Treasury is the management of money and financial risk in your business or organization. Technological solutions, like Treasury Curve, have made it easier than ever for businesses and public entities to manage their critical financial functions and maximize their chances of success. Regarding your organization’s finances, it is crucial to look for reliable partners to help it grow. Treasury Curve has been designated a supervised financial institution by SWIFT. Keep reading to learn precisely what that means and why that brings a significant benefit to your treasury management.

You Don’t Want Just Anyone Handling Your Money

When your organization transfers money, you need both efficiency and security. A supervised financial institution (SFI) member of SWIFT can fully use the high-speed interbank communication system worldwide to communicate with other financial institutions to view information and instantly instruct money movement. The only option available to institutions not designated as SFIs is the open banking system facilitated by application programming integrations (APIs) or FTPs. There are a minimal number of bank APIs, especially when you compare that to the over 11,000 financial institutions on SWIFT,  and unfortunately, there are no consistent standards across APIs. Each bank API requires a different connection. 

Different bank APIs may also offer different functionalities—some may only allow you to receive information but not send it. APIs do offer the advantage of providing a real-time transfer of data. However, SWIFT forms a single network of more than 11,000 financial institutions that all “speak” the same language. Institutions connected via SWIFT allow for quick connections with a vast network of global institutions in a secure and standardized way.

Becoming a Supervised Financial Institution

Not every financial institution can become an SFI. Among other things, an SFI must demonstrate the ability to adequately protect confidential data and always have enough capital to remain solvent. 

To keep the certification as an SFI, an institution must adhere to expensive, complicated, and strict sets of rules. They must obtain and maintain licenses and registrations that allow them to work across multiple states and even countries; submit to audits, inspections, email and investment monitoring, complete exams, and fulfill continuing education requirements. 

Even the marketing of an SFI is controlled by supervising bodies. Supervised financial institutions must ensure their marketing is fair and balanced. SFIs must abide by strict standards to keep their special designation to prove that they can protect their clients from fraud and embezzlement and are required to pay for specific insurance policies designed to protect their customers.

What is SWIFT?

SWIFT stands for the Society for Worldwide Interbank Financial Telecommunications. SWIFT is how over 11,000 banks and other financial institutions can securely communicate and coordinate money and security transfers worldwide in a standardized way. SWIFT is not a financial institution; it does not hold or transfer any assets. SWIFT is a messaging network that uses a system of standardized codes to send information and instructions securely and efficiently between financial institutions. Each financial institution in the SWIFT system is assigned a unique eight or 11-character Bank Identifier Code, or BIC. Organizations have different privileges within the SWIFT system depending on the user category to which they belong.

SWIFT User Categories and Usage Rights

There are four different categories of users in the SWIFT system:

• Supervised Financial Institutions
• Non-Supervised Entities active in the financial industry
• Closed User Groups (CUG)
• Corporate entities.

Of these four groups, only supervised financial institutions are allowed to send and receive all types of messages within the SWIFT system. Other user categories do not have this privilege. Non-Supervised Entities active in the financial industry, for example, can send all types of messages to supervised financial institutions but cannot send or receive payment messages to and from other Non-Supervised Entities.

What is a supervised financial institution?

A supervised financial institution is an organization that engages in financial activities as its primary business and is subject to oversight by state or federal banking authorities.

There are specific criteria a financial organization must meet to be eligible for the designation of supervised financial institution. International, supranational, intergovernmental, or national governmental bodies that primarily engage in banking, insurance, or investment activities— such as central banks—automatically qualify as supervised financial institutions. Other financial institutions must be licensed by, authorized by, registered with, or subject to supervision by an organization such as the Office of the Comptroller of the Currency (OCC), the Federal Reserve System, or the FDIC.

Why is a Supervised Financial Institution Better for Treasury Management?

SWIFT allows for a quick, efficient, and secure transfer of money between financial institutions all around the globe. Only supervised financial institutions have full access to send and receive financial instructions and information from every other institution in the SWIFT system.

An intelligent and autonomous treasury management solution can help optimize the best returns for your excess cash while saving time and maximizing the productivity of your treasury department. As a supervised financial institution, Treasury Curve is obligated to comply with regulators and auditors in order to maintain a positive status and ensure that their clients’ information and financial assets are protected.

What is an API?

API stands for “application programming interface.” APIs help banks communicate information to third-party applications. APIs help create an open banking system. While they are instrumental in some banking applications, they do not offer the same global reach as SWIFT. 

Qualifying as a supervised financial institution does not prevent Treasury Curve from using APIs to communicate with financial institutions. Still, treasury management systems that can only operate via APIs have a much more limited reach than supervised financial institutions that are SWIFT members. When your treasury management system is a supervised financial institution that is a member of SWIFT, you have more access to connect to banks around the globe.

Trust Treasury Curve to Manage Your Treasury

If your treasury management system is not a full member of SWIFT, as a Supervised Financial Institution, then your ability to securely and efficiently manage your cash and investments, globally,  is limited.  Working with a technology provider that is not a SWIFT member, as a Supervised Financial Institution, could result in your organization facing increased risks, decreased access, and decreased efficiencies. In other words, time, money and peace of mind.

Treasury Curve is not just a member of SWIFT but a designated supervised financial institution with the ability to send and receive information to and from other SWIFT members. Ready to optimize your treasury management? Book a Demo with Treasury Curve and get started today.

Key Takeaways:

• SWIFT makes the transfer of information between financial institutions across the globe efficient and secure.
• Only supervised financial institutions, those subject to supervision by specific federal and state oversight boards, can use SWIFT to its fullest potential.
• Supervised financial institutions are obligated to ensure they have enough capital to remain solvent in order to protect their client’s assets.
• Institutions that are not members of SWIFT are limited to using APIs and FTP, and can’t communicate as effectively with the financial institutions on SWIFT.
• As a full member of SWIFT, Treasury Curve gives your organization more freedom to exchange more information and the ability to more securely and quickly connect with a wider range of financial institutions than a TMS that is not a member of SWIFT as an SFI.