Community Engagement Workshop

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Ellen Golden
5 years ago
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1 Community Engagement Workshop

2 Setting the scene: 15 years of strategy Messaging & Platform 100% FIN Growth 50% Price Reduction SWIFTNet Phase 2 Software Business SWIFTNet capabilities to Access Shared Services Solutions: Cash reporting E&I FIN, InterAct, FileAct growth 50% Price Reduction Fixed Fee Distributed Architecture Alliance Lite Alliance Integrator Solutions: TSU, SWIFT Remit, FIX, Proxy voting Business Intelligence FIN, InterAct, FileAct growth 50% Price Reduction Distributed Architecture FIN Renewal HSM Replacement Alliance Lite2 AMH Integration services (T2S connector, IPLA) Business Intelligence, SWIFTRef, Sanctions, Matching MIRS 2

3 Strategy 2020 Timeline & Next Steps Strategy Exploration Strategy Definition Strategy Execution 1. Mumbai board offsite: directions on risks and opportunities to address 2. IR (June 2014) Highlight SWIFT2020 strategic directions Outline consultation objective, process and timeframe 1. Assess strategic directions (DP Dec 2014) 2. Make choices (ER June 2015) Strategic Planning Strategic Review Action plan (IR June 2015) Mid-term review H (IR) 3

4 SWIFT2020 exploration Market & Technology Drivers Geopolitical Disrupters 4

5 SWIFT current business model Standards Messaging Correspondent Banking Platform FX CSD Trade S&R Corporates/IMIs RTGS ACH Software Business Shared Services BUSINESS INTEL LITE2 ACCORD TM LITE2 SANCTIONS REF DATA BUSINESS INTEL LITE2 BUSINESS INTEL MY STANDARDS SANCTIONS REF DATA Access Lite2 IPLA AMH Services Compliance SWIFTRef BI Matching MyStandards MIRS Services 5

6 SWIFT2020 Board Offsite outcome Baseline Areas to further explore Messaging: Domestic Real-Time Payments Person-to-Person Payments Securities Corporates Shared Services: Financial Crime Compliance 6

7 Securities Markets PowerPoint Toolkit 23 October 2008 Confidentiality: restricted 7

8 Securities Markets Core More than 2bn messages in 2013 (+13% growth) 40% of total FIN traffic 135 million messages for assets servicing 80 million messages for funds 20% growth of tri party collateral messages Drivers 2008 crisis Regulatory changes Increased use of collateral management and liquidity New technology, in particular for MIs Traffic impact Compound estimated growth 5-7% per annum for the next five years European market close to maturity post T2S Clear acceleration of S&R (MX) adoption by MIs 8

Securities Markets Segment expansion Investment Managers Market infrastructures Compliance services/bi for Securities T2S adjacencies Product & Service expansion Revisit

9 Securities Markets Segment expansion Investment Managers Market infrastructures Compliance services/bi for Securities T2S adjacencies Product & Service expansion Revisit Custodians value proposition Securities core business Value chain expansion Issuer space Intra-day collateral & liquidity mgmt Funds Geographical expansion Asia Pacific LatAm

10 Securities Markets : Questions for consideration Product & Service expansion Securities core business Product & Service expansion Geographical expansion Value chain expansion Segment expansion SWIFT is currently deploying adjacent services to help the T2S community such as Readiness Portal, testing facilities.. Are they other priorities or areas SWIFT should focus on? - What are the conditions/limitations SWIFT should keep in mind while exploring the expansion to a referencing & reporting utility, a pension portal and compliance services? - Beyond the messaging, how would you expect SWIFT to help you to tackle the collateral management challenge (increased volumes, increased velocity, account segregation)? Geographically, what are the measures we could take to increase our penetration in non- European countries? Lobbying? More direct approach? Other partnerships? Are there any drivers such as regulation, shift in market structure and stakeholder groups, value migration across the value chain, etc., which have led to the issue(s) becoming bigger/more important in past years/months? Where should SWIFT focus its attention and efforts in the coming years? Does it make sense to continue to try and connect all CSDs? What should be SWIFT priority? 10

11 RTP Update Update on Real Time Payments Carlo Palmers SWIFT Americas Management Team Update - CSC - July 2013

12 Update on Real Time Payments Key characteristics RTP Update 24x7: payments can be sent and received all times of the day, every day of the year. Immediacy: Payments must be processed within seconds. Irrevocability: once payments are processed, they can t be recalled. Certainty: payments sent to a beneficiary bank are individually explicitly confirmed or rejected. Funds availability: on the beneficiary s account 12

13 Low High Payment Value Payment Volume High Trend Low Update on Real Time Payments Background RTP Update Delayed Net Settlement (DNS) Systems Payments are netted and settled in RTGS Hybrid Systems RTGS Systems Operated by Central Banks Trend ACH Systems Payments are settled EOD in RTGS Operated by private firms Trend Next Generation ACH Payments are settled Intra day in RTGS Combining high & low value Trend Retail Real Time Payments RTP New End of Day Batch Payments Intra Day Batch Payments Single Payment Payment Frequency 13

14 Update on Real Time Payments Live in ~15 markets, with 8 more in development RTP Update Western Europe Sweden UK Denmark (dev) Ireland (dev) Norway (dev) Finland (dev) Central & Eastern Europe Poland Switzerland Central & Latin America Brazil Chile Mexico Colombia (dev) Africa Nigeria South Africa Middle East Turkey Asia Pacific India Japan Singapore S-Korea Taiwan Australia (dev) Hong-Kong (dev) New-Zealand (dev) 14

15 Update on Real Time Payments 3 key components RTP Update 3 Agreements Payer 1 Bank real-time infrastructure 2 Real-time retail payment system focus 1 Bank real-time infrastructure Payee Three key components required to allow for end-to-end RTPs 1. Banks infrastructure must work in real-time 2. The interbank payment system should work in real-time 3. Commercial and operational agreements must be in place to ensure E2E real-time service Real-time retail payments consultation - 16 September

16 Update on Real Time Payments Outcome of Market Assessment RTP Update Adoption of RT LVP Ramp-up and Usage Solutions RT LVP systems are gaining momentum and are expected to continue to develop in the future The adoption of RT LVP will be mainly driven by regulators wishing to improve payment systems and respond to peer pressure Both short- and long-term economics for banks need to be considered No impacts on RTGS volumes were observed where RT LVP systems were implemented Usage of RT LVP systems will be mainly driven by personto-person payments, m- commerce and e-commerce Secondary use-cases are Point of Sales, bill payments and selection of business-initiated payments RT LVP represent an opportunity for SWIFT in the short / medium term Most solutions are bespoke, with varying functional and integration capabilities, presenting a potential opportunity for standardization (e.g. use of common standards and messaging) 16

17 Update on Real Time Payments Types of RTP systems RTP Update Hub approach RTGS AU Approach Bank A Bank B Bank A Bank B Bank A Bank B Clearing Settlement RTP Hub Clearing Settlement RTGS A B RTGS FSS* A B RTGS A B HVP A B Examples UK, SE, SG, PL (majority of existing RTPs) CH, MX, CZ AU (only use-case so far) Key features Interactive clearing 24/7/365 (most) Settlement either via prefunding or netting No distinction between high and low value No interactive clearing (combined with settlement) No 24/7 (although close) Interactive P2P clearing Settlement untangled from clearing and performed directly by RBA 24/7 FSS: Fast Settlement Service 17

Should SWIFT go beyond evolving its existing RTGS business and develop a more pro-active approach towards domestic realtime retail payment

18 Update on Real Time Payments Questions for consideration RTP Update Reality? SWIFT s role? SWIFT s offer? Do you recognise this trend towards realtime? Will it affect SWIFT s current business? If so, in what time frame? Should SWIFT go beyond evolving its existing RTGS business and develop a more pro-active approach towards domestic realtime retail payment systems? Should SWIFT expand into building domestic solutions/infrastruct ures (i.e. cater for local processing)? Should SWIFT take a more opportunistic approach leveraging its global platform? 18

19 Update on Real Time Payments Next Steps RTP Update 1. Continue consultations and understanding of regional perspective meeting at Sibos 2. Work out a generic value proposition for RTPs, acknowledging the inevitable, yet unquantified, adoption of RTP 3. Approach will leverage existing solutions or components to limit upfront investment and risk 4. Outline our proposed approach in our December 2020 DP and possible Whitepaper 19

20 International Person-to-Person Payments +9% Volumes expected to grow Increased international mobility & services SWIFT: 25% cross border MT 103 < $1K (1/4 real P2P) Value proposition MTOs Entrants Banks Market share MTOs: 50-60%, Western Union Entrants: 20-30% PayPal Banks: 15-20% Trends Consumers expect faster, cheaper, easier More entrants incl. online networks and innovation New regulation, can be - or + for banks * MTOs: Money transfer operators (e.g. Western Union, MoneyGram) 20

21 International P2P payments: Key questions In your view, which are the most relevant drivers? Changes in consumer expectations New innovations Regulation Other drivers? If relevant to banks business, should SWIFT support banks in international P2P payments? If so, do you agree with the proposed way forward? Identify target corridors where a coalition of willing banks could take the lead Discuss the possibility of defining a scheme with common business rules Evaluate the need to evolve or reuse the underlying technology platform 21

22 THANK YOU

2020 Strategy Grow the core, build the future

2020 Strategy Grow the core, build the future Michael Formann, Head of Austria/CEE SWIFT Business Forum Romania, 28.10.2015 Extensive worldwide customer consultation Strategy Exploration Board Offsite