Payments network Swift has unveiled a dramatic overhaul of its infrastructure, which will see it expand its focus beyond financial messaging into end-to-end transaction management services.
The retooled platform, which will be fully live over the next two years, will use APIs and cloud technology to provide a set of common processing services that banks have historically invested in individually, such as the pre-validation of essential data, fraud detection, data analytics, transaction tracking and exception case management.
“We are innovating the underlying infrastructure that financial institutions use to make transactions run even faster end-to-end, and at the same time further reducing costs for the community through industry-shared services in the areas of cyber, fraud and compliance,” says Javier Pérez-Tasso, CEO of Swift. “We will introduce data innovation that embeds risk and control elements expected from Swift, creating peace of mind for business-critical operations. Combining these elements, we are creating a broad platform with faster technology and smarter and better services that the industry can trust as a foundation for innovation towards their own end-clients.”
The planned platform capabilities build on Swift’s recent transformation initiatives, and come almost four years after the network introduced its global payments innovation (gpi) service, which has since been rolled out to both corporates and banks, allowing them to trace cross-border payments in real time.
“This represents a movement toward a more centralised transaction management model. It is a significant change in terms of mindset,” says David Watson, head of North America at Swift. “However, when you actually dive into the detail, it really is a logical continuation of what we have developed over the last few years by adding in a lot of extra capabilities, gpi being one of the very visible ones, over and above our core messaging system.”
Although Swift last year connected its gpi service for cross-border payments with blockchain-based platforms in a proof of concept launched with R3, Swift says that its new platform will not utilise that technology. “We, like many others, are assessing distributed ledger technology’s applicability to our environment. We don’t see it as the technology to drive the core of the transaction management engine, but what we will do from an architectural principle is in many instances similar,” Watson tells GTR. “We will enable people to engage with the transaction instantaneously, regardless of where they are in the chain. You will always be able to see who did what to the data.”
The roll-out of the new system will also buttress Swift’s plans to phase out the Swift messages – such as the MT760, MT798 and MT799 – that have underpinned trade finance products such as letters of credit and guarantees for decades. By 2022, Swift aims to bring in ISO 20022 messages for cross-border payments and cash reporting businesses, and says that the new platform will help to reduce the total industry costs of moving over to the new system.
“Moving to ISO 20022 creates a lot of opportunity for the industry, but it requires a significant amount of work because everyone everywhere is having to make a lot of changes,” says Watson. “The actual delivery of what we are talking about here means that, going forward, migrations can be simpler because more of the effort and cost can be dealt with in the centre.”
However, Swift says that it is committed to “backwards compatibility”, and will continue to enable the use of standard Swift messages on the new platform for the time being.