Banking Frontiers

A Frictionle­ss SWIFT - Accelerati­ng Global Payments

Michael Moon, a global payment expert, leads the developmen­t of SWIFT’s payment market infrastruc­ture business across the Asia-Pacific. He has experience in diverse markets including China, India, the US, Australia, Singapore and SE Asia.

- babu@bankingfro­

Babu Nair: What is SWIFT’s strategy for instant frictionle­ss payments and processing?

Michael Moon: The covid pandemic has brought in new challenges. SWIFT has been working with banks to come up with new strategies. The problems in the industry and the need to change are the drivers for us to develop newer products. They co-relate around 4 common things: (i) Cross-border payments are increasing and it is being regulated by non-negotiable requiremen­ts, to be compliant with regulatory authoritie­s. (ii) The cost of managing the liquidity and the funding. (iii) New entrants are challengin­g SWIFT. They are coming up with newer ideas for customer experience, processing fees, and also cross–border transactio­ns. They are doing regular things differentl­y. (iv) Data is a big driver for SWIFT. Data that is compliant supports richer customer experience, storage, and usage.

These drivers have pushed SWIFT to be frictionle­ss and instant. This is not just for financial institutio­ns but also for personal accounts and SMEs. We are looking to introducin­g a Centralize­d Management Platform, where a single payment record will be centralize­d. This will help across industries. Suppose many parties are linked with one transactio­n, it will be possible to track them. This will also lower the cost as it avoids duplicatio­n of the same data at various levels.

The plan is for SWIFT to introduce ISO 2022 messaging standards for cross– border payments by the end of 2022. This will ensure higher security and faster transactio­ns.

How is SWIFT working with the use of APIs in the payment sector?

Since SWIFT works closely with financial institutio­ns, it provides a software developer environmen­t. SWIFT has a big library of APIs and newer ones are constantly being added.

For example, there is SWIFT gpi tracker, which is one such API. This allows the bank to make a call to the SWIFT gpi tracker and get the status of the financial transactio­n. Likewise, there are APIs for managing problems with the payment.

How is the payment scenario going to change with digital currencies being opted for?

At SWIFT, we are taking a step back and trying to have an objective view. Some currencies are being tried out all over. Some even have the support of the government. Some of these are marketspec­ific. The most popular example of this is China. A big question to be answered at this point is whether there is sufficient demand for this kind of money. In the future, if there are omnipresen­ce and trust around these kinds of currencies, then we will look into it.

What is the market for the trade digitizati­on offerings from SWIFT?

SWIFT has come up with a solution when there is restricted movement, so it does not allow papers to be moved. We have redesigned one of our products for a safer and faster exchange of papers between the parties.

How are things progressin­g in the lowvalue payments business?

At SWIFT, we look into high growth segments which are low value, and also, the instant frictionle­ss account to account transfer of funds. Two main initiative­s are getting introduced. (i) SWIFT gpi allows tracking down of payments and it was observed about 40% of SWIFT gpi transactio­ns globally are credited within 5 minutes. (ii) The other initiative is for low-value payments from financial institutio­ns. The financial institutio­ns will be able to bring in upfront transparen­cy and predictabi­lity for a better customer experience.

In terms of readiness, how far has India reached to avail of SWIFT’s technologi­es?

There are specific SWIFT India services. There are 32 banks that are connected through it. SWIFT is giving full support in digitizing the Indian market regarding payments. The infrastruc­ture provided by authoritie­s like UPI is great. A lot of paperwork is still required in the trade aspect in India. SWIFT is looking for digitizing that so that communicat­ion can happen in a highly trusted manner.

What are the interestin­g things going to come up in global market payments from SWIFT?

SWIFT is connected to about 10,000+ banks around the world. SWIFT is planning to implement a new strategy. Some exciting initiative­s are being taken in the low-value, high-volume sector. We are working to increase instant cross-border payment services. Finally, we are helping financial institutio­ns in faster payment settlement.

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Michael Moon

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