SIBOS 2021: SWIFT evolves to keep pace with market changes

As it wraps SIBOS, its flagship event, SWIFT finds itself at an exciting juncture in its evolution. The world of cross-border payments, financial messaging, and new technology like instant payments and digital currencies has changed the international landscape and SWIFT has risen to every challenge, evolving with the market and providing solutions that stay relevant and essential since it was established in 1973.

With Sibos focusing on “Recharging Global Finance,” it’s worth taking a look at how its host is addressing that same challenge. I addressed it, along with other global payments issues, on a recent podcast at Trade Finance Global. As someone who has dealt with SWIFT in varying roles throughout my 25-year career, I’ve identified four of the most interesting developments in its services and solutions. Yes, this will show SWIFT has proven to be a highly resilient institution. But these are also important developments for FIs all over the world to note:

The success of SWIFT gpi (Global Payments Innovation):  Originally launched as a tracking tool, SWIFT gpi’s mission ensures that cross-border payments measure up to the market’s new standards for speed, traceability, and transparency. For me, it is probably the most important recent initiative by SWIFT. Nearly 70% of SWIFT’s cross-border payments are now being sent via gpi. It also deserves credit for taking gpi technology and applying it to real-time cross-border payments. SWIFT has been testing its real-time capability (gpi Instant) with Australia’s NPP real-time system and Singapore’s FAST. It’s also now available in the UK. SWIFT’s gpi Instant service has significant potential to be a game-changer in cross-border payments.

Migration to ISO 20022: ISO 20022, a structured and machine-readable messaging format that allows significantly more data to accompany a transaction, will become a global standard over the next four years. From SWIFT’s perspective, it will make interoperability between payment systems easier, including its own global financial messaging network. That network has for the past few years been dominated by the MT FIN format. MT FIN and ISO 20022 messages will co-exist until November 2025. At that time, SWIFT support for MT 100, 200 and 900 series message types will cease. However, SWIFT’s MT FIN trade finance messages will be changed significantly to add new message types. These new messages will make Standby and Guarantee issuance and amendments more highly structured, which will improve operational efficiency.

Greater reach and richer functionality: SWIFT service bureaux (which provide outsourced cloud-based applications) have been through many changes in recent years. Whilst the number of bureaux has reduced significantly in recent years, a growing number of those that remain belong to large payment software providers like Bottomline which are offering a broader range of solutions to meet bank and corporate customer needs that go beyond pure connectivity to SWIFT. Among them: access to other payment systems and protocols, such as domestic real-time payments systems, which tend not to use the SWIFT network, and connectivity to the new Visa B2B cross-border payments network which is emerging as a competitor as well as a complement to SWIFT. In addition to extended reach into multiple payment networks, these cloud-based solution providers offer deep functionality spanning treasury management and payment hubs, payment fraud prevention, and AML sanction screening, using techniques such as machine learning, predictive analytics and artificial intelligence.

Future Strategy: How does SWIFT ensure its relevance as it moves forward? It has an ambitious plan to evolve from pure financial messaging to more sophisticated end-to-end transaction management. It’s planning to introduce processing capabilities on a central platform that will orchestrate payments faster and more efficiently, based on a golden copy of rich transaction data. Banks will exchange data with the SWIFT cloud instantly, instead of sending it in sequence to the next party in the payments chain for a cross-border payment. Called the Transaction Management Platform it’s set to launch in November 2022.

SWIFT has grown and flourished in the face of a fast-changing and highly competitive environment. I’m confident they have the expertise in innovation and the right partners to help them achieve their ambitions. Those partners can help SWIFT navigate its roadmap, faster and more efficiently.

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