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SWIFT Reboot: Next-Gen Digital Platform to Deliver ‘End-To-End Transparency and Predictability’ for All

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SWIFT says its new two-year-plus strategy will see it deliver “instant and frictionless end-to-end transactions” with “transparency and predictability”. Delivery will come through what it describes as a “next-generation digital platform”, this being part of a “fundamental transformation” of payments and securities processing in which it aims to “retool the global cross-border banking infrastructure”.

The co-operative is now aiming to go beyond financial messaging, into the provision of comprehensive transaction management services. Its new strategy is expected to “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 its press release, SWIFT said that for payments, “financial institutions will be able to expand offerings to businesses and consumers and enhance the end-customer experience”. For securities, financial institutions “will benefit from improved reconciliation, reporting and asset servicing processes as well as end-to-end visibility of transactions to reduce settlement fails and fines”.

The next-generation digital platform will use APIs and cloud technology to provide a set of common processing services. New and extensive data capabilities will enable the pre-validation of essential data, fraud detection, data analytics, transaction tracking and exception case management.

The strategy, which aims to serve all customer segments, regardless of size and geography, builds on recent successful SWIFT initiatives, such as the gpi payments ‘track and trace’ tool and its direct-access counterpart, gpi for Corporates, the latter of which is now moving beyond the pilot phase.

Community service

Dave Watson, Chief Strategy Officer, SWIFT told TMI that the co-operative is responding to “a lot of up and downstream disintermediation in the payments sector”. This he says, is driven in part by a rising number of closed-loop networks. Although these closed environments have partly been created in good faith to solve specific issues around trade finance, securities, FX, payments and so on, these closed-loop networks present with a range of maturity levels, ultimately creating issues through fragmentation.

With bank customers keen “to tackle old problems or capture new opportunities”, they are demanding more functionality, more transparency, more fee-predictability, and greater ease of execution for cross-border trade, explains Watson. And it is now time for SWIFT to act in the most “co-ordinated and technically interoperable” way to solve for all.

“These issues have been building over the years, and we realised that there was a desire for us to help address these market pain-points, and that we would be very well-positioned to do so, not only through our existing franchise and network but also as a co-operative.”

Progressive model

This realisation led SWIFT into the concept of “evolution to revolution”, based on the understanding that, as a global provider across a wide range of markets, “we can’t just launch something and tell all to start using it”.

However, progression from point-to-point messaging, to the visibility offered by gpi and gpi-for-corporates “has accentuated an unmet customer need of predictability”, says Watson. “The evolution to the future state of transaction management as an industry will hopefully begin to drive home corporate treasury’s understanding that it can indeed have frictionless transactions that are predictable, clear and secure. It’s one of the core reason for evolving to this new model.”

Watson says SWIFT is therefore tasked not only with understanding how its own business model needs to evolve, but also what it needs to do “to drive the community to where it’s going”.

Comparing where it was ten years ago to where it will be in ten years’ time will look like a revolution – as the core shifts toward transaction management. But all its most recent work with pre-validation of payments, gpi, financial crime compliance et al, which will be part of that future state, has evolved in a measured manner.

There is good reason for this, says Watson. “What’s important is that there is backwards compatibility so that we disadvantage neither the fastest nor the slowest movers, because we are on a journey for the whole community.”

Of course, the shift from SWIFT as an organisation that has been somewhat derisively described as being ‘run by banks, for banks’, to one that equally facilitates banks and their customers, has a limit. It will always have financial institutions front and centre of its strategy, Watson assures.

“There are many services that banks provide, and we were created to help make it easier to do them,” he explains. “But maintaining constant corporate direct engagement on how we build out the future whilst ensuring that we speak to those in banks who understand and serve corporates, is incredibly important for us.” It is not, he insists, a binary ‘one or the other’ discussion: “It’s now about working together as a community, and making sure we have the right products and services to meet the needs of the financial services industry and the diverse customers it serves”.

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