SWIFT Annual Review 2010

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SWIFT Annual Review 2010

  1. 1. Annual Review 2010
  2. 2. The signs of confidenceSWIFT is a member-owned cooperative that provides thecommunications platform, products and services to connectmore than 9,700 banking organisations, securities institutions have begun to return toand corporate customers in 209 countries. We enable ourusers to exchange automated, standardised financialinformation securely and reliably, thereby lowering costs,reducing operational risk and eliminating operational the financial industry, butinefficiencies. We also create the connections and standardsthat make markets work across the globe. We bring togetherthe world’s financial institutions, promoting dialogue and it is clear that the futurehelping to solve common industry problems. And we combinea uniquely informed perspective with the flexibility to respondto the individual needs of every customer.This annual review contains a summary of SWIFT’s financialperformance. The full set of financial accounts can be downloaded will be very different from the past. The coreat www.swift.com and is also available from any of our offices. of what we do at SWIFT is as relevant as ever to our communities. But the way we do it is changingContents – bolder, sharper, more4/5Achievementsand highlights 16 / 17 Being responsive 24 / 27 Facts and figures 34 / 35 Oversight of SWIFT agile, but always reliable and secure. 18 / 19 28 / 29 36 / 396/7 Acting differently Executive Committee Security audit statementA time to stay focused and Financial performanceA few words from our Chairman 20 / 21 30 / 31 Maintaining core strengths Board of Directors 408/9 SWIFT andDelivering on our commitments 22 / 23 32 / 33 Arkelis OfficesPerspectives from the CEO Being responsible Governance at SWIFT 4110 / 15 SWIFT Partners2010 in context
  3. 3. 115Achievementsand highlights 30 years of SWIFT presence in Hong Kong, Japan and Singapore, strengthening our global organisation and getting closer to our customers to understand and respond to their needs 3.8million acquisition, Arkelis, enabling us to offer more flexible high-volume financial messaging solutions to our largest customers % confirmations processed on Accord for Securities 4,162 since live date in 2009, enabling broker/dealer customers to reduce counterparty risk and cut their settlement costs 2.5 rebate given on 2010 messaging usage. We also announced a 20 percent average FIN price reduction to take effect in 2011. This is in addition to the 726 achievement, one year ahead of schedule, of a targeted 50 percent price reduction over five years set in 2006 tonnes of paper saved at Sibos 2010, consulting days delivered globally, equivalent to 180 trees, as part of our covering technical and business commitment to being an environmentally processes and practices 15,000+ responsible organisation copies of ‘ISO 20022 for Dummies’ distributed. Now in its second edition, our aim in writing the book was to demystify the standard and encourage take up worldwide corporates registered by year-end. Our SWIFT for Corporates solution allows the exchange of financial information with many financial 8,900 participants at Sibos in Amsterdam, the biggest ever attendance in the institutions through a single, highly secure event’s 32 year history standarised communication platform
  4. 4. A time tostay focused value la eficiencia EFFICIENCYA few words from our Chairman DELIVERY I have often insisted that SWIFT should be judged by its actions, not by what we say from various podiums. From a Board perspective, it therefore gives me pleasure to report that we can be proud of the actions of our cooperative in 2010. Without compromising in any governance way on the attributes of security, reliability and resilience that are the hallmarks of its operations, SWIFT is delivering real business benefits through its programme of structural cost reductions and its execution of the SWIFT2015 strategy. Entrega The use of SWIFT is to a large extent Although it may have been painful at to support this purposeful innovation. SWIFT Chairman and CEO as well on how SWIFT could help us address a derived demand. Its traffic volumes times, it was conducted in a manner The acquisition of the AMH business and as formal discussions with various the common challenges we face. are highly correlated with the economic that has created the right outcomes. creation of a wholly-owned subsidiary, specialised committees. We take environment. In my letter last year, The resulting change in the culture of Arkelis, in 2010 provides a good example these discussions very seriously. This As we move further into a new financial I noted that SWIFT traffic volumes in the cooperative will benefit the of how appropriate Board oversight and oversight process, which has been year, SWIFT is enjoying a fundamentally 2009 reflected the decreased levels of community in tangible ways. support have enabled the Executive very intelligently structured by the G-10 sound environment. It is executing well, business activity within our community. to take bold steps in exploiting new central banks, continues to works well. its governance structure is sound and it Volumes have since demonstrated an Focused execution opportunities for the SWIFT community is well overseen. The SWIFT brand, that upward trend. It became clear during The business of SWIFT is to serve within the context of the SWIFT2015 A practitioner’s perspective of an independent, trusted, neutral third the financial crisis, however, that SWIFT its financial institution customers. strategy. The members of the SWIFT Board are party with integrity and reliability, is firmly needed to examine its cost structure Last year I spoke about the 2015 practitioners drawn from among the established. As the outlook brightens, and act on it with precision, focus and strategy exercise and the extensive Regulation and oversight SWIFT community. We look to SWIFT we must maintain vigilance, diligence deliberation. The process of structural community consultation that was SWIFT will always be driven by the to act with quiet competence, to focus and an awareness of the conditions of cost reductions launched in 2009 underway. The SWIFT2015 strategy priorities of its community. Its ambition on integrity and resilience, and to always continued success. Now is not the time continued throughout 2010. The results was approved by the Board in June is to execute in a robust world-class serve its community. SWIFT performs to relax. Now is the time to stay focused are obvious as Lázaro Campos, CEO, 2010, ahead of schedule. I’m happy manner what its customers ask it to do. exceptionally well on each of these on Good Governance, Exceptional outlines on the following pages. to report that SWIFT is already busy Over the past year, as the regulatory dimensions. As a practitioner, I would Control and Disciplined Delivery. implementing and executing the environment has intensified, banks also like to see SWIFT pointing out areas The achievements of the ‘Lean at strategy in a disciplined way based have looked to SWIFT to help them as where, from its unique vantage point, Yawar Shah SWIFT’ programme are not simply a on the priorities that you have set for a community to address new reporting it believes the community as a whole Chairman one-time internal event. Beyond the your cooperative. You will hear more requirements. SWIFT is responding could be more efficient and where April 2011 15 percent rebate on 2010 message about this from Lázaro. actively to these requests. As a tangible SWIFT could help us achieve that bills, SWIFT is committed to a structural example, the community has asked efficiency without posing a commercial price reduction that is both substantial There is, of course, a continuous need SWIFT to create a sanctions-screening threat to individual members. and sustainable – for 2011 alone it in our industry to balance cooperation utility for smaller institutions to help includes an average 20 percent price and competition. There are many pain them meet regulatory requirements. I recognise that as practitioners, we reduction. The fixed fee programme points for the industry that drive risk SWIFT has stepped up to the challenge sometimes tell SWIFT to stay within its has also been a dramatic success. and cost. SWIFT is trying to address and in Q4 2010 announced a plan and box, but as Chairman I would also like Over 70 percent of SWIFT’s traffic is these issues through collaborative time frame for a new service. We are to see SWIFT offer even more value now on a fixed fee basis. Fixed fee innovation in a way that is open, already being approached on other to the community it serves. For instance, customers naturally reduce their unit structured and transparent. This is a related potential services. I would like SWIFT to become price as their volumes grow, creating collective challenge for the industry increasingly idea-oriented about where a self-incentivising virtual cycle. and SWIFT. The oversight of SWIFT itself by the and how it could help the community. G-10 central banks chaired by the Mobile payments, internet security and As Chairman of the Board, I would A well-structured governance process, National Bank of Belgium is a regulatory reporting, along with specific like to give credit to Lázaro and the based on a trusting and transparent comprehensive and well-structured opportunities and challenges included executive team for the way the Lean relationship between the Board and process. There are regular meetings in SWIFT2015 are all areas where, as programme has been managed. the Executive Committee, has helped between the oversight group and the Board Chairman, I would welcome input delivering real business benefits independent, trusted and neutral third party governance structure sound and well overseen purposeful innovation8 SWIFT Annual Review 2010 SWIFT Annual Review 2010 9
  5. 5. Delivering onour commitments agile RELEVANTPerspectives from the CEO DILIGENTE It’s not in the nature of our organisation to overstate our achievements, but 2010 was undeniably a year of ‘bests’. Our business activities saw healthy growth across the board, we had the best ever availability of our services, the best ever customer support ratings, and the most Inovação COLLABORATIVE highly-attended Sibos in the event’s history. Growth returns efficiency programme (Lean), allowed New five-year strategy underway optimisation and infrastructure hosting to include generating new ideas and Coming off the back of a tough 2009, us to give back to the community. Following approval from the Board in services among others. projects with the community in order to in 2010 we saw a return to steady traffic We announced a 15 percent rebate the middle of the year, we launched accelerate product development and growth. And thanks to strong overall on 2010 messaging usage, and a 20 our strategy for the next five years. We’ve hit the ground running. go-to-market times. We are involved financial performance and a continued percent average FIN price reduction as SWIFT2015 is based on the Although it’s a five year plan and will with a number of institutions to assess focus on structural cost reductions, of 2011. The combined saving of EUR understanding that there is still a lot of evolve, it is designed to demonstrate the potential and appetite for this we were well placed to deliver on our 120 million represents the biggest single mileage left in our established business a different kind of SWIFT. One of the approach – a different ‘how’ as per commitment to significantly reduce saving package ever offered to our areas that we have served over the first illustrations of this was the first SWIFT2015 – and to assess potential your message prices. Whilst the customers, and is consistent with our years: correspondent banking; custody major acquisition in SWIFT’s history. opportunities for such ‘crowd-sourcing’ renewed growth is positive, we know commitment to ensure that the savings and asset servicing; high value market The acquisition of SunGard’s Ambit approaches to complement our own that the days of double-digit organic coming from Lean are shared with our infrastructures; clearing and settlement. Messaging Hub extended our portfolio internal product development and growth are behind us. We have to earn customers. But it also broadens our horizons in high-end messaging and services management approaches. future growth through a combination and allows us to work on addressing and provided our customers with the of continuous improvement and Efficiencies delivered common challenges our customers best solution in that space. We created Innovation, communities, efficiency in our business operations By the end of 2010, over 90 percent face in other areas such as reference a subsidiary company, Arkelis, which excellence and a relentless focus on understanding of the organisation had gone through data, sanctions screening and securities we operate at arm’s length. We have 2011 has started where 2010 left off. where we can deliver most value to Lean. As I write, the programme is matching. Each of these present pain already secured our first customers for Traffic growth is positive, and we are our customers. For us, this means drawing to a close. We have delivered points for our customers as they require our Advanced Messaging Hub solution. making excellent progress in continuing addressing your common challenges on our stated objectives: 30 percent considerable investment and effort that They recognise that the combination of to deliver on our commitments to you. and proposing meaningful and relevant efficiency gains across the entire do not necessarily provide significant SWIFT’s security, reliability and support, Feedback tells us that you are seeing solutions. I believe the growth we saw organisation delivered with zero impact competitive advantage or business with the agility and product innovation the difference. in 2010 validates the hard work we on reliability, security and availability of growth. As a cooperative, SWIFT is of Arkelis, is a valuable proposition. have done over the past two years our systems to our users – in fact we uniquely positioned to tackle these As we continue into 2011, I promise for your cooperative. Work to create a saw our best ever availability in 2010. challenges and come up with relevant Community dialogue and you a bolder, sharper, more agile different SWIFT and prove that we are We promised to deliver “efficiency solutions – and as you’ll see further collaboration extended SWIFT. A company that is inspired ready for the next phase of expansion. without compromise” and that is in this annual review, we are already There were many other highlights in by more innovative thinking; that is exactly what we did. making meaningful inroads. 2010. We welcomed a record 8,900 focused on delivering solutions that Mirroring the global economy, Asia participants to Sibos in Amsterdam meet the needs of an increasingly Pacific was the engine of SWIFT traffic The programme may be over but the Similarly, the industry is wasting and the buzz throughout the event diverse set of communities; and that growth in the year with 13.8 percent Lean way of working is here to stay. It billions on systems and standards that proved that the industry really is back will never compromise on our heritage and similar double digits in almost all is becoming instilled across SWIFT, and cannot ‘talk’ to one another and this is in business. And we advanced critical of reliability, security and resilience business areas. We expect this trend we will stay focused on retaining the where the concept of ‘interoperability’ dialogue well beyond this annual event. that remains fuelled by our passion for to continue into the future. And with efficiencies the programme delivered solutions factors strongly in our 2015 Over the course of the year we hosted operational and service excellence. growth and investment in Asia, intra- within individual teams. Beyond that, plans and where we believe our over 50 events worldwide, touching Asia traffic has provided additional we are turning our attention to see expertise and strength can make a almost 16,000 people from a diverse Lázaro Campos routes for growth. The Americas also where we can derive additional significant difference. Yet another pain set of communities within the SWIFT Chief Executive Officer provided a contribution of 8.7 percent efficiency gains from activities that span point stems from the ‘total cost of ecosystem. April 2011 growth, whilst FIN traffic growth of teams and departments. Lean has been ownership’ of SWIFT for our customers 5.6 percent in EMEA far outpaced the the cornerstone for creating a different – four or five times as large as your Through Innotribe, our focus on region’s GDP. SWIFT. It has earned us the right for SWIFT invoice. Again, we are looking collaborative innovation has continued future growth. And it provides the at ways to reduce this significantly, with great success at a growing number That performance, combined with basis for a more agile, responsive including more standards automation, of events including Sibos. And we the impact of our two-year business and customer-focused organisation. integration solutions, product have now extended Innotribe’s remit sharing savings with customers addressing common challenges, proposing relevant solutions inspired by innovative thinking meeting the needs of diverse communities10 SWIFT Annual Review 2010 SWIFT Annual Review 2010 11
  6. 6. 2010 in context SWIFT traffic is closely associated with SWIFT’s ecosystem is a daily barometer and impacted by the economic environment. of the world economic performance such Sometimes it shows a reaction to events, as GDP growth rates in major countries and sometimes it is an indication of what is regions, capital and import/export flows, going to happen. FX and securities trade volatility. Monthly evolution of average daily live FIN messages (millions) Q1 traffic increased by 5.9 percent compared to Q1 2009. Exceptional SWIFT traffic was driven by a combination raffic of 30 November 2010 T December was the second best This positive trend was a sign of the improving economic of very high volatility in the securities and FX markets, was exceptional: month ever after May 2010. landscape. The growth was observed in all regions though and improving economic conditions. Budget deficits — Total FIN traffic reached traffic grew faster than FIN is strongest in Asia Pacific (double digit growth). in Greece and some other European countries led 18.23 million messages: anticipated and reached the to uncertainty in the market with the euro and about the second best day ever threshold of 4 billion messages the potential impact on the European banks. after 11 May 2010 (18.36 in 2010. n Tuesday 11 May 2010, we recorded a peak day O million messages). with 18,361,704 messages – an increase of 501,636 — ayments traffic reached P messages (+2.8 percent) over the previous peak. 9.32 million messages: This was the first peak day of 2010 and the first one the second best day ever since 15 October 2008. after 30 September 2010 (9.45 million messages). Typical seasonal drop. January February March April May June July August September October November December18.00 17.517.5017.00 16.216.50 16.6 16.0 15.816.00 15.215.50 15.1 15.615.00 15.0 14.9 14.814.50 14.514.00 January February March April May June July August September October November December T he UK economy came out of recession, after figures showed it had grown by 0.1 percent in the last three months of 2009. The economy had previously contracted On 16 February, it was forecast that the for six consecutive quarters – the longest economy of the eurozone would grow by about 1 percent in 2010 but it remains Dow Jones index ended at highest period since 1955. On 6 May, US stockmarkets plunged levels in more than two years. fragile. In 2009, the eurozone was hit hard as concerns about European The Chinese economy expanded by by the economic downturn, contracting government debt continued to shake O 10.7 percent in fourth quarter 2009 by 4 percent, its biggest drop since n 8 July, the International compared with the same period a year investor confidence. At one point, the Monetary Fund (IMF) raised its the euro launched in 1999. Dow Jones was down by more than earlier. The strong growth, however, was forecast for global growth in 2010, accompanied by higher inflation, raising On 18 February, the US Federal Reserve 9 percent, its worst fall since 1987, from 4.2 percent to 4.6 percent, fears that Beijing may introduce stronger Bank said that the economy was before starting to recover. Stocks mainly thanks to robust growth in expected to grow between 2.8 percent I ndustrial production in the fall might have been made worse by I n October, the annual meetings measures to avoid economic overheating. 16 countries that use the Asia. The IMF also warned risks of the International Monetary Fund O n 12 November, G-20 statement and 3.5 percent in 2010, but warned that computer-driven trade (‘flash crash’). had increased and there had been on Irish debt helped to calm On 18 January, the International unemployment would remain high. euro increased by much (IMF) and the World Bank were Monetary Fund (IMF) warned that the more than expected in O n 9 May, the International Monetary a setback in progress towards overshadowed by the tension over investors’ fears. global economy could experience On 24 February, the credit ratings January. The 1.7 percent Fund (IMF) approved a three-year financial stability. currency policies and by a very I n an historic decision, the of Greece’s four largest banks were growth between December EUR 30 billion Stand-By Arrangement O a double dip recession. Dominique n 23 July, the Committee of unbalanced recovery in the global International Monetary Fund (IMF) Strauss-Kahn said countries should downgraded by ratings agency Fitch. and January was the for Greece. European Banking Supervisors economy. It predicted GDP would board agreed on 17 November not exit from stimulus packages that In February, according to the Federal largest monthly jump since O n 18 May, the euro fell below (CEBS) published the results of the increase by 4.2 percent in 2011, to boost the voting power of big bolstered growth through huge amounts Reserve, US industrial production Eurostat started producing USD 1.22 for the first time since EU-wide stress-testing exercise, in down from an earlier forecast of emerging economies and make of government spending. increased for the eighth month in a row. the data in 1990. April 2006. close cooperation with the ECB. 4.3 percent. China the third voting power. C ommentary on SWIFT FIN message volume evolution    C ommentary on relevant 2010 market events12 SWIFT Annual Review 2010 SWIFT Annual Review 2010 13
  7. 7. 2010 in context (continued) Payments Treasury F irst peak in Treasury traffic since August 2007 with 1.68 million messages on 6 May. Exceptional monthly traffic Peak driven by volatility on FX and Money Markets (mainly eurozone related). caused by treasury deals induced by exchange rate/ Q1 traffic shows a growth of 5.5 percent Peak caused by the additional easonal drop. S After the seasonal drop, very strong continuous growth interest rate volatility and securities trading. versus 2009. This is aligned with the payments related to the exceptional was observed mainly in EMEA and Americas. In EMEA ongoing worldwide economic recovery. volumes of trades settlements and Americas, we recorded respectively 14 percent and January February March April May June July August September October November December (securities and treasury). 12 percent growth between August and December 2010. 1.25 1.15 January February March April May June July August September October November December 1.05 8.40 0.95 8.20 0.85 8.00 (average daily live FIN messages in millions) 7.80 7.60 O n 13 April, China’s foreign n 25 October, the dollar fell to O uropean leaders at the G-20 E exchange reserves rose to a new 7.40 a 15-year low against the yen. eased investors’ fears that they high of USD 2.45 trillion at the end would have to bear heavy losses 7.20 of March, up 25 percent on a year O n 18 May, the euro fell below n 19 July, ratings agency Moody’s O if the Irish Republic defaulted earlier. USD 1.22 for the first time since downgraded the Irish Republic’s on its debts. (average daily live FIN messages in millions) On 27 January, Standard Poor’s April 2006. sovereign bond rating to Aa2 from Aa1. O n 17 March, the US Federal Reserve O n 26 May, the OECD Economic Outlook Economic activity in OECD countries will hina raised interest rates for C warned that it might cut its sovereign The Federal Reserve re-established the second time in one month A ustralia’s economy grew strongly in the Bank gave a slightly more upbeat outlook said that the recovery is strengthening gradually pick up steam over the coming debt rating on Japan for the first time temporary reciprocal currency swap to fight inflation and curb asset final quarter of 2009 (+0.9 percent versus for the country’s economy, but said with GDP growth at about 2.75 percent two years, but the recovery will be uneven On 14 June, Greek government bonds since 2002. lines with other major central banks. price bubbles. July-to-October). It was the only major interest rates would remain close to in the OECD area as a whole in both and unemployment will remain high, were downgraded by Moody’s credit economy to avoid recession. zero for an “extended period”. 2010 and 2011. according to OECD Secretary General. rating agency. Securities Trade Q 1 Securities traffic grew by 7.8 percent compared to I ncrease partially driven by Peak due to exceptional activity on Securities and Treasury markets Q 1 2010 trade messages showed a strong growth Q1 2009 although volatility has been lower. Apparently the Corporate Actions traffic (NYSE and London SE recorded the highest number of trades for the of 9 percent compared to Q1 2009. This was investors’ confidence in the markets returned. peak in April and May 2010. year). On 11 May 2010, we recorded a peak day with 8.87 million another sign of the international trade recovery. securities messages. January February March April May June July August September October November December January February March April May June July August September October November December 8.50 0.180 8.00 0.175 7.50 0.170 7.00 0.165 6.50 0.160 (average daily live FIN messages in millions) (average daily live FIN messages in millions) W TO said that trade was likely to grow T he value of world merchandise trade was by 13.5 percent in 2010. O n 25 August, Nikkei dived below around 25 percent higher in the first three Director-General Pascal Lamy said: Germany made a surprise decision 9,000, a 16 month low, as yen soared. In March, US Democrat senators unveiled to temporarily ban some types of apan’s exports grew for the first time in 15 months in December, boosted by J months of 2010 than in the same period “It underscores the wisdom governments proposed new laws that will give the US demand in Asia and China. The Japanese finance ministry said China had now of 2009, according to WTO figures. have shown in rejecting protectionism”. short-selling of financial products. O n 21 July, President Barack Obama Federal Reserve more regulatory powers overtaken the US as Japan’s largest overseas market. On 6 May, US stockmarkets plunged signed the Dodd-Frank Wall Street over big US banks. as concerns about European Reform and Consumer Protection Act. government debt continued to shake The law is aimed at promoting financial T he European Commission published draft rules investor confidence. At one point, the stability in the United States. on trading in complex financial products. The Dow Jones was down by more than body wanted to create a watchdog to monitor 9 percent, its worst fall since 1987, D ow Jones index ended at highest the derivatives market. before starting to recover. levels in more than two years. Average daily number of InterAct messages Average daily volumes of FileAct Volatility’ peak driven by increased CREST ‘ T he HKMA RTGS (CHATS) Phase 2 went eak driven by increased P and CLS volumes, induced by large volumes live in July using SWIFT InterAct and CLS and CREST volumes. 4 Low value payments market infrastructures 1 ‘ Volatility’ peak. 5 Low value payments market infrastructures 1 of FX and Securities trading. Browse to support liquidity management/ generated live traffic. generated 5.9 billion transactions in 2010, monitoring control flow to their participants. growing by 26 percent. January February March April May June July August September October November December January February March April May June July August September October November December 1.90 4,250 1.80 4,000 1.70 3,750 1.60 3,500 1.50 3,250 3,000 (millions of live messages) (millions of live traffic characters sent) Continuous increase driven by European Low value payments and Corporates. nd of Year customer payments peak. E14 SWIFT Annual Review 2010 Commentary on SWIFT traffic evolution    C ommentary on relevant 2010 market events C ommentary on SWIFT traffic evolution    C ommentary on relevant 2010 market events SWIFT Annual Review 2010 15

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