LISA: We understand that B2BeX is a comprehensive B2B Web site to facilitate international trade finance and banking. Is anybody else doing anything similar? If so, what is B2BeX's major differentiating factor?

John Hammond: We expect that there are other initiatives, but ours is not simply about trade finance and banking. B2BeX is a trade facilitation platform of which trade finance and banking are (important!) parts. The real differentiator is in the degree of integration that we have achieved between those banking features and the trade process as such that usually starts with the "discovery" stage and goes all the way through to fulfillment. The basis of the design is to offer a cooperative environment where the originating data is used repeatedly throughout the process in such a way as to avoid re-keying an error, while offering secure user choice of communication. Communication is at the top of all of the "must do better, must do faster, and must reduce costs" lists of business change measures that can deliver to expectations in the Internet world of today. Two years ago maybe not… but today we can use the Internet and the emerging global IP technologies to make a difference in so many ways. B2BeX is one example of the change that is possible by managing to integrate the processes in a paperless e-commerce environment using low cost service delivery methods.

LISA: The banking sector represents a mix of conservatism and innovation with technology; while customers still widely use physical paper money and talk to human tellers, the same people subscribe to online banking. Does Standard Chartered Bank (SCB)'s move to B2BeX suggest that this balance is beginning to tip over substantially to the digital/virtual as opposed to analog/physical?

John Hammond: As with any other type of business, the banking sector is driven by competition that to me is itself a mix of part innovation and part process improvement. I am not sure that we are yet seeing a substantial move to the digital/virtual as we still have a lot of human interaction. We also had the dot.com boom-to-bust phase that set many initiatives back or killed them off completely. There were a number of casualties in the areas of "virtual" banks and "virtual" trading environments. They never had the opportunity to prove their business cases but I suspect that they were more on the side of available technology looking for a business problem.

B2BeX is a business solution for SCB and for our customers and their trading partners that is more business than technology focused and is founded on traditional IT principles of ROI to the business. That means our business as a bank, but just as important it means the businesses of our customers and their trading partners. If you look at the players as communities you will see that the possibilities for the "virtual" are what are currently driving changes in business processes. However, we are now looking very clearly from the business perspective, the business case perspective, the value add perspective… at what a virtual alternative can offer to complement the human business process interaction.

LISA: Traditional telco companies are still facing technical and cultural clashes in migrating to the IP world. Reliability, security, and quality issues mean they don't yet sufficiently trust IP enough to abandon their circuit-switched networks. Given this attitude of the communication providers, is IP trustworthy enough to be the basis of the banking sector's infrastructure?

John Hammond: A good question if it were posed to ALL companies. Businesses per se have to make that cultural leap but I would say that it is no longer a paradigm shift… just a leap! The Telco's have a different problem as they evolve away from their traditional wired service base to cable and fiber-optic bandwidth supply and wireless delivery. They are finding that the revenue model is very different and that they are exposed to far greater competition.

For businesses in general there are really no technical issues today -- witness the banking sector's adoption of IP as a primary and trusted means of secure communication. Trusted is the keyword here as banks are the ultimate "trusted third party". There are some issues of course, but they are generally not technical! Breaches of security have happened, but they have so far been shown to be a result of a poor technical implementation, or a failure in the management control process. The banking industry is a very well regulated business environment that benefits from the need for banks to comply with stringent National Monetary Authority stipulations that now extend to banking services that are delivered through Internet channels.

LISA: The downturn of dot com shares and the scare of vicious computer viruses and crimes have plagued cyberspace. Has this in any way negatively affected SCB's investments into the virtual world such as B2BeX? If not, why not?

John Hammond: In a word… no! SCB made the hard decisions about their entry into the use of Internet technologies for its trade banking services at the end of 1999. The decisions were business decisions driven by customer demand. We were never a pure dot com play so our business case was sound and still is today. There may have been some doubts but there was never any real question about moving forward as our customers continued to support and indeed demand that we take our trade services on line. If nothing else thedot com phenomena did raise awareness and show businesses what was possible. Our customers quickly saw that if anybody could be relied upon to deliver quality, security, and certainty in services over the Internet… it should be their bank.

LISA: You come from a background of logistics (albeit physical), including electronic data exchange for trade. While EDI (Electronic Digital Interchange) in its original shape has never taken off on a global scale and is in "its death throes today" (to quote your words), what makes you, as the expert of the field, believe that IP is the way of the future for trading and banking? What is your business model?

John Hammond: I agree that EDI in the traditional VAN form did not take off and we now know that it was just too complex and too expensive to span the divide between the OECD-based MNC and the SME in the emerging markets. In a technology sense that means the gap between a sophisticated ERP system and a fax machine at best. This divide remains for many of the mid-range EDI systems, in that the companies that implemented those systems have to manage and maintain two or more systems -- one for the pure EDI, machine to machine, process; and others for those trading partners who never came to the EDI party.

The problems were exacerbated by a failure to effectively have "standards" adopted on a global scale. Today we have IP as a communications protocol already accepted on a global scale and very effectively supplanting the expensive central processes of the VANs. For many years we have had what I call the communications standards… X.25… X400, and the messaging standards or formatting protocols which in the VAN world were the US-based ANSI X.12, or the UN-sponsored UNEDIFACT standards. Today we have a convergence of those standards through what is now the UN CEFACT bodies and others such as OASIS to promote the use of IP and to facilitate the new "open standard" XML and SOAP based protocols. These are specifically designed for Internet applications that use the latest delivery channels right down to the simplest and cheapest Browser accessed web services.

So our business model is to deliver an integrated service using open standards to user choice of messaging and media. We have to deliver our own services as a bank closely integrated with the sourcing, logistics and information functions that support our customers and their trading partners. We have to do that in a low cost, on-line, real time, paperless, any-to-any messaging and media environment. That capability allows us to implement a business model on a global scale that protects our existing business, takes us into new markets, and allows us to service previously non-viable sectors of business.

To a bank, visibility means reduced risk, effective communication means less risk and less cost, and less cost means access to new markets with new low cost products. Our supply chain is no different to a manufacturing process in the sense that we have to continually examine cost in order to expand our markets up and down stream. The business model also opens up new revenue opportunities from fee and subscription based services.

LISA: Putting up a B2C site selling consumer goods is one thing, but given the enormous complexity involved in trade financing and banking business, including different regulatory issues for each country, how did you manage to bring B2BeX into reality? What was the key factor for the success of the project?

John Hammond: The question most asked! As you would expect of a bank… a very rigid and exhaustive approval process involving a huge number of people in the most difficult phase… the internal sell! That took around 12 months, but the outcome was a very clear path and a total commitment from the business and the IT teams from the very top… Chief Executive and Board down! The key factor is teamwork in a project of this scale where so many cultures, skills and personalities are brought to play in a business and technology endeavor. I have come to understand that the complexities of international trade are best understood in Asia where the challenges are faced every day. The digital divide is probably widest here too as the local Hong Kong press would have you believe that business is largely fax driven. They overlook the fact that Hong Kong has probably the largest community of PKI users through TradeLink with a local customer base of more than 50,000 users!

LISA: LISA and its readers are particularly interested in the fact that B2BeX is going to be multilingual and multicultural. Could you share with us some concrete examples of difficulties involved in globalizing and localizing B2BeX? Have you found localizing into Asian locales different from localizing into European locales? If so, what specific aspects?

John Hammond: LISA members will not be too surprised to hear that we have faced some very basic issues in this area. International trade is conducted in English isn't it? Well… yes and no, and less and less yes. It is possible to offer services on a single English platform and there is ample business to be had on that basis. However, the ability to facilitate local language presentation and input of data is a clear differentiator and is now a business requirement in many places. At SCB our business is predominantly based in the emerging markets of Asia, the Middle East and Africa so that localisation is a demand for the bank. At the customer level, of course, it is an expectation since our customers trading partners can be… absolutely anywhere.

Please also remember that users of B2BeX do not need to be account holders with SCB. In the globalization process we face regulation as a bank in more than 55 countries where we operate trade banking services directly and also, we and any users have to comply with Internet and e-commerce regulation in any country that the service can be accessed from. At this moment there are still some countries where we are in the (sometimes protracted) process of seeking approvals to operate B2BeX services. The issues are usually around what is a banking service in that the bank is generally restricted in the type of non-banking service that can be offered. In some jurisdictions a catalog or even a document preparation service is seen as non-banking. However, most territories in which we operate are enlightened in terms of the promotion of e-commerce and recognise the role of a bank as part of the trade process. So in global terms we are progressing to plan while tackling the local issues as we go. Each of the territories in which we operate have local SCB Legal and Compliance Officers and local Product Managers who are advising on all of the local issues so that we get a smooth local roll out.

LISA: In your view, how important is the linguistic and cultural aspect in establishing sites such as B2BeX?

John Hammond: More important than we first realised as we have found from experience that knowledge of local practice is vital. In places such as China, Thailand, Indonesia, Philippine and Malaysia the cultural and language nuances can have a huge effect on acceptance. A mistake can very quickly destroy credibility if you are trying to demonstrate that you can make a contribution to an improved process and only succeed in showing ignorance of the basics.

LISA: Did you find "culturalization" of B2BeX necessary when creating multilingual sites, given that each country has slightly different banking practices?

John Hammond: We are still learning about this, but yes it is clearly an issue that we are aware of. Choice of translator and local advisors is a big issue, as we are not just talking about banking. We are outside the local SCB comfort zone so have to be extremely careful in the selection of local expertise. There is no shortage of help with LISA as a prime example of source information.