SWIFT has added daily updates to its reference data directories, moving from monthly updates previously, in an attempt to reduce financial industry costs associated with payments processing.
The financial messaging provider said that as part of the upgraded SWIFTRef data platform, the new service will replace monthly updates and help financial institutions (FIs) and corporates respond to market developments and the evolving regulatory landscape. The demand for better cash visibility and data reporting under the post-crash regulatory environment is strong and contactless and mobile payment technologies are also quickening the payments cycle.
SWIFT said that reference data is constantly changing with Business/Bank Identification Codes (BICs), national bank identifiers or Standing Settlement Instructions (SSIs) being modified due to the merger or splits of companies under the weight of the financial crisis of 2008 onwards, or new regulations such as the EU’s Payment Services Directive (PSD). The single euro payments area (SEPA) initiative is also causing many firms to look at how their payments infrastructure is built and to improve their code structure and procedures ahead of the 1 February 2014 migration end date. The disappearance or creation of new entities and modifications in correspondent banking relationships has also been a marked change in recent years. SWIFT calculates that in a typical month:
- Approximately 1,400 BICs undergo one or more changes, meaning they are newly created, deactivated or modified.
- Approximately 1,900 national clearing codes are created or removed.
- Approximately 35,000 SSIs change.
SWIFT feels these large numbers deserve daily updating, rather than monthly missives. Maintaining accurate and up-to-date data is a major challenge for medium to large FIs and corporations processing thousands of domestic and international payments every day, especially if they’re not getting same day data reporting.
“As competition across the sector increases and with margins under continuous pressure, data quality and daily access to up-to-date payments reference data is paramount,” said Patrik Neutjens, head of reference data at SWIFT. “Providing daily feeds of our reference data files will help our stakeholders in their crusade to achieve higher payments processing efficiency and lead to significant cost reductions for the industry as a whole.”
In providing daily updates, SWIFTRef aims to help organisations comply with regulations such as the EU’s Markets in Financial Instruments Directive (MiFID) II and (SEPA), which require timely reporting and improved identification of counterparties with valid BICs or International Bank Account Numbers (IBANs) respectively.
As Martine Brachet, head of interbank relationships at Société Générale and a SWIFT advisor, explains: “Reference data is now part of the core of the information systems of the banking sector. Without BIC, IBAN or SSI it is not possible to manage the enormous daily flows of payments without taking the risk of delivering the funds to the wrong parties. From February 2014, the European banks will have to derive the BIC of the destination from the IBAN, for national SEPA payments, it is essential to get valid and reliable reference data on a daily basis in order to make the relevant controls and so reduce the operational and financial risks.”