where the problem is; it’s either on SWIFT’s side, or yours.”   
There has also been a question of cost in the Alliance Lite2/service bureau debate; depending on the services that the corporate treasurer needs, one option might be much more expensive than the other. Nevertheless, the simplicity and efficiency of Alliance Lite2 has clearly won Gilead over. “If it costs more, we’ll pay more. But in our experience it hasn’t; it’s been relatively inexpensive to work with SWIFT,” Vollmer said.   

Chris Hansen, assistant treasurer and director for Brocade Communications Systems has also had a very positive experience in implementing Alliance Lite2. “For our size of a company, and the volume that we have, SWIFT is the right solution,” he said.

Brocade, a leading supplier of networking equipment and software, adopted the service last year after doing a review of all of its treasury services. “We looked at all of our cash management related services, and what we found was, there were a lot of areas where we thought we could improve,” he said. “It was kind of a holistic approach to revamping our treasury. We had a host-to-host connection with our main banks, but we didn’t have any connections with a lot of our smaller banks. So we sat down and reviewed the whole process.”

Brocade determined that service bureaus would not be sufficient to handle a company of its size, and host-to-host connections were what it was trying to get away from. After talking with some treasury peers, Brocade’s treasury function ultimately decided to go with Alliance Lite2. “It took about two months to set it up and get it running,” Hansen said. “But for me, two months of hard work for very little ongoing work was well worth it.”

Now with Alliance Lite2 up-and-running, Brocade has found that adding new banking partners to its platform has become incredibly easy. “It used to be a lot of work to add a new bank, because it was all manual,” Hansen noted. “Now, with Alliance Lite2, it’s a very simple, straightforward process that requires very little effort.”

Since Brocade began its treasury overhaul, it has reduced man hours by 4,000 per year. “Now, how much of that can directly be attributed to SWIFT, I don’t know,” Hansen said. “But we wanted to streamline all of our processes and in order to do that, we needed one pipe to get all of the information through to us. And that’s really why taking the time to adopt SWIFT was key.”

Download the 2015 AFP SWIFT Buyer’s Guide.

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