After the COVID-19 pandemic hit, we saw very clearly the power of the digital world to keep us connected. We all went digital in a big way in our daily lives as we moved to remote working and turned to a whole range of apps to buy groceries, order takeout and connect with family and friends.
The pace of digitization has accelerated greatly in every industry. A recent global survey of executives by McKinsey1 found that the COVID-19 pandemic escalated the digitization of customer interactions by three years globally. And the financial industry has been no exception. Banks have massively accelerated their digital strategies as their customers have shifted to transacting online.
At SWIFT’s (Society for Worldwide Interbank Financial Telecommunication’s) recent Sibos conference (a global financial-services networking event organized by SWIFT), Noel Quinn, the chief executive officer of HSBC, said in his opening speech that the bank had brought to market digital services in a week that generally would take three or four months. “It’s opened people’s eyes to see the art of the possible,” he pointed out.
And there’s no going back. Customer expectations have been sharply reset, and banks will need to relentlessly innovate at every touchpoint with their customers—both consumers and businesses—to provide ever faster and better services to stay competitive. To facilitate that, they need a safe, secure and compliant back-end to support digital financial interactions instantly and without friction.
That’s where SWIFT, the world’s leading provider of secure financial messaging services, comes in by providing the foundation that enables innovation in the financial community. SWIFT connects four billion accounts across more than 11,000 institutions in 200 countries to securely and confidently move value around the world. It is on its own transformation journey to support the banking community in moving all forms of value, from fiat currencies to CBDCs (central bank digital currencies)2 and crypto-assets, and to leverage new settlement methods and features, such as banking as a service (BaaS) and buy now, pay later (BNPL).
There’s no doubt that we are at an inflection point in financial services, challenging companies to stretch themselves to discover new ways of doing what they do better. Each company is an integral part of the journey. This article will focus on some of the recent strides SWIFT has made to fulfill its unique role to assist financial institutions in providing the instant and frictionless transactions that customers demand today.
The new API-enabled transaction-management platform enables financial institutions to expand.
In September 2020, SWIFT announced a strategy to facilitate instant, frictionless cross-border transactions anywhere in the world. At the core of this vision is a new API-enabled transaction-management platform that leverages the benefits of rich ISO 20022 (International Organization for Standardization 20022) data. The platform will provide comprehensive transaction-management services and pave the way for financial institutions—independently or collaboratively with others—to innovatively create new services to support their business growth.
Through this platform, financial institutions will be able to greatly expand their offerings to businesses and consumers, enhancing the end-customer experience. In securities, financial institutions should benefit from improved reconciliation, reporting and asset-servicing processes as well as end-to-end visibility of transactions to reduce settlement fails and fines. The platform will orchestrate interactions between financial institutions and other participants to minimize friction, optimize speed and provide complete transparency and predictability from one account to another, virtually anywhere in the world.
