Презентация на IV Национальном платежном форуме России 2016

1. A SWIFT perspective on the
evolution of the payments
business
Matthieu de Heering
Head of Russia, CIS and Mongolia - SWIFT
National Payments Forum – Moscow – 09-Nov-2016

2. Digital disruption in
payments

3. 33Digital disruption in payments – October 2016Digital disruption in payments – October 2016

4. 4
The unbundling of banks
Source: https://www.cbinsights.com/blog/disrupting-european-banking-fintech-startups/?utm_content=buffer2f104&utm_medium=social&utm_source=facebook.com&utm_campaign=buffer
Digital disruption in payments – October 2016Digital disruption in payments – October 2016

5. 5
Disintermediation is happening both in the “front office” and in the “back office”
5
Front
office
Back
office
Local bank Local bank
PSP
PSP
ACH ACH
GTB GTB
End customer
(retail, SME, corp)
End customer
(retail, SME, corp)
Correspondent Banking
CorrespondentBankingdisintermediation
Digital disruption in payments – October 2016

6. Disruption is creeping up from C2C to SME and B2B, where most of the
banks’ transaction revenues are
Source: McKinsey Global Payments Map; Project team
1 Revenues include transaction fees, FX fees, exclude revenues not directly linked to individual transactions (account maintenance fees, interest income) and FI to FI flows
2 Currently in the B2B/B2C/SME space but actively pushing towards entering into the B2B corporate space (e.g., Western Union Global Pay app)
66Digital disruption in payments – October 2016

7. Distributed ledger technologies (DLT) can present some opportunities
Distributed
database
Information
propagation
Beyond
payments,
e.g. trade
finance
Traceability
77Digital disruption in payments – October 2016

8. Digital disruption in payments – October 2016 8
DLTs – conclusions of the technology assessment
• Existing DLTs are currently not mature
enough to fulfil the requirements identified
• There are promising developments in each of
these requirements
• Significant extra R&D work is needed in all
these domains before DLTs can be applied at
the scale required by the financial industry

9. 9
Need for change, also rejuvenate business model
Technology Business
Digital disruption in payments – October 2016

10. The correspondent banking model is under pressure
Customers and
regulators push for
better payments service
Banks rationalize their
correspondent banking
networks
Digital innovators offer
new disruptive
solutions
End customers increasingly demanding
Domestic payments going real-time
Regulatory intensity and increasing costs
Network rationalization
Enhanced value proposition
Disintermediation
Digital disruption in payments – October 2016 10

11. Objective: deliver a better customer payment experience
“Before”
Traditional correspondent banking
“After”
The SWIFT global payments innovation (gpi) initiative
1. Slow, can take multiple days
2. Expensive, multiple deducts
3. Secure and compliant
4. No transparency on cost and time
5. Convenient and ubiquitous
6. Open and inclusive (global reach)
1. Fast(er) (start with “same day”)
2. Higher efficiency & less intermediaries
3. Secure and compliant
4. Transparent, with payments tracking
5. Convenient and ubiquitous
6. Open and inclusive (global reach)
The objective is to first fix these key pain points
Note regarding prices: it will be at the discretion of each SWIFT gpi
member to decide the pricing strategy vis-à-vis its customers,
including other financial institutions
Digital disruption in payments – October 2016 11

12. Still reach
non-initiative
banks
Accessible
by any bank
Reaching
any bank
Tracker
Directory Observer
SWIFT gpi concept
SLA rulebook
Core transaction banks
Value-added product suite
Messaging technologies
Digital disruption in payments – October 2016 12

13. Digital disruption in payments – October 2016
SWIFT gpi product suite
Directory Tracker Observer
 End-to-end payments tracking database to
monitor progress of a gpi payment
 Allows to track a payment’s path in real
time, obtain transparency on deducts and
confirmation that payment was credited
 Business Intelligence dashboard showing
bank compliance with gpi SLA.
 Ensure control, monitoring and
enforcement of SLA, and, consequently,
service quality
Availability
December 2016 via SWIFTRef
Availability
 GUI: November 2016
• MT 199 / API: Q1 2017
Availability
 Approach to be finalised: Q4 2016
 Basic version: April 2017
 Advanced version: Q4 2017
• Providing operational info on gpi
members, BICs, currencies, cut-off times
• Essential reference data to calculate best
gpi payment route
13

14. Central payments database,
hosted at SWIFT
Updated via MT199 or API
Data consumption via GUI, via
MT199 (push) or via API (pull)
SWIFT gpi tracker “in the cloud”
Bank A Bank BOriginator BeneficiaryBank C
Digital disruption in payments – October 2016
MT199/API
101 > 103 > 103 > 910 >
MT199/API MT199/API
“One-glance”
status overview
Track path,
in real time
Details of banks along
the chain
Transparency of total fees and time
Unique, end-end tracking number
Bank D
103 >
MT199/API
14

15. SWIFT gpi customer credit transfer – Value proposition for corporates
Faster, same day use of funds*
Transparency of fees
End-to-end payments tracking
Remittance information transferred unaltered
Digital disruption in payments – October 2016
Grow international business
Enhance supplier relationships
Increase treasury efficiencies
Benefits for a corporateKey features
(*) within the timezone of the receiving gpi member
15

16. SWIFT gpi customer credit transfer - Value proposition for banks
Grow volumes
Offer distinctive payments service
Retain and attract new customers
Protect and grow transaction volumes
Comply with regulation
(Dodd-Frank, PSD2, …)
Sell payments services to third parties
Reduce cost
Lower network management cost,
avoid proprietary connections in
non-strategic countries, access
global quality network
Enhanced compliance practices
Optimised intraday liquidity flows
Increased straight through processing
Lead innovation
Reputational benefit
Leader in global payments
innovation
Digital disruption in payments – October 2016 16

17. SWIFT gpi initiative banks
Regional representation of
SWIFT gpi banks
50%
Europe,
Middle East,
Africa
30%
Asia Pacific
20%
Americas
63. Nordea Bank*
64. Oversea-Chinese Banking Corporation
65. PKO Bank Polski
66. Promsvyazbank
67. Rabobank
68. Raiffeisen Bank International
69. Resona Bank
70. Royal Bank of Canada*
71. Royal Bank of Scotland
72. Sberbank
73. Siam Commercial Bank
74. Silicon Valley Bank
75. Skandinaviska Enskilda Banken
76. Société Générale
77. SpareBank 1
78. Standard Bank of South Africa
79. Standard Chartered Bank*
80. Sumitomo Mitsui Banking Corporation*
81. Swedbank
82. Tadhamon International Islamic Bank
83. TMB Bank
84. Toronto-Dominion Bank
85. UBS
86. U.S. Bank
87. UniCredit*
88. United Overseas Bank
89. Wells Fargo*
46. ICICI Bank
47. IndusInd Bank
48. Industrial and Commercial
Bank of China*
49. ING Bank*
50. Intesa Sanpaolo*
51. Investec
52. Itaù Unibanco
53. JPMorgan Chase Bank*
54. Kasikornbank
55. KBC Bank
56. KEB Hana Bank
57. Lloyds Bank
58. Mashreq Bank
59. Maybank
60. Mizuho Bank*
61. National Australia Bank
62. Natixis
28. Commonwealth Bank of Australia
29. Commerzbank
30. Crédit Agricole
31. Crédit Mutuel-CIC Banques
32. Credit Suisse
33. CTBC Bank
34. Danske Bank*
35. DBS Bank*
36. Deutsche Bank
37. DNB Bank
38. Ecobank
39. E.Sun Commercial Bank
40. Erste Group Bank
41. Fifth Third Bank
42. FirstRand Bank
43. Handelsbanken
44. Helaba Landesbank Hessen-
Thüringen
45. HSBC Bank
(*) Pilot bank
1. ABN AMRO Bank
2. ABSA Bank
3. Alfa-Bank
4. Australia and New Zealand
Banking Group*
5. Axis Bank
6. Banco Bilbao Vizcaya Argentaria
7. Banco Bradesco
8. Bangkok Bank
9. Bank of America Merrill Lynch*
10. Bank of China*
11. Bank of New York Mellon*
12. Bank of Nova Scotia
13. Bank of the Philippine Islands
14. Bank of Tokyo-Mitsubishi UFJ*
15. Banco Santander
16. Banco de Crédito del Peru
17. Banco do Brasil
18. Banque Européenne d’Investissement
19. Barclays*
20. Bidvest Bank
21. BNP Paribas*
22. Budapest Bank
23. CaixaBank
24. Canadian Imperial Bank of Commerce
25. China Construction Bank
26. China Merchants Bank
27. Citibank*
Digital disruption in payments – October 2016
85+initiative banks
Channelling payments
into 224 countries
Representing 71% of all
SWIFT cross-border
payments
17

18. Digital disruption in payments – October 2016
SWIFT gpi roadmap – Draft proposal
Today
18

19. SWIFT gpi v2 : The digital transformation of cross-border payments
Digitized
customer
experience
Front-office of
core banks
Third-party
organisations
Customers
Renewed
correspondent banking
technology
Improved intra-bank
operating model
Open access, new
collaborative approach
Core digital
transaction banks
Create
value
first
Reduce
back-office
cost
Enable
collaborative
innovation
Reduce
fundamental
interbank
cost
A
B
C
D
Digital disruption in payments – October 2016 19

20. Market Infrastructures
v01

21. General Market Infrastructure trends
R themes
21
• Fighting financial crime & regulatory compliance
• CPMI-IOSCO, Sanctions, Intraday liquidity, CSDR, PSD2
• Increasing / changing (cyber) threats
• Compliance with CPMI-IOSCO guidance
• Operations: multi-currency, extended opening hours, rationalisation
• Replace aging technology
• Drive towards ISO 20022
• Increasing international connectivity/interoperability of infrastructure
• ISO 20022 adoption
• Examples: T2S, SEPA, SADC, ASEAN, CIPS, MILA, ASEAN
Regulation
Regionalisation
Renewal
Resilience
• 24/7/365 real-time retail payments, for example, AU
NPP, US TCH, SEPA Inst
• Towards a single platform for all payments
(HVP vs RTP vs LVP)
Real-time
Changing
value
proposition
Market
Infrastructures

22. Towards 2020
22
SWIFT2020 Strategic Priorities
Software
&
Connectivity
Messaging
Shared
Services
One-to-Many MIsMany-to-Many FIs
MI
FI
FI
FI
FI
FI
FI
FI
FI
FI
FI
FI
Market Infrastructures
• Payments
• Securities
• Treasury / FX
Core
Compliance
FMIs are an
important segment
for SWIFT and a
major part of the
SWIFT2020
strategy
Market
Infrastructures

23. Strategy and Reach
FMI Reach and Evolution
23
Shows domestic FMI systems where SWIFT traffic is ‘live’. FMI may not use SWIFT for all its operations
100
120
140
160
180
200
220
240
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
FMIs 'Live' on SWIFT
Market
Infrastructures

24. High Value Payments
September 2016
v01

25. 60%
84
747 millionmessages/year
global systems
systems
15%global transactions
13%SWIFT
FIN traffic
Market Infrastructures update – HVPS, Sibos, Geneva
SWIFT in the high-value payment systems space
Market share
High Value Payment
Systems

26. Standards Messaging
Resilience Connectivity &
Integration
Secure platform
reliable messaging solutions,
closed used groups, validation,
non-repudiation, authentication,
copy mechanisms
Expertise & tools
automation, STP, standard
management and community
onboarding tools,
global market practice setting
to increase harmonisation and
interoperability, vendor
certification
‘FNAO’ performance
40+ years of operational
excellence, resilience,
reliability, privacy, PKI security
and 24/7/365 support
Interfaces & middleware
supporting safe exchange of
clearing and settlement
messages, message
transformation, integration
services,partner management
Market Infrastructures update – HVPS, Sibos, Geneva
SWIFT’s value proposition
Four pillars
Community
management
High Value Payment
Systems

27. Technical
Full diversity
Geographical
Staff
Unique Software
Non-direct
data
replication
Transparent
& Remote
operations
No direct link
Use formatted messages
Balances and confirmations
No threat propagation
Controlled by RTGS
No impact for participants
Accessible remotely
Always actionable
MIRS is an RTGS that rebuilds balances in less than 2.5hours with
MIRS - SWIFT resiliency offering for RTGS
A fully diverse, contingency solution
High Value Payment
Systems

28. Real-Time Payments
September 2016
v01

29. RTPS: What are the current RTP challenges we are trying to solve?
REACH: Major CSM and partners are looking to reach (new) customers through SWIFT
RE-USE: Banks are looking to re-use infrastructure to connect to different systems
STANDARDISATION: Banks, CSMs and Regulators want to standardise interactions as much as possible
OPERATIONAL: Need to ensure that our solutions are standardised, re-usable and scalable
Community
SWIFT
FINANCIAL: Need to make sure we have a viable commercial offering that will be used by our community
29
Real-time
payments

30. SWIFT real-time messaging
Supporting the FIs to enable an entire eco-system
A B
Target2
Clearing
Calculation of net
positions
24h
Overlay and Third Party Services
RTPS
Direct
Participants
Indirect
Participants
Technical
Aggregators
SWIFT footprint for RTP messaging
30
Real-time
payments

31. ISO 20022 Harmonisation
Charter
September 2016
v01

32. Standards
ISO 20022 Adoption
32
ISO 20022 has emerged as
the default messaging
standard for FMIs around
the world
Currently, there are 200+
global ISO 20022 initiatives,
mostly driven by FMIs
SWIFT is the ISO 20022
‘Registration Authority’ on
behalf of ISO and is actively
involved with global market
practice initiatives

33. Share information
• ISO 20022 information including Message
types, release timelines, and declaration of
compliance with global market practice
Standards
ISO 20022 Harmonisation
33
Publish
Adhere
Share
Publish information on MyStandards.
Disseminate message types, message
versions, release timeline and market
practice
ISO 20022 Harmonisation Charter
Proliferation of ISO 20022
implementations means
increased variability in
deployment, multiple
message versions,
market practice rules and
release cycles
ISO 20022 Harmonisation
Charter ensures less
variation and more global
market practice
Signed by Major FMIs
Payments
• ACH Colombia
• Bank of Canada
• Canadian Payments Association
• Hong Kong Interbank Clearing
• Southern African Development
Community
Securities
• Australian Securities Exchange
• Clearstream
• Euroclear
• LCH.Clearnet
• Russia’s National Settlement
Depository
• Singapore Stock Exchange
• Ukrainian National Securities and
Stock Market Commission
• VP Securities Denmark
• VP Securities Luxembourg
• VPS Norway
FX
• CLS
Market practice and Release Management
• Adhere where possible to ISO 20022
Global market practice
• Synchronise maintenance timeline with
SWIFT MT/FIN
• Minimise number of simultaneous message
versions

34. www.swift.com
SWIFT Instant Payment Solution 34