Welcome to Finextra's live coverage of the Swift Business Forum in Toronto. This year’s conference, on the theme 'expect the unexpected' will explore how firms are using technology and new ways of thinking to better prepare for an unpredictable future.
And we're wrapping up from Toronto. Swift's London forum is next week and Finextra will be there.16:46:
Sun cites research suggesting that firms trying to increase diversity will take a hit early on from profit perspective but once they hit critical mass the benefits kick in and they see huge benefits. Especially true for multinationals.16:32:
Sun says he wants to challenge how we perceive people and the world, make us see the huge range of diversity. A Rubiks Cube has six colours but 14 quintillion combinations. Talks about how technology, particularly social media, makes the world smaller and helps consumers gain power and be smarter.16:20:
Sun asks: how do you react to people on social networks if you can't see what they look like? He built an app where you interact with strangers - without knowing what they look like. Asked members to ask and answer 'icebreaker questions'. Then finally members got to see what each other looked like - 'the reveal'. One couple ended up getting married. The woman later admitted she'd have cut him off early on if she knew what he looked like.16:10:
Apologies for the radio silence, it wouldn't be a live blog without at least one technical issue. It's time for our final session, which sees James Sun, co-founder, of mobile social network Anomo (and former Apprentice contestant) talk about diversity leadership in a world of globalisation.15:27:
We kick off with Swift's pitch to corporates: more efficient and reduced costs for financial transactions because of centralization and automation; visibility and control.
Number of corporates on Swift worldwide is now almost 1500 and growing fast. Europe leads the way but momentum in Americas. Used to only make sense for the big boys but now 42% of Swift-connected corporates have a turnover of less than $1 billion. And FIN traffic was up 22% last year. FileAct traffic growth 42%.15:15:
Time for another work session, this one is called "Swift for corporates: are you ready?" and will involve Louis-Etienne Berube from Swift, Grant Dalrymple of FCT and BlackBerry's Jennifer Ramsey-Armorer.14:20:
Lormel says that although terrorism threats have changed over the last 15 years, financing is a constant. Says that New York Times "thought they were doing society a favour" when they revealed details of the Swift deal in 2006. "That was unfortunate." (You can read a Finextra report on that episode here)
Terrorists need to make money, store money, spend money. So they use informal channels but also formal. We look at terrorist financing one dimensionally. We need 3-D because money flows in three stages: fundraising, then divided up by what are effectively treasury departments, then flows in small amounts to operatives. So banks are on the front line, because they are all vulnerable to facilitating financing but also because they have valuable data, are a source of intelligence.
Finance is, along with communications, the biggest weak link for terrorist organisations. 14:00:
After the fun and games, onto the serious business of combating terrorism financing with Swift's David Lefferts and Dennis Lormel, the former head of the FBI Anti-Terrorist programme.
Lormel was at the FBI on 9/11. Says he told directors at time that if given financial team could identify who carried out attacks within two weeks. Lormel returns to the relationship with Swift post-9/11. Says that FBI learned a lot, especially about privacy issues and also "guarantees" that the work done with Swift led to several terrorism-related arrests.13:25:
OK, I don't think it's wise to try to blog this trivia event. Crazy bankers getting rowdy. We'll be back for the serious stuff in an hour.12:15:
Question from the floor: what about corporates? Only for Swift members but door left open for bringing in others at some point.
Time for lunch. We'll be back in an hour for a some light relief in the form of what I'm reliably informed will be an "interactive and informative, trivia style game".12:00:
Wills says that gathering KYC information from corresponding banks is an expensive business. Says asked some banks cost per corresponding relationship a year. Ranged from $30,000 and $70,000. So claims the KYC Registry can help save a lot of money by putting a lot of valuable data points at fingertips. And because banks all have lots of relationships, the more members onboard the more valuable it is - the aim is to get 7000. But, like Facebook, you can control who sees your information.
Think it's fair to say that Swift is making the most of having all these banks in a room to give its KYC Register the hard sell...11:48:
Wicks is running through the reasoning for sanctions testing, comparing it with fire alarm testing. Both are there to mitigate risk of low risk but high impact event. He argues that there are two sides: testing systems to make sure meeting regulatory requirements, but also tuning systems to make them as cost-efficient as possible. Firms are increasingly automating tests, setting them up to run once a week.
Swift will also come in and do assessment for clients. It is also introducing peer assessment reports, making the most of the organisation's community to let members learn from each other.11:35:
Delegates have split off into different work sessions. I've opted for Compliance Services Solutions, with Tony Wicks and James Wills from Swift.
Wicks repeats claim from earlier that dealing with compliance issues is best done through an organisation like Swift - it's not an area for competition. The group only introduced its first compliance offering in 2012 and set up a dedicated unit in 2013.
For the future: promising additional services within KYC Registry, a client/name screening service, and a tool for FATF 16 compliance.11:20:
Moderator asks about timelines.
Estep: we developed ACH blueprint in 2012 with a seven to 10 year timeline. Trying to work out how rules can bridge payment systems of today to those of tomorrow. A little reluctant to be specific, constantly evolving.
Gaetz: we need industry view of future so are going to work on setting out this vision in next few months. But not advocating setting a date - market should drive.
Piggot says that timelines are too long.11:09:
Onto "instant payments". Are we going to see Canada and the US follow UK, Australia?
Estep walks through US's ACH plan (see Finextra story)
but stresses this is not real-time authorisation. So there's still some things to be worked out...
Gaetz says Canada should be a leader on instant payments (or should certainly be ahead of US). Piggot says his clients are willing to pay for instant payments for payroll. 10:57:
So how do you get change? Estep: There have been 225 discrete rule changes over last 20 years. We have to have all 12000 financial institutions say yes and implement rules changes at the same time (not to mention other industry players).
Gaetz: First you have to get agreement on what the end goal is, then set a broad timeline, and then get the right people to work on it. 10:50:
Oops, Dignen hasn't been able to make it so we have a new moderator. Unfortunately, I didn't catch his name...
Anyway, Estep kicks us off by saying that Nacha sees its role as balancing oversight and innovation. Challenge is how does an organisation like Nacha promote innovation?
More name confusion, Gaetz notes he's been re-christened from Gerry to Gary on the background screens. Onto the serious stuff, he compares the CPA to Swift, in that it is a cooperative, but it also has a legislative mandate, which is close to unique. There's been a lot of change in payments, especially at the edge of "our world" in retail space (the new players in mobile etc.).
Piggot focuses on the importance of data - understanding CPA, Nacha, Sepa, Bacs, etc. etc. A Sepa fan, "would love to see" that approach to data in North America.10:36:
Our panel for the payments session is: Janet Estep, president and CEO, Nacha; Gerry Gaetz, president & CEO, Canadian Payments Association; and William Piggot, VP, international money movement, ADP. Moderating is Eileen Dignen, SVP product management and strategy, The Clearing House.
On the agenda: real time, drivers for implementing ISO20022 data standardisation, convergence of payment instruments, data reconciliation and new market entrants. 10:16:
Lansdowne-Higgins says that there's a lot of dialogue and engagement in Canada on financial crime compliance. Recognition that there's need for more formalised industry cooperation.
That's it for the session. There's a short coffee break before we return for 'Payments - the next frontier'.10:08:
Brinkley asks about private-public partnerships. Petre talks about TFTP programme. After 9/11 US govt gave us a call and asked for all Swift data. Became clear they didn't really know what Swift did. There was no legal challenge to subpoena but what about data privacy? So talked to US Treasury and hammered out MoU to limit scope of subpoena and protect some data and get an audit. She claims that it was a win-win. [Pretty sure it was still a touch controversial...]
McCaul suggests that we're getting closer to a better balance of carrot and stick from regulators. Hints from US that firms with good systems and practices will be able to take in more risk.
There's something a little unusual about this panel...09:57:
McCaul says that many years after 9/11 the industry has still not found a sustainable solution to the AML issues, getting balance between protection and the costs. But, says that there is a glimmer of hope, a move away from the whack-a-mole approach to regulatory enforcement.
Lansdowne-Higgins agrees that we're still in early stages of working out how to tackle these problems. Always an evolving model that we're facing. Getting better at collaboration. After 9/11 we had armies coming into our compliance shops but now resources being more spread out through organisations. 09:45:
And that's that. We're onto our first panel - on trends in financial crime compliance. Our moderator is Amy Brinkley from AWB Consulting. Lansdowne-Higgins stays with us, along with Elizabeth McCaul from Promontory and Swift general counsel Blanche Petre.
Petre runs us through the major compliance issues for Swift over the last 15 years. First we had the terrorist financing programme. Then we had the crisis of data protection following press revelations. Then we had the geo-political crisis with Iran sanctions. Petre says that the big lesson was the need for cooperation.09:32:
Lansdowne-Higgins notes that Canada isn't one of the 106 countries already onboard with the KYC Registry. Church says that he's surprised - "We're not a vendor!" Not going to trap you and then jack up prices in five years. He implores delegates to go back to their banks and ask them to sign up to the registry. It's free, I don't understand why not signed up.
Lansdowne-Higgins backs him, although notes that there's a cost to consumption and a lot of due diligence work09:24:
Church is now laying out metrics by which Swift can be measured:
- Is it working? Yes - highlights its success against the growing cyber-threat
- Is it being used? Yes - reccord message numbers in all regions
- Is it evolving to meet needs? Yes, emphasises Swifts recent aggressive move into compliance
So what's strategy for the next five years? Stresses its driven by the community - "We're not here to drive shareholder value, we're here to serve you."
Members want Swift to focus on the core - the messaging network; respond to a changing market infrastructure; address compliance. Says firms are throwing money and human capital at dealing with ever tougher compliance - has to be a better way to deal with this.09:15:
After a welcome from Suprenant, Lansdowne-Higgins - who is the Canada board member for Swift - lays out three highlights from the last year:
- 5.6 billion messages processed, 11% year-on-year growth
- Operational excellence - exceeded all targets
- Mentions Swift win for Australia's new faster payments infrastructure08:50 EST:
There's a packed agenda for today's event at the Arcadian Loft in downtown Toronto, with Swift Americas chief executive Chris Church, Nacha president Janet Estep, and entrepreneur -and former 'The Apprentice' contestant - James Sun among the speakers.
First up, Church will be joined by the Royal Bank of Canada's Lisa Lansdowne-Higgins and Swift country head Anne Suprenant to give an overview of Swift's work over the last year and where the organisation is headed. We'll then move on to financial crime compliance, the future of payments, fighting terrorism financing, and diversity in leadership. You can read the full agenda here.