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Is SWIFT Succumbing to the Dinosaur Syndrome?

The news item "Staff cuts ‘inevitable' as Swift contends with declining volumes" (FINEXTRA News, 14 September 2009) triggered some wider thoughts that I would like to share.

SWIFT's need to restructure and to contain operating costs is not in my view simply a result of the financial crisis and the downturn in message volumes. There is also a substantial element of the "dinosaur" syndrome in these events.

If SWIFT wants to succeed in attaining the efficiencies that it seeks there are three basic issues that it needs to urgently address.

  1. Speed up innovation - SWIFT is too slow to innovate. There are some great changes in the SWIFT pipeline but the problem is that they take forever to develop and implement. A competitive banking industry has rightfully not got the patience for this.
  2. Get away from the technical focus - SWIFT messaging and its processing is a technical issue, but the market that it serves is driven by business requirements. From my own experience the business area is oft-times totally neglected. The business champions in the industry often do not really understand what SWIFT can do for them. Similarly the "translation" and melding of the technical and the business aspects is left to the banks to do. The banks are no good at this. If SWIFT wants banks to use their solutions they need to actively show the banks how this can be done.
  3. Temper the bureaucracy - SWIFT is run by (1) too many bureaucrats (who really don't have an appreciation for the role that SWIFT ought to be playing) and (2) too many interbank bodies (who's agenda's are often shaped by the business interests of the financial institutions involved).

I am a great believer in and supporter of SWIFT - I have been since its birth way back in the 1970s - so please don't take my thoughts amiss.

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Comments: (2)

Gary Wright
Gary Wright 15 September, 2009, 10:20Be the first to give this comment the thumbs up 0 likes

Good comments, which I believe are shared by a growing number of people. It would be great if SWIFT was not treated as some sort of protected species and had more life breathed into it. SWIFT's future has to include more vibrant implementation and developments that match the needs of bussiness. This can only be acheived if more business people and innovators are included. But I doubt that this will happen as the people at SWIFT are bound to be protective of their positions and loathed to bring into play anything that looks like a risk.

A Finextra member
A Finextra member 15 September, 2009, 14:15Be the first to give this comment the thumbs up 0 likes

Interesting thread.  As one with some 20+ years experience in SWIFT, and now a user/customer, I am perhaps qualified to comment.

As reported in CITYAM today in London, Bank of England Executive Director Richard Haldane said "There is not a scrap of evidence of economies of scale or scope in banking - of bigger or broader being better beyond a low size threshold" 

Innovation is healthy. But aside from the perceived slowness of SWIFT innovation, the problems for the majority not blessed with burgeoning IT resources and very deep pockets are the priorities and budget to cope with change for change sake.  Think about it .. each enhancement or new service requires thousands of organisations to review, train, test, implement and maintain systems. Huge unnecessary global expense, low to nil value to most, hence slow uptake. 

Business focus - Solutions are historically geared for large institutions rather than small to medium sized players. New messages build on old standards with yet more participants, and just resulting in an increase in manual charges for non-compliance.

  • There are great middleware solutions out there to transform and transport formats, so why do SWIFT publish which are 'right' to be promoted to customers? Because they paid for a label?
  • There should be no charge for the privilege of accrediting this years standards version with few changes.  
  • SWIFT should reward vendors for being compliant, with free support, test-beds and training etc, as they are more in touch with customers business requirements.
  • Connect institutions free of charge to market infrastructures and counterparties. SWIFT is a utility after all. 
  • Pay for sent messages only, and do not penalise small users for also receiving traffic through punitive license band pricing on SWIFT supplied interfaces.  How can that be a cost benefit to the industry? Just a case of give with one hand with lower traffic fees and take with the other as higher TCO.

Bureaucracy - Its true. Too many talking shops, committees and standards groups. Investigations must take place as to whether they are enabling or hindering standards development and uptake, especially with variants of ISO20022. Standardise the standards without needing compelling events to force change. 

With cost control in mind, perhaps it is also time to revamp SIBOS...  5000+ participants trudge across the world at an average cost $3000 + hotels+ extra curricular activity expenses.  Conservatively 20-25,000 man-days of industry professionals used, $20million+ for registration and flights, $7million+ to stay there.

Will transactions flow faster, smarter, cheaper, further, untouched as a result enabling us to cost justify other projects and more automation? 

The dinosaur is evolving, but the industry must see the benefit of all that talk translating into action and valuable payback.

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