SWIFT for Payment Market
Infrastructures
An efficient platform to support your payment
systems transformation
Mr. Paul Landvogt, Equens
Mr. Ed Kelsey, Bank of England
Mr. Stéphane Ernst, SWIFT
27 October 2010 14:00 – 14:45
Agenda
Introduction
• SWIFT offering for Payment Market Infrastructures
Equens
• Payment factories to optimize the processing flow & manage liquidity risk
Bank of England
• Bank of England and SWIFT for High-Value Payment Systems
Conclusion
• SWIFT supports Payment Market Infrastructure to address future challenges
Q&A
SWIFT for PMIs - 27 October 2009
Key challenges of the payments market
infrastructure ecosystem
How to mitigate
systemic risk?
How to manage
my collateral
efficiently?
Central bank
Govt
Entities
CSD
Do I have the
right risk/cost
balance per
payment?
High-value payment MI
How to secure
settlement
finality?
Participants
ACH
How to reach
my
counterpart?
Indirect Participants
How to optimise
my liquidity?
Direct Participants
How to achieve cost
reduction & scale
business?
Low-value payment MI
Participants
Direct Participants
How to transfer
funds quickly at
low cost?
Corporates
SWIFT for PMIs - 28 October 2009
Consumers
Trends in Payments Market Infrastructures
SWIFT response…
• High operational availability for messaging & RTGS
• Liquidity and collateral control
• Security, non-repudiation, delivery notification,
• Role-based access control
• Regulatory reporting
Risk mitigation
• Global reach
• Single platform
• Direct and indirect
• Bilateral or multilateral
• Copy services (Y-/T)
Volume
scalability
• SWIFT messaging MT or MX
• Standards ISO2022
• Market Practice groups
• E2E business modeling
• Standards validation
Cost efficiency
• Message price reduction by an average 20%
• Reduced TCO – standard messaging protocol
• Services to ease implementation
SWIFT for PMIs - 28 October 2009
Business
interoperability
Legacy and
innovation
• Multi-payment scheme and instrument support
• Any format & channels (m-/e- payments)
• Payment instructions, cash management and reporting
• Application-to-application or user-to-application
• Reference data
4
SWIFT’s 5-pillars offering for Payment
Market Infrastructures
Your
Payment Market Infrastructure system
Services
Consulting
Implementation
Project
Management
Training
Customer support
Standards
Messaging
MT messages
MX (ISO20022)
Market practices
FIN,
InterAct
FileAct,
Browse
Copy
Security
PKI
HSM
Delivery
notification
Multi-site
A comprehensive solution
SWIFT for PMIs - 28 October 2009
Integration
Alliance Interfaces
Integration tools
Alliance Connect
Bronze/Silver/Gold
Payment factories to optimize the
processing flow & manage liquidity risk
An end-to-end payments processing service challenge
Mr. Paul Landvogt, Equens
Leading the way to the future
From 3.4 to 5 billion card transactions
From 9.4 to 13 billion payment transactions
Strategy
Retain current clients (BE, DE, FI, FR, GR, IT, LUX, NL, SE, UK) and attract new clients
Maintain top position in Europe (DE, FI, IT, NL)
Expand presence in Europe through partnerships, mergers and acquisitions
Card processing: merchant acquiring, acquiring processing and issuing services
Domestic and cross-border payment processing services
Portfolio
From generic Clearing & Settlement to tailor made Bank Payment Processing services
Innovative solutions: eInvoicing, mobile payments, healthcare information, biometric
Supporting services: connectivity, risk, management information, customer services
Europe’s first truly pan-European cards & payments processor (EACHA, IPFA)
Core
value
Lowest possible processing and routing costs
Highest standards of quality, reliability and security
Distinctive range of modular, innovative and future-proof processing services
One-stop-shopping for customisable packages and practical advice
SWIFT for PMIs - 28 October 2009
From core payments processing towards
extended bank-to-bank supporting services
Payments
servicing
banks
Correspondent banking
Payments
servicing
banks
Bilateral Clearing
RTGS
(High value payment)
ACHs
Core
Extended
Back-office
processing
Clearing &
Settlement
Back-office
processing
Cash and liquidity risk management, treasury reconciliation
Payment exceptions and investigation
Cost efficiency
Reliability
Security
Availability
Scalability
Bulk transfer
Any instrument/
scheme
Standard
Reach
Regulations
Community rules
Supporting banks in servicing their customers
Consumers
Payments
servicing
banks
Near-real
time execution
m- & e- channels
Information on fees
Payment tracking
Financial
institutions
Corporates
Core
Extended
Payment services
Cash and liquidity risk management, treasury reconciliation
Payment exceptions and investigation
Common interface to ERP
Real-time access
Standards
Payment E&I
Cash optimisation
Liquidity risk management
End-to-end payments factories (“cockpits”) to
optimise processing & manage liquidity risk
Basic payments processing
services for communities
Extended centralised data
flow management
Addressing all market players
requirements
Automation to optimise
processing end-to-end
On-line exposure visibility to
reduce liquidity risk
Standard connectivity,
formats and business flows
Cooperation with key global
partners
EACHA, IPFA
SWIFT (global service
partner)
Core
Extended
Payment
capture
Back-office
processing
Clearing &
Settlement
Back-office
processing
Payment
delivery
Cash and liquidity risk management, treasury reconciliation
Payment exceptions and investigation
Conclusion and key points
• Extension of service portfolio from core payments processing to
a payments factory and a centralized control center covering the
complete value chain with all the different aspects and
requirements
• This needs partners join hands while concentrating on their core
competence under the condition of a collaborative and
cooperative approach
• SWIFT is one important partner both in the way of offering
product & services (communication, …) and the area of defining
standards based on best market practice
SWIFT for PMIs - 28 October 2009
Bank of England and SWIFT
for High-Value Payment
Systems
Mr. Ed Kelsey, Bank of England
27 October 2010 14:00 – 14:45
History
• RTGS was launched in 1996 as a platform to effect real-time
payments in central bank money
• Driven by the goal to remove risk from the settlement process
• Inter-bank payments are made through the CHAPS payments
scheme, operated by CHAPSCo.
• The communications network was upgrade to SWIFT in 2001
• DvP link to Crest introduced in 2001
SWIFT for PMIs - 28 October 2009
What We Do
• RTGS settled, on average, £744bn per day, and £908bn on its
busiest day last year
• Through RTGS, the Bank of England provides payment facilities to:
– CHAPS Sterling payment system
– CREST settlement system
– Lower value net clearings:
•
•
•
•
BACS
Cheque and Credit
The Faster Payments Service
LINK
• RTGS also plays a key role in the implementation of monetary
policy, with the voluntary remunerated reserve accounts which sit
at the heart of the Bank’s Sterling Monetary Framework held in the
RTGS processor
SWIFT for PMIs - 28 October 2009
Why SWIFT?
• Used to transmit the payment messages via SWIFT FIN Y-Copy
made between banks:
– Security
– Availability
– Non-repudiation
• Also used for the RTGS Enquiry Link to enable:
– Activity on a bank’s account to be monitored
– A bank to receive information about their account
– And, in certain circumstances, transfer funds between their
accounts
SWIFT for PMIs - 28 October 2009
Future Developments: Drivers
• Liquidity Savings Mechanisms
– Financial crisis means more liquidity is required, and that
already available will need to be used more efficiently
• Management/Business Information
– Financial crisis means the banks need to see what liquidity
they are using, and when
• Enquiry Link Upgrade
– Technology is dated and costs are incurred by the banks
when implementing a “fat GUI” in their premises
• Market Infrastructure Resiliency Service (MIRS)
– Enhancing the resiliency of RTGS, to bring it into line with
best international practice
SWIFT for PMIs - 28 October 2009
Future Developments: The Bank’s response
• Liquidity Savings Mechanisms
– We are looking to implement changes to the settlement
algorithms within RTGS, to be introduced in 2011/12
• Management/Business Information
– We upgraded to SWIFT FIN full Y-Copy in September 2010 and
will implement a payments database for members in 2011/12
• Enquiry Link Upgrade
– We are exploring using SWIFT browse with full SWIFT Interact
messages
• Market Infrastructure Resiliency Service (MIRS)
– We are working with SWIFT and other central banks to build a
“generic” RTGS system which could act as our 3rd site
SWIFT for PMIs - 28 October 2009
SWIFT supports Payment Market Infrastructure to
address future challenges
SWIFT for PMIs - 28 October 2009
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Benefits for Payments Market Infrastructures
A comprehensive messaging solution
Risk mitigation
• 8000+ banks in +200
countries
• Access indirect participants
through Service Bureaus
Volume
scalability
• Messaging price adapted to
market conditions
• Single messaging platform for all
financial businesses
• Support bilateral models with no
need of investment for a ACH
SWIFT for PMIs - 28 October 2009
Cost efficiency
• Guaranteed payment execution
• Traffic and duty segregation
• 99,999% operational uptime/ disaster recovery
• 24/7 dedicated support for critical infrastructures
• Monitor and control liquidity positions
• Reliable and efficient exceptions management
Business
interoperability
Legacy and
innovation
• Best industry practices
• Business model and physical
representation (XML)
• Tools / partners for message
conversion and application
integration
• Reference data for payments routing
• Cope with legacy and innovations
• Support any industry standard
• Payments and reporting
Payment Market Infrastructures
Live system status as of September 2010
North America
Canada
US (TCH)
Central & Latin America
Bahamas
Barbados
Chile
Dominican Rep.
Guatemala
Trinidad & Tobago
Venezuela
Western Europe
Denmark
Norway
Sweden
Switzerland
UK
Eurozone
Target 2
EBA Clearing
Austria
Germany
Greece
Ireland
Italy
Netherland
Spain
Central & Eastern Europe
Albania
Azerbaijan
Bosnia & Herzegovina
Bulgaria
Croatia
Hungary
Slovenia
Romania
Poland
Middle East
Bahrain
Israel
Jordan
Kuwait
UAE (DIFC)
Qatar
Africa
Angola
Algeria
Central African States (BEAC)
Ghana
Kenya
Mauritius
Morocco
South Africa
Swaziland
Tunisia
Uganda
Zimbabwe
West African States (BCEAO)
Botswana
Egypt
Lesotho
Namibia
Tanzania
Zambia
Asia Pacific
Australia
Fiji
Hong Kong
New Zealand
Philippines
Singapore
Sri Lanka
Thailand
Thank YOU
Q&A
62 high-value MIs
240+ million payments/year
21 low-value MIs
5+ billion payments/year
2000+ banks
90+ countries
Legend
Both HVP and
LVP MI
LVP MI only
HVP MI only
Payment Market Infrastructures
SWIFT Contacts
High-Value Payment
Low-Value Payment
Market Infrastructures
Market Infrastructures
Stephane Ernst
Marie-Christine Diaz
Market Manager
Market Manager
Mobile : +32-476-896087
Mobile : + 32 474 99 10 65
stephane.ernst@swift.com
marie-christine.diaz@swift.com
SWIFT for PMIs - 28 October 2009
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