Financial messaging body Swift is introducing a suite of services it claims will improve automation and reduce errors in standing settlement instructions (SSIs).
SSIs are agreements between two financial institutions that fix the receiving agents of each counterparty. Although they make for speedy payment and settlement, SSIs are frequently changed, which results in settlement errors and payment rejections.
Swift says research it has carried out with 12 customer banks suggests there are about 40 million such payment errors every year, costing the financial industry an estimated $700 million.
It aims to cut this with the launch of a global SSI repository, using multiple sources and sophisticated selection strategies to ensure that an institution's SSIs are complete, accurate and able to be replicated with ease.
An SSI directory for retail payments based on the repository will be updated and published on a monthly basis with a similar offering for treasury in the FX and money markets sectors to follow.
In addition, Swift plans the creation of a standard messaging format for distribution of cash SSI updates, available from November this year. The message format will be structured, validated and authenticated, and allow senders to either specify a list of recipients for the notification, or to inform the broader Swift community.
Finally, Swift is offering a diagnostics service that informs customers when counterparty SSIs held in their payment applications are incorrect and details corrective measures. The service, which was unveiled at Sibos, validates a customer's current list of counterparty SSIs against multiple information sources to provide a reliable picture of their accuracy.
Patrik Neutjens, head, reference data, Swift, says: "The lack of a single source for SSI information has led to payment failures, costing banks considerable time and money. In the age of automation and real-time reporting, it is crucial that this situation improves. These three initiatives will provide a comprehensive solution to some of the problems with changing SSIs."