28 August 2015

Enrico Camerinelli

enrico camerinelli - Aite Group

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Transaction Banking

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Another Lost Opportunity for SWIFT?

20 March 2014  |  3362 views  |  0

When I wrote my comment to a previous announcement about the KYC registry I did not want to do the bird of ill omen to SWIFT although all planets seem aligning to put the bank cooperative into a corner.

Today’s announcement from Thomson Reuters that it will develop a central utility for KYC due diligence checking with the launch of Accelus Org ID is another nail in the coffin—after KYC Exchange Net’s—of SWIFT's ambitions to build and operate a KYC Registry as an industry-wide utility. I still insist that SWIFT should stay out from developing any kind of software and—instead—stand up as THE voice of all financial institutions to provide standard rules, clear guidelines, and technical specifications about what data and what workflows should the KYC registry contain and handle. The more SWIFT gives the perception that it wants to develop software, the less the opportunities for success. The only software SWIFT should develop is for proof of concept models to test, before release, the recommended guidelines and standard procedures.

I am happy to be proven wrong and for that I expect to read soon a press release from SWIFT, backed by the top 100 global banks, reading that SWIFT’s KYC repository is the only one that will be accepted and endorsed, and that SWIFT has been appointed to develop the software.

If SWIFT claims to represent more than 9,000 financial institutions in 209 countries I still can’t understand how is it possible that KYC Exchange Net stated that its KYC platform is developed “with banks from across Europe and Asia”, and Thomson Reuters just announced that Accelus Org ID "was developed in partnership with leading financial institutions”. Are these banks sitting at more than one table, or are they the few ones outside the SWIFT community?

Bottom line: SWIFT should make a clear statement that its role is not to develop software but standard procedures, practices, and recommendations. Whoever wants to develop and sell a KYC registry platform must follow SWIFT’s prescriptions and have the software certified by SWIFT. Anything else will push SWIFT into a corner and make it succumb against more robust and capable software providers.

 

TagsRisk & regulationTransaction banking

Comments: (1)

enrico camerinelli - Aite Group - Boston | 03 April, 2014, 10:43

A number of conversations have followed this blog post and revealed additional information that deserves attention. In particular, Luc Meurant—head of banking markets and compliance services at SWIFT—provided me with some clarity on the following key points:

  • SWIFT’s decision to develop the software for a KYC registry platform follows a precise and explicit request from its members. 
  • Financial institutions are missing a robust solution that ensures a commonly shared KYC registry for their correspondent banking operations. No market solutions so far have satisfied this request. 
  • The mission to cover transaction banking services positions SWIFT as a player of reference for any software development in this space. 
  • The KYC registries under development by other players mentioned in the original blog post are particularly suited for broker/dealers, investment banks, asset managers, funds or corporates. This does not conflict with SWIFT’s target: correspondent banking.

My conversation with Luc verified that SWIFT has been explicitly appointed to develop the KYC Registry software. It also suggested that a one-size-fits-all solution cannot be applied in the KYC registry domain, and that other players have the opportunity—and are encouraged—to provide value as well. Conversations with other parties also confirmed that FIs welcome SWIFT’s commitment to developing software for transaction banking services, but that SWIFT’s recommendations and standards can be accepted and endorsed only once they have been validated through real-life implementations.

In conclusion, the information received has helped me to hone my opinion on SWIFT’s approach and strategy. SWIFT has indeed decided to be a key competitor in the KYC ecosystem—for that, I would recommend that SWIFT more frequently communicate updates on the development of its KYC Registry platform. I look forward to finding out more.

 

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job title sr. analyst
location Boston
member since 2009
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Senior Analyst for Corporate Banking, based in Europe. Current research focuses on Global Transaction Banking, Supply Chain Finance and Working Capital Management.

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