The Transaction Workflow Innovation Standards Team (TWIST) is a not-for-profit industry group with representatives of the following key constituencies:

• Corporates
• Public Administrations
• Financial Services Providers (i.e., banks and non-bak financial institutions)
• Solutions Providers (e.g., software vendors and consultancies)

The primary aim of the TWIST organisation is to close the gaps in the physical and financial supply chain to release the enormous value locked up in disjointed paper-based processes. To achieve this, TWIST rationalises financial industry standards by creating user-driven, non-proprietary and internally consistent XML-based standards for the financial supply chain.

Core to the TWIST approach is the drive for open electronic communication standards that cover full process cycles and are neutral with respect to the providers of services. TWIST has a modular design (business model, format, syntax, transport, reliability and security requirements can be applied separately or in conjunction), making use of technological solutions that are universally available and provided by multiple suppliers. This means that TWIST standards recognise the role of banks as service providers, but does not limit the provision of services to banks. TWIST communication standards do not prescribe which services should or should not be provided, but allow any market player to provide services to others, irrespective of its role or size in the market place. As a consequence, TWIST message standards contain elements that may not be supported by all service providers. The fact that some service providers need such elements is enough for TWIST to incorporate these in its design. The result is that the standards that will emerge from this effort are universally applicable, where the individual arrangement between market players will determine how much of the standards will be used in their specific situation.

Ensuring a Win-Win for all TWIST Participants

For banks, their clients, software vendors and other competing service providers to co-operate closely, an approach is required which ensures sustainable win-win situations for all participants. TWIST achieves this through a focus on high quality, open standards that are easy to implement and are equally applicable to both large and small organisations, which may have similar needs but differing levels of resource. TWIST also encourages fair competition between service providers by involving more than one provider in each area (e.g. system vendors, trading platforms, infrastructure providers, consultancy firms and banks). Both large and small organisations are involved in the design of the standards, ensuring their wide applicability as well as the absence of dependency on single service providers or vendors.

Each TWIST member has valuable experience in developing functionality to support electronic communication in at least one of the three financial processes (wholesale financial markets, commercial payments & receipts, and cash management). TWIST also seeks to identify and incorporate good practice in its standards to promote open, efficient and well controlled processes to the benefit of all participants in these processes.

Delivery of TWIST Benefits to All Participants

TWIST provides the following benefits to all participants:

• Increased operational efficiency
• Reduced errors and rework
• Reduced integration and upgrade costs
• Facilitation of benchmarking
• Identification and dissemination of good practice

In addition, the standards help:

• Banks and their clients, who can reduce the implementation and operational risks of modern technology such as electronic trading platforms, and benefit from their efficiency.
• System and trading platform vendors because connectivity to their software is standardised and simplified, and they can, through these standards, gain globally relevant, agreed good practice functionality at low cost.
• Consultants through the confidence in electronic communication that the standards engender, which will lead to systems selection and integration projects for them.
• Auditors, who will be called upon to provide control reviews.
• Learning organisations: Because the standards implement good practice, they are able to build educational programmes around them.

Co-operative, Pragmatic and Focused on High Quality Delivery

Open standards, based on well-defined good practice processes, require a co-operative and pragmatic approach and have produced high quality standards that can be implemented within a shortened timeframe.

Through efficient communication and a focused approach, TWIST has been able to make efficient use of its members’ resources in a targeted manner.

Respect for Knowledge and Experience

Co-operation between competitors entails visible commitment and mutual respect. Win-win situations are sought, where the knowledge and experience of all team members is respected, and consideration is shown for differing commercial interests.

Organisations approach the various elements of the processes in different ways, and these differing practices are implemented in the platforms and systems that they develop. TWIST seeks to use the knowledge that is represented in these approaches, and aims to identify best practices that can help align the operations of all participants.

Seeking Consensus on Alternatives to Suit All Participants

There is sometimes more than one good practice for a particular process. For example, transaction compliance controls can be exercised in a variety of satisfactory ways. Also, there are a number of alternative good practices in the settlement of financial and commercial transactions, and there are various good practices with regard to security in a given organisational or technical environment.

TWIST seeks to find a consensus on a limited number of alternative good practice processes that will enable both large and small participants, with different levels of organisational complexity, to benefit from solutions that suit their individual situations. As an example, TWIST’s software vendor members, who serve a wide range of customers, help make it possible to identify the full range of required alternatives.

Humorously, some people say that STP solutions, as promoted by many providers in the ’90s, in reality only delivered Straight To Printer, instead of the desired Straight Through Processing. As mentioned at different places in this brochure, it is now generally accepted that solutions need to be based on open standards to enable end-to-end Straight Through Processing to be realised.

TWIST aims to close the gap in efficiency between the financial and the physical supply chains by delivering best-practice standards for business processes and electronic information exchange. This helps to effectively unlock the enormous value locked up in the financial supply chain created by a lack of high quality, timely and structured information often as a result of disjointed and paper-based processes.

Financial supply chain efficiency

Gaps between the financial and the physical supply chain can be measured using indicators such as the amount of working capital locked up in the organisation and the number of days that sales are outstanding (DSO). Further the impacts of inefficient and paper based processes are often measured in man hours spent on collection of paper documents, storage and retrieval of such documents, data input, reconciliation of accounts and the management of mismatches and or disputes. This would be applicable for any of the departments that would be affected by financial supply chain automation (procurement, billing, accounts receivable, accounts payable, treasury operations, controlling and accounting).

Just by way of example, the extra processing cost of a disjointed and paper-based accounts payable process as relates to staff, takes the necessary time to:

• Input invoice data into enterprise resource planning (ERP) systems
• Reconcile them to the corresponding purchase orders
• Managing disputes of invoices that do not reconcile
• Route paper invoices around to managers for approval
• Execute payments on invoices that are approved

Efficiency requires automation aligned processes and structured information

Automation relates to information and processes. What is often underestimated however is that many processes are at least partly external to the organisation and involve communication with other parties like customers, suppliers and service providers like banks. To ensure efficient electronic communication and process alignment, content and structure of information flows need to be agreed with stakeholders.

Often, big companies will attempt to impose their own data models and process flows on their counterparts. Even if that approach is successful in those cases where these counterparts are small and dependant on them, it is expensive and time consuming and does not work with many suppliers and customers if these enforced solutions are not aligned with those of others.

So, rather than engaging in costly bilateral negotiations, many corporates are now seeing the benefit of driving out inefficiencies by adopting open standards for content plus structure of information flows and for business processes. The logical choice would be for standards that are user-driven, internally consistent, incorporate existing standards as well as leverage on modern technology. This ensures the ability for low-cost implementation and rapid adoption.

The implementation of standards that automate the financial supply chain threatens those who have no reason for the market to change and may be too big a burden for early adopters to act. Yet such early adopters are now driving for implementation of open standards based on the following insights:

• Competition does not take place at the level of information flows and business process, but at the level of the service offered to the customer. A typical example would be that the design of an invoice is immaterial. However, the offering of attractive discount terms thanks to standards-based automated processing would get the attention and support of many customers.
• Cross-border trade leads to complex financial and physical supply chains with multiple parties having to synchronise their processes and information flows. Standards allow managing the complexity thanks to the predictability of process and information, which is essential to conduct business on a larger scale and sign off on financial and operational controls.
• Standards are key to creating visibility of all the steps of the transaction lifecycle. Most treasurers who are responsible for managing a company’s cash efficiently and hedge currency and interest rate risks effectively will agree that and overall accurate picture of all a firm’s payables and receivables is essential to deliver on their tasks. Similarly it will be important for a sales manager to have timely and correct information about disputed invoices and funds received from customers.

Value of standards that define a common language

Standards that define best-practice templates for business processes and electronic information exchange are needed to close the efficiency gap between the financial supply chain and the physical supply chain. For such standards to have a chance to be successful, they need to be user-driven, internally consistent, incorporate existing standards as well as leverage on modern technology. This ensures the ability for low-cost implementation and rapid adoption.

However, that is not enough. The implementation of standards that automate the financial supply chain threatens those who have no reason for the market to change and may be too big a burden for early adopters to act. With a significant value proposition for both users and leading service providers, the necessary change can be triggered. TWIST has spent five years to build up its portfolio of standards, build many relationships and define win-win situations for early adopters.

TWIST standards help to automate business process and information flows in a multilateral environment where multiple parties have to interact and synchronise their business processes. What is unique to the TWIST approach is the involvement of the key audiences to make all this happen and that is TWIST’s “e-business triangle”. Specifically, TWIST standards are developed with the involvement of the end customer, the service provider and the solutions provider. No effective automation takes place without standards that are agreed between these three key audiences.

The value proposition for each party involved in the implementation of open standards is:

• The end customer, often a corporate that can be big or small, will benefit by predictability, visibility and overall efficiency improvements. The end customer is he or she who engages in a business transaction (goods or financial) and who buys services to facilitate the execution of the transaction (e.g., transport, insurance). With the implementation of open standards, a corporate can be totally focused on expanding its business whilst driving cost out of the equation.

TWIST Standards enable multilateral electronic communication and automated processing, enabling the growing of the business and its efficient running.

• The service provider who facilitates the transactions executed by end customers will benefit also from predictability and visibility of their services for their customers, since it will reduce rework and minimises customer satisfaction. Further where customers benefit from efficiencies, providers who enable such efficiencies should be able to charge more for their services. Examples of such service providers are trading platforms, banks, clearing houses, insurers, logistics providers and network providers. It goes without saying that service providers are constantly looking for efficiency gains in their offering as well as the widening of their service portfolio.

TWIST Standards enable the offering of services with increased predictability and visibility that increases the efficiency of corporate customers.

• The solutions provider that the end-customer and the service provider will use to efficiently run their respective businesses will benefit from user-driven functionality and reliability of service. They further benefit from lower implementation costs and switching costs for customers in implementing their solutions, given that customers would only increase their dependency on solution providers if switching costs are acceptable. Examples of such solution providers are software (and hardware) providers as well as providers of hosted service e.g. business process outsourcing.

TWIST Standards enable the offering of user-driven and reliable solutions with limited costs of implementation and acceptable switching costs for corporate customers.

Reduction of Cost

Reduction of cost is one of the best understood benefits of the usage of standards as it is a direct benefit associated with automation. This kind of reduction of cost is related to such things as:

• overall reduction in processing cost
• reduction in manual labour and assignment of staff to exception processing
• increased accuracy and thus reduction in errors

Less directly obvious, but equally relevant in this category are:

• better capability of producing, delivering, paying in time
• reduction of stock (physical as well as financial)
• better cash flow management

Increase in Revenue

Most often overlooked, is the potential of standards with respect to increasing revenue. Indeed, standards are mostly implemented to get the direct benefits of automation. However, automation also means that the quality of information and its availability significantly increases. In the modern economy it is well understood that information represents huge opportunity for “new” revenue. For example, this phenomenon has allowed what used to be known as transportation companies to re-invent themselves as logistics services providers, offering for example tracking information and data useful in the financial reconciliation process. Another good example are the significant revenue opportunities for banks in the open account space, helping their corporate customers with “new” services like purchase order to invoice matching, reverse factoring etc.

Compliance with Regulations

Some of the recurring themes in the increasing amount of regulation are outlined below, together with how TWIST – while being not the entire solution – is working to address them.

Visibility of transactions and customers: These requirements relate to establishing visibility of all the steps in the transaction lifecycle and of the underlying business purpose, properly reporting on transactions and hence the requirement to keep audit trails and “knowing your customer”. Visibility requires multilateral electronic communication and processing of information. TWIST standards are a key ingredient to making that happen.

Operational excellence and best practice: Regulation often requires adherence to prescribed processes, best practice and consistent application of business processes. The consistent application of specific business processes requires their standardisation and packaging in workflow-based applications. TWIST Standards not only include “messages”, but also “business processes”.

Equal access to base products and services: In the EU, there is increasing demand for equal access to identical products and services throughout the area. TWIST Standards help level the playing field for commoditised services, while of course allowing for competition based on service excellence.

Self-assessment

Naturally the specific business case for implementing open standards for a given organisation will depend on its existing infrastructure, the scope of its activities, the countries it operates in and the organisational costs for change. On its website (www.TWISTstandards.org) TWIST is gradually developing surveys and tools that facilitate any organisation to make a self-assessment of the costs and benefits of bridging the efficiency gap between the financial supply chain and the physical supply chain.

Overview

TWIST has created a legal entity called TWIST Process Innovations Ltd, as a vehicle to better manage its operations.

TWIST Process Innovations Ltd is a not-for-profit company which has been set up to support the objectives of the existing TWIST organisation.

Board of Directors

The company will have minimum 2 and maximum 15 Directors. Directorships are held on a personal, rather than corporate, basis. The goal is to have proper representation of all the constituencies of the TWIST community: corporates, financial services providers, public sector and solutions providers,

The role of the Board of Directors is to:

• Provide necessary governance and confirm strategy
• Approve new membership applications
• Approve sponsorship applications
• Protect IPR and TWIST brand value
• Protect TWIST core principles
• Approve any contractual commitments made by the company
• Plan and approve annual budgets and levels of financial authority
• Fulfil the legal duties required of a UK limited company.

All other functions are delegated to the Management Team.

Management Team

The ManagementTeam is responsible for managing and driving TWIST business. The Management Team consists of two Directors (i.e., the Chairman of the Board and the Chief Operating Officer) and other invited individuals. Individuals may be invited to participate in specific meetings of the Management Team, depending on the particular agenda at that time.

The key responsibilities of the Management Team are to:

• Plan and drive marketing activity and external publicity
• Define and ensure application of the development process & methodology
• Plan and communicate standards development scope and schedule
• Initiate appropriate harmonisation efforts with other standards bodies
• Appoint working group Co-Chairs where required, and assist with appropriate resoucing
• Ensure the technical consistency and quality of TWIST products
• Establish and maintain the necessary infrastructure to support TWIST business
• Promote wide market adoption of TWIST standards
• Support early adopter proof of concepts and pilot projects
• Maintain relationships between TWIST and the research network
• Determine and manage policies on training, education and accreditation activity.

Roundtables

The Chairman of the Board organises regular roundtables on topics of interest. The objective is to discuss industry trends and issues and to seekfeedback on TWIST-specific topics.

The Chairman of the Board will select individuals depending on the spcific topic.

The Roundtables can take the form of a conference call, dinner or meeting.

At least one of the Roundtables during any particular year must be to discuss TWIST progress with the TWIST Sponsors.

Technical Committee

The purpose of the Technical Committee is to define and manage the technical direction of TWIST Standards.

The responsibilities of the Technical Committee are as follows:

• Define and maintain the technical architecture of TWIST Standards
• Enfoce the consistence application of the technical architecture
• Review the Busines Requirements Specifications submitted by the Standards Working Groups and provide feedback
• Produce, publish and manage the XML message formats based on the Business Requirements Specifications submitted by the Standards Working Groups
• Carry out gap analyses with other standards and technical assessments as requested by the Management Team, the Programme Director or a Standards Working Group
• Maintain the Standards Release Schedule and manage specific standards releases
• Identify, acquire and maintain standards development tools for usage by the Technical Committee and the Standards Working Groups
• Provide assistance free of charge to TWIST Pilots, duing one conference call of one hour every second week during a period of three months. Additonal support will be charged by TWIST and must be arranged between the TWIST Pilot Coordinator and the Chair of the Technical Committee

Membership of the Technical Committee is by appointment by the Management Team. The Technical Committee appoints a Chair who is responsible for the day-to-day management of affairs. The Technical Committee Chair reports to the Management Team.

TWIST Members

Individuals as well as Legal Entities from the following constituencies can apply for TWIST Membership:

• Corporates
• Public Administrations
• Financial Services Providers (i.e., Banks and Non-bank Financial Institutions)
• Solutions Providers (e.g., software vendors, consultancies)

All membership applications need to be approved by the Board of Directors and memberships are subject to an annual memership fee.

Individual Membership is subject to an annual membership fee of £150 and gives right to:

• Participation in Pilots, Working Groups and Uer Groups if they are working closely with a TWIST Corporate Member
• One free registration for one TWIST Event per calender year
• Inclusion in the membership pages on the TWIST Website
• Publicity by the individual as a TWIST Member

Legal Entity Membership for Corporates an Public Administrations is subject to an annual membership fee of £1,500 and gives right to:

• Participation in Pilots, Working Groups and User Groups
• One free registration for one TWIST Event per calender year and significant reductions on additional registrations
• Inclusion in the membership pages on the TWIST Website
• Publicity by the entity as a TWIST Member

Legal Entity Membership for Financial Services Providers and Solutions Providers is subject to an annual membership fee of £1,500 and gives right to:

• Participation in Working Groups
• Participation in Pilots and in User Groups if introduced by a TWIST Corporate Member
• One free registration for one TWIST Event per calender year and significant reductions on additional registrations
• Inclusion in the membership pages on the TWIST Website
• Publicity by the entity as a TWIST Member

TWIST Sponsors

Organisations who want to deepen their involvement with TWIST and its community can apply for sponsorship, subject to approval by the Board of Directors. All sponsorships are subject to a sponsorship fee.

Event Sponsorship comes at a fee of £5,000 per event and gives right to:

• A one year membership worth £1,500
• Participation in Working Groups
• Participation in Pilots and User Groups if brought in by a TWIST Corporate Member
• Five free registrations for TWIST Event during the calender year covered by the Membership
• Exhibition space at the sponsored TWIST Event
• Inclusion in the sponsroship pages on the TWIST Website
• Publicity as TWIST Member

TWIST Sponsorship comes at an annual fee of £10,000 and gives right to:

• A one year membership worth £1,500
• Participation in Pilots, Working Groups and User Groups
• Five free registrations for every TWIST Event
• Exhibition space at one TWIST Event
• A dedicated page on the TWIST Website
• Publicity as TWIST Sponsor + usage of the TWIST Logo in marketing materials
• One complementary training day

TWIST Platinum Sponsorship comes at an annual fee of £25,000 and gives right to:

• A one year membership worth £1,500
• Participation in Pilots, Working Groups and User Groups
• Five free registrations for every TWIST Event
• Exhibition space and banners at every TWIST Event
• A dedicated page on the TWIST Website, a feature article in the TWIST Newsletter
• Publicity as TWIST Platinum Sponsor + usage of the TWIST Logo in marketing materials
• Specific project support

Working Groups

The Working Groups develop and maintain TWST Standards in accordance with Standards Plans approved by the TWIST Management Team.

A Working Group has the following responsibilities:

• Produce the Business Requirements Specification (i.e., BRS) that will be used by the Technical Committee to produce the message formats and the message implementation guidelines
• Seek and incorporate feedback from the industry on the BRS
• Submit the BRS to the Technical Committee and help them to resolve any issues the Technical Committee may have with the BRS

User Groups

User Groups are formed to discuss experience with the implementation of existing TWIST Standards

A User Group has the following responsibilities:

• Document their findings
• Submit their findings to the TWIST Management Team who will take appropriate action where relevant (e.g., setting up a Working Group to discuss additional user requirements for an existing TWIST Standard)

Pilot Groups

A Pilot Goup is set up to oversee the running of a TWIST Pilot:

• A Development Pilot leads to the creation of new TWIST Standard
• An Implementation Pilot focuses on the implementation of existing WIST Standards and may lead to enhancements or extensions to existing TWIST Standards

Non-Members

Non-members may participate in TWIST activities when invited to do so by a member of the Board of Directors or of the TWIST Management Team.

TWIST has a declared strategy of collaborating with other standards organisations on a peer-to-peer basis. This is from the unambiguous perspective that standard organisations by definition are not aimed to be competitive when they serve the marketplace.

In the Payments area, TWIST has been pro-actively involved in the harmonization of the ISO XML-payment standards together with IFX, SWIFT and OAGi. Further active collaboration is being pursued with these organisations.

In the area of Wholesale Financial Markets, TWIST has established active relationships with MDDL, FpML and FIX.

In various parts of this website a number of references are made to partner organisations and their websites. Listed below are the links to the partner organizations and a brief description of each.

FIX www.fixprotocol.org

The Financial Information eXchange (FIX) protocol is a messaging standard developed specifically for the real-time electronic exchange of securities transactions. In addition to defining messages for communicating transactions, FIX also defines the session-level interaction between two FIX applications.

FpML www.fpml.org

Financial products Markup Language (FpML) FpML is a protocol for complex financial products.

MDDL www.mddl.org

Market Data Definition Language (MDDL) is an XML-based interchange format and common data dictionary on the fields needed to describe 1) financial instruments, 2) corporate events affecting value and tradability and 3) market-related, economic and industrial indicators.

OAGi www.openapplications.org

The Open Applications Group is a not-for-profit, open, and fully independent Open Standards Organization focused on promoting interoperability among business applications and creating business language standards to support this goal. TWIST and OAGi are working together closely on the commercial payments core payment kernel.

SWIFT www.swift.com

SWIFT is the industry-owned cooperative supplying secure, standardised messaging services and interface software to 7,600 financial institutions in 200 countries. The SWIFT community includes banks, broker/dealers and investment managers, as well as their market infrastructures in payments, securities, treasury and trade. TWIST and SWIFT scopes are complementary – the graphical illustration of this as follows:

Control, Reliability and Security

FIXSP www.fixprotocol.org

The FIX Session Protocol (FIXSP) is specified in Version 4.4 (18 June 2003) of the FIX standard. The standard includes both the FIXML application and the FIX Session Protocol. In Application of FIX it is explained how the FIX Session protocol can be used for the secure transport of TWIST messages.

ebXML www.oasis-open.org/committees/ebxml-msg

The ebXML Message Service standard is specified in “Message Service Specification Version 2.0, OASIS ebXML Messaging Services Technical Committee, August 2002.” or later editions. The standard is intended to be implemented upon protocols such as HTTP and SMTP. It can be used to carry non-ebXML XML applications (or non-XML for that matter). It can also be separated from the rest of the ebXML architecture. In Application of ebXML message service it is explained how ebXML can be applied for the security of TWIST messages.