IBS Journal April 2015
The long and winding road
It has been a long journey in Swedbank to present proper business value and gain senior management backing for replacing its payments systems but, with ISO 20022 on the way and with its legacy systems nearing the end of the road, this is no longer the case. A project centred on Fundtech’s Global Payplus (GPP) is underway to span both high-value and high-volume payments, domestic and cross-border.
Swedbank is underway with a major upgrade of its high-value and low-value payments infrastructure. At its heart, it has Fundtech’s Global Payplus (GPP). In part, there are competitive pressures behind the move, including the threat from non- bank rivals. There are also regulatory rea- sons, particularly the need to be ISO 20022 compliant. This is actually the Swedish bank’s
fourth attempt to replace its payments platforms. A lot of the previous false starts have been related to reprioritisation with- in the bank, with insufficient support for a transformation that has sometimes been looked on as providing little added val- ue. ‘With payments, no one realises how important they are until they stop work- ing, it is a commodity, not a sexy thing,’ says project head and payments product manager, Asa Gibson Lundmark. There is also a tendency to forget that apps and other customer-facing innovations rely on the payments infrastructure, she adds. With many parallel projects, it is
always a challenge to gain attention and resources. Gibson Lundmark admits that the payments team has not been good in the past at describing the business case. Swedbank’s head of payments and cash management, Kristina Tanneryd, agrees, ‘we must accept that ourselves. If we just say, this is a system upgrade, it sounds very uninteresting and of low business value, we must be much better at describ- ing the impact for the whole bank and our customers when presenting our case.’ In fact, the go-ahead this time around
was partly because there was no option, as the main existing system, Fundtech’s old Payplus, is on a Windows 2003 plat-
16
form that is nearing the end of its life. ‘It was part of the reason for finally getting our project approval,’ admits Gibson Lund- mark. Swedbank has separate legacy systems
in Sweden and the Baltics so a develop- ment, whether for business or regulatory reasons, has to be implemented in both areas, which is expensive and time-con- suming. It also impacts the bank’s ability to offer a single, consistent payments offering to its customers across the different coun- tries. ‘We can’t do that today, which is a bit embarrassing,’ Gibson Lundmark admits. ‘We will be able to offer a more attrac- tive and homogeneous customer offering throughout our home markets when we have delivered our new project’. As well as the cost and logistical rea-
sons for the project, there are the wider market influences, says Tanneryd. There is clearly a lot of sophistication in the Nor- dic markets and limited use of cash. Digi- tal banking is well established and ‘instant payments are now something that is natu- ral’, she says. The Swedish mobile payments service, Swish, has been in the market for one year and there are two million users, with a version for corporates just launched. It is popular and has proved to be a very good cash substitute, she says. Here, and for other areas such as ID security, the Nor- dic banks do cooperate around the infra- structure so that all banks that wish to par- ticipate also take their share of the invest- ment cost. At present, Swish is limited to Swedish krona and, while its direction is determined by the overall consortium that owns the entity, Swedbank would certain- ly like to see support for euros, to make it applicable for its other home countries. ‘It
© IBS Intelligence 2015
www.ibsintelligence.com
is on the agenda and we are pushing for it, definitely,’ says Tanneryd. There is a relatively high degree of trust of banks in the region, says Tanneryd, but customers are demanding and sophis- ticated, so customer satisfaction is quite low. One area of frustration is the lack of transparency in payments. With regards the new entrants, there is a question of whether they are competitors or partners, she says. ‘Sometimes, they could be both.’ The banks must keep their costs low and still attract the volumes, but must also add value. ‘There is not much that differenti- ates us from the other banks operating in the region since the payments products are commodities nowadays,’ she says. ‘Our competitive edge lies within other areas such as how we service our customers and in providing a stable product delivery at all times.’ The bank already has high rates of
straight-through processing (STP) and the goal with the upgrade project is to retain and increase this level. Some of Swed- bank’s branches now do not handle cash. ‘We want our staff to give financial advice instead of handling cash over a counter,’ says Gibson Lundmark. The payments project started in April
2014. The initial intention was to address incoming payments. The bank tends to view payments as incoming or outgoing, rather than high- or low-volume, says Gib- son Lundmark, because it seeks to handle them on a single infrastructure. GPP will be the single platform for all payments, regardless of volume or value. Six months into the project, there
was a major about-turn, with a switch of emphasis to outgoing payments. This was
case study: swedbank
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48
