As the major players from the banking, corporate and payments sectors discuss the key topics facing the financial services industry at Sibos (the annual banking seminar held by SWIFT) this week, bobsguide talks to Neil Gray, Senior Manager, Corporate Business – EMEA, SWIFT UK, about the history of SWIFT and keeping the financial services industry connected over the last 40 years.
The history of SWIFT
Neil Gray, Senior Manager, SWIFT: The Society for Worldwide Interbank Financial Telecommunication (SWIFT) was formed in 1973 by a group of banks who decided they needed a more secure, reliable and robust way of communicating than the Telegraphic (Telex) system that they were using at the time. This system was unreliable and as computers became networked, the SWIFT organisation was created to form a banking network. We were set up as a cooperative and operate on a not-for-profit basis. SWIFT deliver services to the banking industry, with the goal of making financial transactions between organisations in the financial services industry more secure, reliable, robust and cheaper, etc.
SWIFT in 2014
Neil Gray, Senior Manager, SWIFT: The SWIFT network has expanded to 214 countries and we connect around 11,000 players in the financial services industry. We mainly connect banks but we have an increasingly diverse membership that includes securities companies, insurance companies, stock exchanges and now also corporates which were previously not allowed to join the SWIFT network. SWIFT also acts as a standards body and we have created a set of published coded standards that are free for the industry to use. These standards are widely used within banking and now also within corporate-to-bank communications.
Neil Gray, Senior Manager, SWIFT: Sibos was first organised in 1978 to maintain contact with SWIFT’s growing user base in the financial sector. Sibos is the flagship annual SWIFT conference that covers a whole range of topics in the banking, security, trade finance and corporate space. In each of these parallel streams we try to focus on the topics that the industry is facing. We bring together speakers on these topics from the banking and technology industries, and also include presentations from SWIFT to discuss what we are currently working on. We encourage discussions and debates, and aim to bring the financial community together to discuss the topics that are affecting us all.
SWIFT in the corporate space
Neil Gray, Senior Manager, SWIFT: In the corporate space, SWIFT provides an alternative channel where corporates can access the services provided to them by their banks. Medium to large sized corporations usually have more than one banking system per bank, in order to interact with each bank, manage their accounts, submit payments and collect statements, etc. Many banks would prefer to have one common system to communicate with their banks and SWIFT provides the option for corporates to communicate with their banks through one network, the SWIFT network. The SWIFT network is secure and has the world’s major banks connected to it which means once the corporate has joined SWIFT and is connected to the network they have the ability to communicate with all of their banks. We have replaced multiple bank proprietary connections by providing a single standardised bank connection to the banks, through the SWIFT network. Time and effort is saved by the corporate because rather than having to manually enter payment details into their online banking system, the payment instructions already automatically produced by their back office system are electronically sent to the SWIFT interface, then sent on to the various banks to process for payment. The banks end-of-day statements based on the activity from the corporate accounts also get sent to the SWIFT network, then are electronically sent to the Treasury Management System (TMS) and aggregated to show which currency is held in which account. This system enables corporates to move money between accounts, manage their liquidity more efficiently, and automate and streamline their payment flow, etc.
At SWIFT we are constantly trying to find ways to serve the industry at large. We aim to take the cost and risk out of the financial industry by looking at the ways that we can replace multiple implementations of the same system placed individually at each bank, and then provide this service on a shared platform for the industry to use as a whole.