Swift - enabling instant and frictionless cross-border payments

systems. There is for example room to make some cross-border payments more seamless as the world of lower value transactions grows. Swift is working hard to address all the elements that are within our control and to upgrade the industry’s infrastructure to enable instant cross-border transactions 24/7 between over four billion accounts on our network worldwide, regardless of size or value.

In today’s rapidly moving world, people everywhere expect to be able to send and receive payments instantly with a touch of a button or a tap on a screen. All payments therefore need to be fast, transparent, efficient and frictionless regardless of size or value, both domestically and across borders.

We can see firsthand the increasing benefit of values smoothly flowing across borders in our fast-paced, globally enabled society. Cross-border payments are essential to the world’s economic growth and international trade – not only for the world’s largest banks, but also for small businesses and individuals across continents.

While the majority of today’s cross-border payments are made quickly– settling within minutes or even seconds on routes where well-established direct links exist between countries – they are by nature more complicated than domestic payments. Our data shows that delays often occur at the receiving end of an international payment, likely because of capital controls and associated compliance checks, local operating hours, fragmented or incorrect data, and the use of batch processing

Together with our global community of financial institutions, Swift has made huge strides to enable instant and frictionless cross-border transactions for wholesale payments. Today, thousands of financial institutions use Swift to send and receive payments quickly and securely across the world, with full transparency over where the payment is at any point in the transaction. We give institutions confidence to send payments abroad knowing where their money is every step of the way, that all proper controls have been passed and that it will arrive on time. Not only that, but we have also delivered easy-to-implement solutions to address other friction points in the payments chain – including fixing avoidable errors upfront to avoid delays down the line, streamlining operational investigations when necessary, and ensuring compliance processes can keep up with faster payments.

While wholesale payments have traditionally dominated the cross-border payments space, we have more recently witnessed consumer behavior trends shift from a largely domestic payments model to one that regularly includes sending money abroad. The need for a frictionless experience for low value payments is clearer than ever.

Swift is committed to helping financial institutions improve the experience for consumer and lower-value business payments to help these businesses thrive. The foundations we laid in the high value corporate payments space have given us the opportunity to deliver the same experience in the highly competitive retail and consumer space, allowing banks to re-use infrastructure investments they have already made.

For instance, our Swift Go service allows financial institutions to enable their customers to send predictable, fast, highly secure and competitively priced payments anywhere in the world with ease – directly from their bank accounts. With a fastgrowing community of more than 630+ banks in 130 countries, Swift Go is not just rivalling the offers of card players and Fintechs, but it is doing so on a global scale as it rapidly grows to become the new standard in lowvalue international payments.

The increasing demand for instant cross-border payments has also fueled a global curiosity around central bank digital currencies (CBDCs). The Bank for International Settlements recently reported that nine out of 10 central banks are currently exploring digital currencies, covering economies that account for more than 90 percent of global GDP. However, the risk of these CBDCs becoming fragmented is high, since central banks are using different technologies, standards and protocols.

While we don’t yet know the exact role that CBDCs will play, we do know that interoperability and linking between different CBDCs on a cross-border level will be critical to fully realising their potential and to ensuring protection against market fragmentation. We have launched a number of experiments which show that Swift can enable interoperability between different CBDC networks and between CBDCs and existing payment systems. We are committed to working with our community and partners to support this major shift in the financial ecosystem and ensure that value in all its forms – whether digital tokenbased or traditional account based – can move around the world quickly, seamlessly and securely for as many people as possible. www.swift.com/future

This is a pivotal moment as the global payments industry stands ready for an instant, secure and frictionless future, with Swift at the forefront of this digital revolution. Our work today to innovate the industry’s global financial infrastructure will set it up for decades of success, creating a digital foundation for banks, corporations and small businesses to keep raising the bar on the services they provide to their customers.

Swift is further automating the end-to-end execution of payments on our platform, ensuring data issues are a thing of the past, and that service levels are sustained –making processing transactions faster, more efficient and cheaper without compromising on security. Underlying all of this is the rich data of ISO 20022, a standard for communicating financial information that is being adopted for cross-border payments across the Swift community from March of this year. Not only has Swift played a leading role in defining the standard, but it has been entrusted by the financial community to facilitate industry-wide adoption for crossborder payments.

We can see clearly that the future of payments is powered by better data, artificial intelligence, APIs and cloud-based solutions – and that future has already started.

EO: Is it challenging to keep up with the rapidly changing technology landscape within the payments sector?

TC: Yes, and our role is to continue to champion those new developments and to encourage people to take on and adopt new approaches, new solutions, and new technologies. Equally, we must be mindful of the fact that although our industry is dramatically different to how it was even 10 or 20 years ago, in the grand scheme of things. The debit card was invented 30 years ago, and the credit card was only invented 60 years ago, so these are long term innovation cycles.

Looking at an example such as the addition of digital currencies into the technology landscape, while we’re all excited about what it might mean, we also recognise that the adoption of something like this will take several decades, so we must possess short-term enthusiasm, but keep our eyes on the long-term horizon.

EO: How do you see the association developing over the next five years?

TC: As a membership platform business grows in scale, the value for both the buyer and the seller also grows. In such a virtuous circle, the more members you have, the more value they get and the more productive our community becomes to run. This allows us to invest more in delivering value to our members, and the virtuous circle continues.

Secondly, we’ll become increasingly focused on our policy and government relations agenda because the government needs to be completely aware of and excited about the potential for this industry sector to generate new jobs, new businesses, and successful shareholders and to do that in a way that competes with other countries. Now that we’re outside the EU we need to remain focused on building the UK as a centre of leadership in payments.

And finally, we believe that bringing people together post-pandemic is increasingly important, so we’re going to invest in delivering larger events to make sure that our members and sponsors get access to greater opportunities, not just here but around Europe.

EO: What is the key to facilitating profitable business partnerships?

TC: The key to the facilitation of profitable business partnerships is collaboration, which is enabled through engagement.

For example, we facilitate an Advisory Board of 18 senior executives who have been elected by their peers to represent the industry. They help to set our content agenda, ensure our governance is world class and serve as our voice in the community. In return they create profitable partnerships with each other and our members.

We also get senior executives involved with our seven

ASSOCIATION

community projects. These focus on the things that matter to our members, including financial crime, financial inclusion, regulation, cross-border payments, open banking and digital currencies. This year, we have launched a new initiative, Project ESG, which will help our industry to achieve a set of responsible, sustainable goals. It is proving to be extremely popular because our members really care about these things. And through these projects, relationships and partnerships are formed.

What makes this such a lovely business to work in is that we enable people to have a greater impact on the world around them in a way that makes them happier and more fulfilled. They feel more resilient in their working lives because they affiliate with like-minded others, have a place where they belong, and have influence over their collective destinies.

In the years ahead we will also be focusing on two other important components. Firstly, we want to professionalise payments. We believe that too often people acquire skills and expertise in our industry simply by doing work and we would like to accelerate the pace at which they can learn by providing additional professional learning opportunities and more training.

Secondly, we’re going to be accelerating the democratisation of our community. We want our members to be increasingly able to influence what it is that the community does, and the way in which it is delivered through regularly checking in with our members and allowing them to influence the day-to-day content and direction of what we do. This means that the community is not only positioned as being for them, but they’ve been involved in creating it, and co-creating it along with my team.

In the end, however, it’s really about the people we have on our team that makes all this possible. You don’t generally wake up in the morning and say, I want to work for a financial services trade association. Instead, people have joined us who are brilliant at developing great content for events, superb at managing business-tobusiness accounts, inspired at shaping policy or excellent at marketing and business development. And they have come together with the collective purpose of improving lives everywhere through payments. As a result, we have a wonderful team of highly motivated people who love working together and doing well by doing good. It’s inspiring and the real secret of our success.