ASEAN Payments Market Trends, Xiao Qinwen, SWIFT

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ASEAN Payments Market Trends, Xiao Qinwen, SWIFT

  1. 1. ASEAN Payment Market Trends SWIFT Business Forum, Singapore Qinwen Xiao Payments Market, Asia Pacific, SWIFT July 9th, 2014
  2. 2. Rapid transformation in payment system development • Fighting Financial Crime & SWIFT Compliance Services roadmap • CPSS-IOSCO, Sanctions, FinInform, Intraday liquidity • The trend to real-time payments • RMB internationalisation • ASEAN Economic Community (AEC) 2015 • ISO 20022 and market practice • Reliability of systemically important payment systems Regulatory Developments Resiliency Renminbi Regionalisation Real-time innovation Singapore Business Forum 2014
  3. 3. The Macro Context - ASEAN growth is high and tightly coupled to China 0% 20% 40% 60% 80% 100% 120% 140% 2006 2007 2008 2009 2010 2011 2012 2013 ASEAN CN Rest of APAC SWIFT Total CARG ASEAN 9.5% China 10.2% Rest of APAC 7.3% SWIFT Total 6.65 Customer Payments: MT 103 sent in volumes (2006 – 2013) Singapore Business Forum 2014 Regionalization
  4. 4. -2% 4% Volume Value Within ASEAN Countries Payments Sent YOY Change Customer initiated (MT103) and institutional payments (MT202 excluding cov), excl. central banks 1% 5% Volume Value -1% -6% Volume Value 10% 3% Volume Value 7% -3% Volume Value 3% -12% Volume Value -2% -1% Volume Value -16% 29% Volume Value 37% 27% Volume Value 132% 12% Volume Value Source: Watch growth in 2013 compared to 2012 in volume and in valueSingapore Business Forum 2014 Regionalization
  5. 5. Regionalisation - Developments in the Financial Infrastructure will facilitate economic activity Common Standards Interoperability Common Platform Single system and process Central system and currency Singapore Business Forum 2014 Regionalization
  6. 6. Towards AEC 2015: the role of standards and a common community 6 AU Zengin, JP CNAPS2, CNIN Low- value High- value CIPS, CN BOJNet, JP Live NZ TH PG BN SG MA Live ISO 20022 movers Payment systems ASEAN: • Thailand • Singapore • Philippines • Brunei (2014) • Malaysia (2015) These systems use SWIFT today: Asia Pacific: • Australia • New Zealand • Taiwan • Macao • Hong Kong • Fiji • Sri Lanka • Papua New Guinea • India (end 2014) Singapore Business Forum 2014 Live Regionalization
  7. 7. Real Time - ASEAN Countries have opportunities to “Leap Frog” their payment infrastructures and work across borders Singapore Business Forum 2014 Deferred Net Settlement (DNS) Real time Gross Settlement (RTGS) ACH (Automated Clearing House) Real time Low Value Batches Single Payments High Value Low Value Time Criticality Size of payment Hybrids Multiplebatches Real-Time
  8. 8. Renminbi Singapore Business Forum 2014
  9. 9. Significant evolvement in RMB offshore clearing Hong Kong the leader ~74% share (BOC) Thailand Announced interest to establish clearing bank London 4th Clearing bank (CCB). China (CIPS) New international RMB clearing system by 2015 Singapore 3rd Clearing bank (ICBC) Luxembourg RMB clearing MOU signed With Clearing Bank approved by PBOC Potential, or in progress Shanghai FTZ Piloting liberalisation of RMB financial services RMB “centres” 9 • Political drive to reduce dependency on USD • RMB sitting in top 10 payment currencies • Mushrooming offshore clearing centre environment Taiwan 2nd Clearing bank (BOC) Macao RMB clearing (BOC) Frankfurt 5th Clearing bank (BOC) With Clearing Bank approved by local central bank Laos RMB clearing (ICBC) Malaysia RMB clearing (BOC) Cambodia RMB clearing (BOC) Philippines RMB clearing (BOC) Moscow RMB clearing (BOC) Paris RMB clearing MOU signed Seoul RMB clearing service to be set up RMB
  10. 10. Competition among RMB “centres” is intensifying Source: SWIFT Watch Customer initiated and institutional payment, inbound & outbound, based on value RMB 26% offshore (outside China and Hong Kong)
  11. 11. SWIFT support for financial institutions in RMB? • STP & automation (e.g. market practice guide) • CIPS (China International Payment System) • RA for 20022 • Industry dialogue – onshore/offshore RMB groups • RMB Tracker • RMB Market Insights • Customised insight services • Watch Value Analyser • White Papers Business Intelligence Standardisation & Automation • Clearing centres – RMB RTGS on SWIFT (HK, TW, SG) • Bank reach • ~10,000 globally • ~3,000 in Asia-Pac Connectivity Singapore Business Forum 2014 RMB
  12. 12. Resiliency Singapore Business Forum 2014
  13. 13. What do we mean by resiliency? Singapore Business Forum 2014 Resiliency
  14. 14. 2011 - RTGS outage of 4 hours Software bug 2013 - RTGS 9 hours unavailable Wrong parameterization In 2011 both main sites of an PMI were nearly flooded Natural events Data Corruption From which “golden position” can I restart? Staff unavailability Diversity with peers and/or 3rd party staff? Loss of essential services Service diversification & geography 9/11 could be on an FMI? Terrorist attack Cyber attack Who accessed my confidential data base? Threats are everywhere Singapore Business Forum 2014 Resiliency
  15. 15. 2011 - RTGS outage of 4 hours 2013 - RTGS 9 hours unavailable In 2011 both main sites of an PMI were nearly flooded 9/11 could be on an FMI? Data Corruption Cyber attack Staff unavailabilitySoftware bug Wrong parameterization Terrorist attackNatural events Loss of essential services From which “golden position” can I restart? Which staff will be really available? Service diversification & geography Who accessed my confidential data base? Geographic diversity Staff diversity Technical and geographic diversity Technical diversity Technical diversity Technical diversity Technical diversity Geographic diversity Need for a different approach Singapore Business Forum 2014 Resiliency
  16. 16. Payment transactions Payment transactions Payment settlement system So , how do we do this? Payment system resiliency only as strong as weakest link MIRS: Market Infrastructure Resiliency Service Alliance Lifeline Alliance LifeLine Singapore Business Forum 2014 Resiliency
  17. 17. Regulation Singapore Business Forum 2014
  18. 18. Financial Crime Compliance Roadmap FATF 16 Information quality Compliance Analytics Sanctions list Mngt service Sanctions KYC AML Processing services Traffic analysis Standards Data repositories KYC registry AML testing & tuning Sanctions Screening Sanctions Testing & tuning (transaction & client systems) Traffic restriction (RMA) Live Development Qualification Exploration Quality Assurance Client/Name screening Singapore Business Forum 2014 Regulation
  19. 19. The Future and Opportunities for the ASEAN / APAC Financial Infrastructures will Revolve Around These Themes Regulatory Developments ResiliencyRenminbi RegionalisationReal-time innovation Singapore Business Forum 2014
  20. 20. Common challenges unique solutions 20Singapore Business Forum 2014

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