When it comes to instant payments, the international banking network SWIFT has been anything but fast in recent years. That’s about to change with the organization’s announcement of a two-year strategy to implement faster payments.
The Board of the network which represents more than 11,000 banks around the world, announced a new strategy promising to fundamentally transform payments and securities processing by retooling its cross-border infrastructure by 2022.
This improved network will enable the world’s financial institutions to deliver instant and frictionless end-to-end transactions.
“We are innovating the underlying infrastructure that financial institutions use to make transactions run even faster end-to-end, and at the same time further reducing costs for the community through industry-shared services in the areas of cyber, fraud and compliance,” said Javier Pérez-Tasso, CEO of SWIFT.
“We will introduce data innovation that embeds risk and control elements expected from SWIFT, creating peace of mind for business-critical operations,” Pérez-Tasso said. “Combining these elements, we are creating a broad platform with faster technology and smarter and better services that the industry can trust as a foundation for innovation towards their own end-clients.”
New faster technology platform within two years
SWIFT has set an aggressive timeline for implementing its new platform with plans to fully implement it before the end of 2022.
The new platform expands beyond financial messaging to deliver comprehensive transaction management services. This new approach will support and accelerate innovation, paving the way for financial institutions — independently, or in collaboration with fintechs — to create new value-added services to support their business growth.
In the future, transactions between financial institutions and other participants will see less friction, faster speed, and end-to-end transparency and predictability from one account to another anywhere in the world. This move has the potential to power instant and frictionless transactions between at least four billion accounts serviced by financial institutions across the SWIFT network.
The next-generation digital platform will use APIs and cloud technology to provide common processing services that banks have historically invested in individually, saving the industry time and money. New and extensive data capabilities will enable the pre-validation of essential data, fraud detection, data analytics, transaction tracking, and exception case management.
Members were fast to support the strategy
Facing growing competition from new fintech innovators and disruptors as well as changing consumer banking preferences, the industry was quick to support the new strategy.
“With its new platform strategy, SWIFT is evolving from just making incremental improvements to its traditional store and forward messaging capabilities and towards truly transformative change based on API dynamic connectivity, a vastly improved data model and extremely relevant ‘payment orchestration’ services,” said Manish Kohli – Global Head of Payments and Receivables, Citi. “This reimagined SWIFT platform builds on the progress of gpi, and moves us towards our desired end-state of payment ubiquity with the ability to make frictionless and instant cross border payments across the SWIFT network.”
Michael Bellacosa, Global Head of Payments and Transaction Services, BNY Mellon pointed to the changing marketplace. “Customer behavior has changed significantly in recent years. Our ongoing collaboration with SWIFT is an instrumental part of bringing the latest payments solutions to our customers both now and in the future.”
Next level security
SWIFT’s continued investment in cybersecurity and risk management will ensure resilient and secure transactions with minimal disruption through backward compatibility.
Deutsche Bank said it will integrate its legacy systems into the new platform. “We plan to connect SWIFT’s cooperative industry-wide solution with our own products and client services that manage payments for all types of financial institutions, corporates, and fintechs.” Stefan Hoops, Managing Director, Head of Corporate Bank, Deutsche Bank.
Other international banks from the Middle East to China also support the new transaction technology strategy.
Sumit Aggarwal, EVP and Head of Transaction Banking Services, Emirates NBD said, “Technology is central to innovation in our industry and it is encouraging to see SWIFT placing APIs, Cloud and SWIFT gpi at the heart of its strategy. SWIFT’s new approach marks a change in focus, while the technologies and products at its core are proven, thus making it simpler for banks to adapt.”
“SWIFT’s new platform is in line with the rapid changes and agile innovation demands of the financial industry. The end-to-end transaction management mechanism and embedded shared services provided will make message transmission more intelligent and efficient, while data communication will be more open,” said Fan Yaosheng, General Manager of Clearing Department, Bank of China. “We foresee the platform will play an important role in helping banks reduce costs and prepare for the shift to ISO 20022 more flexibly, which will have a profound impact on the cross-border payments landscape.”
Headquartered in Belgium, SWIFT products and services connect more than 11,000 banking and securities organizations, market infrastructures, and corporate customers in over 200 countries. You can read the full announcement here as well as comments and perspectives from 16 of its international bank members here.
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