Digital banking
payment or eat into it considerably. The international worker community often needs to send money home to friends and family, which contributes significantly to the economies of many developing nations. The SWIFT Go service is designed to underpin these low-value payments, making them predictable, fast and low-fee. Financial institutions can enable their SME and retail customers to send low-value payments anywhere, direct from their bank accounts. However, the reality is customers want the same experience regardless of whether the payment is domestic or cross-border. “That’s the challenge the user community is putting in front of us,” said Thomas Halpin, MD, global head of payments, HSBC. “They want the payment system they live with day-to-day [to be] mirrored internationally.”
Isabel Schmidt, head of direct clearing and asset accounts services products at BNY Mellon, agreed. “Nobody wakes up in the morning and says, ‘I’m going to make a few payments today’ – what they want to do is transact and conduct their business. The payment is something that has to happen seamlessly to support that primary objective.”
The power to transform
The world runs on application programming interfaces or APIs. It’s how softwares work together, how web applications interact, and how apps on smartphones connect with one another to exchange information. Momentum behind APIs within financial services – letting those services interoperate – has been steadily rising over the past decade. APIs have the potential to transform customer experiences in areas like payments, treasury, compliance, security and more. The conference was told that if the industry wanted APIs to reach their full potential, then keep in mind standardisation, interoperability and collaboration. One area where APIs are coming into play is with the transaction manager platform. According to Perez-Tasso, the transaction manager promises instant payments internationally. “When we promise instant, we really will deliver instant.” The API-driven transaction manager will also include data services, including sanction-screening, anomaly detection, data analytics and exception management.
The rise of blockchain and token-based currencies is also covered by APIs and the transaction manager, said Perez-Tasso. It is currency agnostic, which means if central bank digital currencies (CBDCs) or stablecoins are adopted, SWIFT can provide interoperability between token and account-based networks. “Down the line, by creating the platform of platforms, strategic partners who are innovating in different segments can plug-in to introduce new forms of value across the ecosystem,” he said. SWIFT’s APIs provide the interoperability needed for a 21st century, modern banking system. Customer expectations have increased, as has the number of
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services available. Sibos attendees heard that due to the range of choice in financial products and services, institutions need to offer a compelling user experience and deliver a compatible standardised service. This is the role APIs will play, offering a standardised way of creating seamless, interoperable services across the industry and into new areas, including digital wallets.
“Interoperability extends past traditional payment systems into home-grown wallets and systems,” noted Sara Castelhano, managing director at JP Morgan. “We’re living in a world where we are seeing more domestic payment schemes coming up and more alternative payments born from the wallet industry. Ultimately, consumers want to be able to move money faster.”
Trackable securities transactions The securities industry will also benefit from the evolving SWIFT platform, with attendees hearing customers already have high expectations regarding the visibility they have with other forms of transactions. Providing better visibility throughout the settlement and reconciliation value chain is essential to increasing efficiency and reducing settlement fails, the conference was told. SWIFT’s platform evolution creates a service that will make this possible for the very first time. “What we are building with our community will really increase focus on helping address post-trade flows and the expectation of greater speed, transparency, efficiency and openness through the SWIFT platform,” said SWIFT’s chief strategy officer, David Watson.
The evolving SWIFT platform will enable financial institutions to increase efficiency and offer customers what they want – low cost, fast and transparent cross-border payments. But the platform will also help institutions take the fight to the new generation of fintechs through superior, battle-tested and standards- compliant software and APIs. ●
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SWIFT’s all-digital global event, Sibos, looked at the narrative between fintechs and traditional institutions, offering solutions and customer expectations.
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