An interview with the Daniel Bardini who runs the Financial Messaging segment for Bottomline Technologies
OTC Space: Hello Daniel – what is changing in financial messaging?
Daniel: Quite a lot is actually changing in our space. After decades of relatively static situation, things have dramatically accelerated during the past 3-4 years and changes have continuously being introduced, triggered by different factors. First of all, the changes in ways consumers, you, me and others are actually consuming financial services. Now many payment applications are available from your smartphone and this has transformed the way we consume this type of services. The other main trigger is related to regulators, opening up new markets for new entrants, especially in the payments area and retail banking segment. These are the Fintech and Challengers Banks that took advantage of the Open Banking new context to offer alternative services to the consumers. Bottomline is supporting this trend and is the Financial Messaging partner of choice for these new entrants.
OTC Space: What changes are happening at SWIFT?
Daniel: SWIFT traditionally is the benchmark in Financial Messaging. But this is evolving fast especially when it comes down to faster or instant payment schemes serving domestic consumers. Banks and the financial industry are always trying to find faster and different ways to cope with messages that are transferring money and securities. At the moment we are really experiencing a big boost in the instant payment world, with projects spread across the globe that have nothing to do with the historical cross-border coverage of SWIFT.
In parallel to that there are also initiatives that have been taken in the marketplace. One of the initiatives that we are involved with is called ‘Visa B2B’ and its basically using the Visa infrastructure to perform cross border payments between corporates. So rather than going through SWIFT, Visa is offering a direct payment using their infrastructure and the accounts that they have across all the banks to facilitate payments and settlements. This is a new way of performing payments that has come to life, and we are part of this initiative. We are providing the infrastructure and the services to our clients to be able to perform these payments.
So, Yes, SWIFT is still a big and important player with over 11,000 banks connected to their network and with millions of messages every day, but it is not anymore, the only player!
Equally, SWIFT is still a very important partner for us, but through this product that we have called ‘Universal Aggregator’, this gives us the ability to plug into all of these different networks; whether they are international, cross border or domestic.
If you look at the cross-border business, 50% is related to payments and the other 50% is related to securities. They are not just confined to the payment world, and right now it is the payment area that is under pressure because of the new technologies invented, and channels launched.
SWIFT is reacting very well to it; they are being active and are on their way to adapting their value proposition to the reality of the market. They are innovating and taking the lead towards defining the next stage in financial messaging.
OTC Space: Does messaging become less important because you just interact with a ledger?
Daniel: Before, with the SWIFT cross border environment you would have had to go through a number of intermediaries to get to this point. With the Visa and the ledger technology, it can be done directly.
Even though the ledger and these new technologies will bring a lot more comfort and faster ways to perform payments, but this all needs to be framed into environments that are secure and highly resilient.
This is why we have companies like Visa that are bringing to market, new services building on the hyper secure infrastructure that is already available.
OTC Space: What about hacking?
Daniel: At the end of the day you have two aspects: the first is fraud protection. You may have heard about the story a couple of years ago where $1 billion dollars was stolen,https://en.wikipedia.org/wiki/Bangladesh_Bank_robbery. The reaction to that was to create a set of new rules that need to be implemented by the banks or by the cloud providers, like us and members of the cross-border payments network. This is in order to really secure the value chain that is in a payment. We have been very active on this matter and provided to our client our Secure Payments services to prevent or detect fraudulent activities.
The second aspect is politics and sanctions, to make sure that the banks remain in a safe place and nobody in the bank can go to jail because the wrong payment went into the wrong place. This is the another set of solutions we are providing to our clients, all about sanctions clearing and anti-money laundering. We help clients to screen their messages before they go out, or before they come in. We are a uniquely placed in the value chain, as the last point before a payment goes out and the first point before a payment comes in, the ideal position to do these checks.
Something to be noted here is the responsibility always remains within the bank, irrespectively of the degree of outsourcing they take, eventually they are liable versus the regulator if anything wrong happens.
OTC Space: Many thanks Daniel.
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