August 31, 2004

C&W has a growing hub, and it's not Nashville.

Financial institutions with a significant global presence rely upon nostro accounts with correspondent banks in other countries. But, with funds shuffling across national boundaries, time zones and banks' payments systems, it can be difficult for a bank to gain a consistent view of its cash position at any given point in time.

Telecom provider Cable & Wireless (C&W, London) has drawn upon its global presence to deliver real-time nostro data to its subscribers. As a result, global financial institutions including Citigroup, JPMorgan Chase, ANZ, Mizuho and Barclays have been able to better understand their cash positions across all correspondent relationships, while gaining financial management efficiencies, including lower messaging costs, better management of working capital and reduced operational risk.

Cable & Wireless has established an information feed from each participating bank. As it receives data in real time, it immediately disperses information about the movement of funds to its subscribers, using XML-based SWIFT cash reporting standards.

Banks can use existing applications - such as those from SmartStream (London), SunGard (Wayne, Pa.), Pegasystems (Cambridge, Mass.) and City Networks (London) - to receive and process the real-time nostro data for their accounts. "They can actually use this data without having to adjust their systems," says Alister Hoad, Cable & Wireless. "It's not proprietary."

In turn, participating financial institutions can supply real-time data to their own customers. The largest banks hold thousands of correspondent and agent accounts, for which they execute payments around the world. "Financial institutions are executing the payments on behalf of their corporate clients," explains Conrad Steinman, senior CLS product manager, Citibank (New York; a Citigroup business; $1.3 trillion in assets). "Many cannot execute all of those payments on their own, and so they establish a global cash correspondent management network."