Payments Work Session
What’s happening in the payments marketplace?
George M Doolittle, Head of Global Payment Services, Global
Transaction Banking, Wells Fargo
Liba Saiovici, Managing Director, Latin America Product Management,
Global Treasury Solutions, Bank of America Merrill Lynch
George M Doolittle
Executive Vice President
Global Transaction Banking
Wells Fargo International Group
Cartagena, Colombia, Julio 2013
Some Thoughts On Emerging Payments Issues
• Trends and Issues
• The Emerging Science of Payment Risk Management
• The Work of the Payment Market Practice Group
But, Payments Sit at the Heart of the System …
What is on the Industry’s Mind?
Management as a
The Battle for
Flight to FX
The Value of Data
Discretionary v. Non-
Some of the Detail…
•Payment Reference Data
•LEI-Legal Entity Identifier
•Off-shore Clearing Sites
•ISO 20022 Migration
•Settlement? PvP, CLS, RTGS,
•FATF.. Beneficial Ownership
•Extensions …Human Slavery, Tax
Evasion, Corruption, Gambling
•Non-Banks: e.g. Telecoms, Web
•Dodd Frank Act
•Internationalisation of RMB
What should we be focusing on?
• Payment Transparency
• Intelligent Payment Routing
• Payment Risk Management
• Public Works & Community Projects
• Regulatory Harmonisation
The Emerging Science of Payment Risk Management
Errors Mount at High-Speed Exchanges in
By NATHANIEL POPPER
January 14, 2013, 8:00am
Security Firm Discovers Global Spy
Bank Hacking Was the Work of
Iranians, Officials Say
By NICOLE PERLROTH and QUENTIN
Payment Risk Management (an Emerging Science)
•24x7 Real Time Operations
•Liberation e.g. Arab Spring
Payment Centre Locations
Telecommmunications and Infrastructure
Team Member Safety
•RingFencing: Safety and Soundness
•Anti-Money Laundering and Anti-Terrorism
•Corruption and Tax Evasion
So, Hot Topics In Payment Risk Management …
• Anti-Money Laundering, Anti-Terrorism, Tax Evasion, Corruption and Sanctions
• Transparency …
– Pricing, and Processing
– Banking Privacy and Beneficial Ownership
– Counter-Party Risk (LEI)
• Safety & Soundness:
– Liquidity and Capital
– Solving for Too Big to Fail (Living Wills, Basle III, Liquidity)
– Euro-Contingency Planning
• Interconnectedness: Financial Market Infrastructure Risk
– Systemic Risk Analysis
• Our Wired World:
– Identity Theft and Card Fraud
– Software Promotion Mis-Haps
• Disaster Recovery
– Natural Disasters
– IT Implementations
Introducing the PMPG
• International industry group of payment subject matter experts focusing on
setting market practices, beneficial to the payments community
• Not a regulatory body, no enforcement
– Setting of consensus driven global market practice
– Educating the market place by provision of white papers
– Protecting the market place by responding to industry consultations
from a global market practice point of view
• SWIFT Advisory Group
• Provide a truly global forum to drive better market practices which,
together with correct use of standards, will help in achieving full STP and
improved customer service:
• The PMPG mission is to:
– take stock of payments market practices across regions
– discuss, explain and document market practice issues, including
– recommend market practices, covering end-to-end transactions
– recommend payments market practices in response to changing
– ensure publication of recommended practices
• End-to-end payment transactions, including:
– payment initiations from any business to a financial institution
– payment instructions between financial institutions
– any kind of exception handling related to the above (rejections, returns,
status reports, request for cancellations, reversals)
– transportation and processing by financial institutions of business to
– financial reporting, confirmations and statements, related to the above
– the convergence of the trade and payments space
– the impact of compliance requirements as they relate to global payments
– market practices for securities transaction related payments
• Market Practice Guidelines
– Use of the MT 202 COV
– Compliance with FATF SR VII
– International payment charging claiming process
– US expanded wire formats
– Use of ISO 20022 for high value payments
• White Papers
– Use of IBAN in international payments
– Maritime attachments
– Handling of multiple character sets
– Auto Foreign Exchange Conversion
– Foreign Account Tax Compliance Act (FATCA)
– Dodd Frank Section 107315
What’s happening in the payments
Liba Saiovici, Managing Director, Latin America Product Management
July 11, 2013
The global payments landscape
Change in global payments is inevitable…
and will require a different strategy.
Forces at Work in the Global Payments Industry
There are a number of forces at work which are shaping the direction of the global
With the increasing volumes of electronic payments, there is a focus on
improving infrastructure to transform how payments circle the globe
While the forces at work are similar across the globe, focus areas vary by region:
North America - focus on mobile and near-field communication (NFC) payments, and a number of regulations
EMEA – SEPA implementation and the impact of an integrated market
Asia Pacific - increase in electronic payments and payment options
Latin America - growth of person-to-person (P2P) payments and electronic payments as a result of an increase in non-cash usage.
Global volumes of non-cash payments increased by 7.1% , reaching $283 billion during 20101.
Mature economies contributed nearly 80% of the volume, however, the 4.9% growth rate of mature economies was far
outpaced by the 16.9% growth rate in developing economies.
Use of non-cash payment instruments continues to grow exponentially.
Heightened importance of emerging markets in driving global economic growth has highlighted the growth of intra-regional
trade and has increased the need for enhanced cross-border settlement and cross-currency payment solutions.
Payments is one of the fastest growing industries worldwide and future growth
potential remains enormous
1 Source: World Payments Report 2012
But… a lot of companies in Latin America are still unfamiliar with
ISO 20022: the lingua franca in payments and securities
ISO 20022 has been widely viewed as the ‘holy grail’ of message standardization for the future.
The standard offers great potential for reengineering the payments industry and for process improvement.
Use of the standard has been greater in more developed markets with emerging markets, such as LatAm, being slower to adopt,
however, usage continues to grow.
Global embracement of the standard will be critical if industry participants are to reap the full benefits of global standardization.
Widespread adoption will most likely drive further changes in consolidation, competition and technology.
Standardization initiatives aimed at improving efficiency, streamlining processes and reducing costs continue to gain widespread
industry attention and participation.
Organizations such as SWIFT have become a critical voice on the standards front and have emerged as catalysts towards global
standardization of processes.
In a recent Anthemis Group report, SWIFT was highlighted as still being “the preferred infrastructure when we talk about international
payments” through its core “strategic positioning”.
Standards are particularly key in the emerging mobile space with the need for mobile payments standards definition and management.
Historically the lack of a common global standard and variations between systems
have reduced the ability to seamlessly pass data between counterparties
What is ISO 20022?
Implemented by banks, corporations, payment systems and financial applications providers to conduct payment operations
The future (and present) standard in use with a number of the world’s clearing and payment systems
Frequently appearing in corporate cash management RFPs where multi-bank, multi-country reach is required
For financial services
A harmonized set of standards across financial services domains:
– Cash, Securities, Trade, Card, FX, Remittances and other
Freely available to all members of the financial services community
Based on a partnership of multiple standards organizations including SWIFT, IFX, OAGi, x9, TWIST, and others
A single set of globally relevant financial services messaging standards
The focus of SWIFT’s future standards development (SWIFT MX)
Many view ISO 20022 as the ‘holy grail’ of message standardization for the future
Who (and what) is driving adoption?
- Harmonization (driven by regulation or innovation)
- Renewal of legacy systems
- Further automation required
- Creation of new services
- Interoperability with other systems/players
- Market infrastructures
- Global harmonization & regulation (e.g., SEPA in Europe)
- Automation in specific markets (e.g., the ‘funds’ market)
- Corporates, fund managers
- XML, SOA, web services
Bank of America Merrill Lynch is a leader, very actively supporting ISO 20022
ISO 20022 Payment Market Infrastructure Adoption
It is important to note that while the myriad regulatory changes taking place
across the globe represent unique challenges, they also bring with them
opportunities for firms who are able to seize them
The evolving regulatory landscape: the list that keeps on growing
Regulatory changes around the globe are impacting the operational, technological and competitive models of payments.
Pace of regulatory change brings with its own challenges for firms to keep current on existing, and emerging regulations at a
global, regional and local level.
A wide range of global and regional regulatory and industry initiatives are reshaping
aspects of the payments market
Familiarity with the latest advances in technology innovation will prove
invaluable for firms looking to stay ahead of the global payments curve
Mobile technology: Revolutionizing financial services throughout the world
Mobile is widely viewed as a game changer, globally, in the evolving payments landscape.
Increasing penetration of smart phones and mobile tablets.
The user experience with a mobile device has evolved to be much richer and is contributing to channel convergence.
The emergence of mobile as a ubiquitous delivery channel is also seen as fueling the drive to real-time payments.
Mobile has become increasingly important in the emerging markets where the use of mobile devices continues to climb and be
seen as an important delivery channel for services.
Financial institutions have the chance to leverage their reputation as trusted payment providers and effective risk managers to
strengthen their role in the mobile payments ecosystem.
Enhanced automation through technologies, such as mobile , and the evolution of artificial intelligence and straight-through
processing abilities, are quickly reinventing industry payment methods and vehicles.
With advances in technology and adoption of industry standards, there is a tremendous opportunity for firms to deliver more
“value added services” to differentiate themselves in an increasingly level playing field.
Advances in, and adoption of, technology continues to fuel and foster the
introduction of new innovations
Forces at Work in the Global Payments Industry
Adapting to an increasingly connected global industry
It is clear that the future payments landscape will be very different in the coming years compared
with what it is today.
In order to fully embrace and capitalize on this change, collaboration at all levels of the industry
The pace of regulatory change will continue to increase as regulatory and industry participants
adapt to a more globally connected industry.
Newer technologies , such as the ubiquity of mobile, are going to be game changers.
SWIFT will continue to play a pivotal role as the drive towards global standardization continues.
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