Putting some snap, crackle and pop into any large gathering of bankers and other assorted financial services professionals is always going to tax the loftiest of intellects, so industry messaging cooperative SWIFT can be forgiven for bumping up against various well-worn clichés as it seeks to elicit some sort of fervour around its annual Sibos exhibit and conference. The big theme for this year’s trade show-cum-evangelical meeting - in Atlanta on October 11 - is ‘time for growth’.
A tad bland perhaps, but an apposite enough summation of SWIFT’s current preoccupations. Over the course of 2003 the cooperative finally hit the magic number of 2bn messages sent over its network – that’s an average of 8.2m a day – on the back of a growth of overall messaging traffic of 12.7% over the period in question. Payments messages, which currently account for 60% of that traffic, were up 9.5%, but crucially the growth in securities messages seen in preceding years continued: an increase of 18.6%, driven mainly by clearing and settlement segment.
Not small beer by any means, and all the more impressive given that over the past couple of years SWIFT has imposed upon its users not one but two significant migration programmes. The first saw a shift from the old ISO 7775 message set across to the more flexible, functionally richer ISO 15022 standards; this was followed by the introduction of the cooperative’s new SWIFTNet architecture and attendant business solutions, a transition that remains on track to be fulfilled by the end of this year.
A fundamental reengineering of SWIFT’s messaging network that sees its FIN store-and-forward financial messaging service move from the creaking X25 transport mechanism first introduced in 1977 onto a new secure IP network (SIPN), SWIFTNet seeks to provide a ‘single window’ onto an ever-increasing range of value added business solutions spanning the entire transaction lifecycle.
The ‘commercialisation’ of SWIFT underpins the current strategy: the cooperative is looking to use help improve liquidity management, reduce operational costs, ensure scalability, offer higher throughput, enhance reliability, availability, security and support – all on a common platform. SWIFT maintains the new architecture will allow institutions to halve total messaging costs when connecting to the multiple services available through SWIFTNet; straight-through processing (STP) will also be enhanced thanks to the technical interoperability the platform offers.
The new architecture is clearly aimed at persuading existing users that, despite the proliferation of new and ever cheaper connectivity and networking technologies in recent years, SWIFT can still add value to its members’ businesses. However, the cooperative also remains committed to extending its user base beyond the bank-to-bank space it has traditionally inhabited.
To this end, in June it announced it is to admit securities market data to the club. “The move represents a significant step forward for the use of the ISO15022 standards for corporate actions and reference data across the industry…. The_providers’ integration within the SWIFT community will provide significant potential for greater STP as well as risk and cost reduction,” SWIFT notes.
However, SWIFT is also now focusing on indirect connectivity options as a key way of broadening that community. SWIFT service bureaux (SSBs) – whereby SWIFT users outsource their SWIFT interface operations and SWIFTNet connectivity to third-party providers – are already a well-established option. SSB users continue to have a contractual and commercial relationship with SWIFT, but without incurring the costs attached to full membership. Some 70 organisations worldwide now run SSBs and SWIFT reports that their popularity continues to grow as more and more financial institutions choose to focus on core business and outsource non-core activities.
The other method to connect to the SWIFT network is via so-called Member Administered Closed User Groups (MA-CUGs), whereby a corporate or other non-SWIFT member enters into a contractual agreement with a bank to access the messaging infrastructure.
However, SWIFT is now looking to take this concept a step further by actively encouraging those large financial institutions that have invested heavily in complex and expensive SWIFTNet infrastructures to capitalise upon that investment by allowing their customers to connect to SWIFT through them.
As Wim Raymaekers, head of connectivity channels at SWIFT, acknowledges: “In addition to having service bureaux that provide the technical connectivity, we could also tap into our members, who not only have the physical interfaces but also possess significant expertise when it comes to dealing with SWIFT and our products.”