Community Engagement Workshop

2006-2010

Setting the scene: 15 years of strategy

▪ FIN, InterAct,

FileAct growth

▪ 50% Price Reduction

▪ Distributed Architecture

▪ FIN Renewal

▪ HSM Replacement

▪ FIN, InterAct,

FileAct growth

▪ 50% Price Reduction

▪ Fixed Fee

▪ Distributed Architecture

▪ 100% FIN Growth

▪ 50% Price Reduction

▪ SWIFTNet Phase 2

▪ Alliance Lite2

▪ AMH

▪ Integration services

(T2S connector, IPLA)

▪ Alliance Lite

▪ Alliance Integrator

▪ SWIFTNet capabilities to Access

▪ Business Intelligence,

SWIFTRef, Sanctions, Matching

▪ MIRS

▪ Solutions: TSU, SWIFT Remit,

FIX, Proxy voting

▪ Business Intelligence

▪ Solutions:

– Cash reporting

– E&I

2001-2006 2011-2015

Messaging & Platform

Software Business

Shared Services

2

Strategy 2020 Timeline & Next Steps

2015

2020

Strategy Execution Strategy Exploration

1. Mumbai board offsite:

directions on risks and

opportunities to

address

2. IR (June 2014)

Highlight SWIFT2020

strategic directions

Outline consultation

objective, process

and timeframe

Mid-term review

H1 2018 (IR)

Strategy Definition

Strategic Review Strategic Planning

Action plan

(IR June 2015)

1. Assess strategic

directions

(DP Dec 2014)

2. Make choices

(ER June 2015)

3

SWIFT2020 exploration

2014 2015 2020

Geopolitical

Disrupters

Market &

Technology Drivers

4

SWIFT current business model

Access Lite2

IPLA AMH

Services

Software Business

Messaging

Correspondent Banking

RTGS FX S&R

CSD ACH Corporates/IMIs

Platform

Compliance SWIFTRef

BI Matching

MyStandards MIRS

Services

ACCORDTM

MY

STANDARDSBUSINESS

INTEL

LITE2

LITE2

SANCTIONSREF

DATA

BUSINESS

INTEL

LITE2

SANCTIONSREF

DATA

BUSINESS

INTEL

Shared Services

Standards

Trade

5

Areas to further explore

Baseline

Messaging:

Domestic Real-Time Payments

Person-to-Person Payments

Securities

Corporates

Shared Services:

Financial Crime Compliance

SWIFT2020 Board Offsite outcome

6

PowerPoint Toolkit – 23 October 2008 – Confidentiality: restricted 7

Securities Markets

Securities Markets

• 2008 crisis

• Regulatory changes

• Increased use of

collateral management

and liquidity

• New technology, in

particular for MIs

Drivers

• More than 2bn messages in 2013 (+13%

growth)

• 40% of total FIN traffic

• 135 million messages for assets servicing

• 80 million messages for funds

• 20% growth of tri party collateral messages

Core

Traffic impact • Compound estimated

growth 5-7% per annum for

the next five years

• European market close to

maturity post T2S

• Clear acceleration of S&R

(MX) adoption by MIs

8

Securities Markets

Securities core business

Segment expansion

Value chain expansion

Geographical expansion

Product & Service

expansion

Investment Managers

Market infrastructures

Asia Pacific

LatAm

Compliance services/BI for

Securities

T2S adjacencies Issuer space

Intra-day collateral & liquidity mgmt

Revisit Custodians value proposition

Funds

SWIFT is currently

deploying adjacent

services to help the

T2S community such

as Readiness Portal ,

testing facilities .. Are

they other priorities or

areas SWIFT should

focus on ?

10

- What are the

conditions/limitations

SWIFT should keep in

mind while exploring the

expansion to a

referencing & reporting

utility, a pension portal

and compliance services?

- Beyond the

messaging, how would

you expect SWIFT to

help you to tackle the

collateral management

challenge (increased

volumes, increased

velocity, account

segregation)?

Where should

SWIFT focus its

attention and efforts

in the coming years?

Does it make sense

to continue to try and

connect all CSDs?

What should be

SWIFT priority ?

Are there any drivers

such as regulation,

shift in market

structure and

stakeholder groups,

value migration

across the value

chain, etc., which

have led to the

issue(s) becoming

bigger/more

important in past

years/months?

Securities core business

Product & Service

expansion Product & Service

expansion

Value chain expansion

Geographical expansion

Geographically, what

are the measures we

could take to increase

our penetration in non-

European countries?

Lobbying? More direct

approach? Other

partnerships?

Segment expansion

Securities Markets : Questions for consideration

SWIFT Americas Management Team Update - CSC - July 2013

Update on Real Time Payments – Carlo Palmers

RTP Update

12

• 24x7: payments can be sent and received all times of the day, every day of the year.

• Immediacy: Payments must be processed within seconds.

• Irrevocability: once payments are processed, they can’t be recalled.

• Certainty: payments sent to a beneficiary bank are individually explicitly confirmed or rejected.

• Funds availability: on the beneficiary’s account

Key characteristics

RTP Update

Update on Real Time Payments

Update on Real Time Payments

13

Background

RTP Update

Paym

ent

Val

ue

Payment Frequency

Hig

h

Low

End of Day Batch Payments

Single Payment

ACH Systems

Payments are settled EOD in RTGS

Operated by private firms

Delayed Net Settlement (DNS)

Systems

Payments are netted and settled in RTGS

Retail Real Time Payments

RTP

RTGS Systems

Operated by Central Banks

Hybrid Systems

Combining high &

low value

Intra Day Batch Payments

‘Next Generation’

ACH

Payments are settled Intra day in RTGS

Trend

Trend

Tr

end

Trend

Paym

ent

Vo

lum

e

Low

H

igh

New

Update on Real Time Payments

14

Live in ~15 markets, with 8 more in development

RTP Update

Asia Pacific India Japan

Singapore S-Korea Taiwan

Australia (dev) Hong-Kong (dev)

New-Zealand (dev)

Central & Eastern Europe Poland

Switzerland

Central & Latin America Brazil Chile

Mexico Colombia (dev)

Western Europe Sweden

UK Denmark (dev) Ireland (dev) Norway (dev) Finland (dev)

Africa Nigeria

South Africa

Middle East Turkey

15 Real-time retail payments consultation - 16 September 2014

Real-time

retail payment

system

Payer Payee

Agreements 3

Bank real-time infrastructure

1

2

Three key components required to allow for end-to-end RTPs

1. Banks’ infrastructure must work in real-time

2. The interbank payment system should work in real-time

3. Commercial and operational agreements must be in place to ensure E2E real-time service

Bank real-time infrastructure

1 focus

3 key components RTP

Update Update on Real Time Payments

Update on Real Time Payments

16

Outcome of Market Assessment

RTP Update

• RT LVP systems are gaining momentum and are expected to continue to develop in the future

• The adoption of RT LVP will be mainly driven by regulators wishing to improve payment systems and respond to peer pressure

• Both short- and long-term economics for banks need to be considered

Adoption of RT LVP

Ramp-up and Usage

Solutions

• No impacts on RTGS volumes were observed where RT LVP systems were implemented

• Usage of RT LVP systems will be mainly driven by person-to-person payments, m-commerce and e-commerce

• Secondary use-cases are Point of Sales, bill payments and selection of business-initiated payments

• RT LVP represent an opportunity for SWIFT in the short / medium term

• Most solutions are bespoke, with varying functional and integration capabilities, presenting a potential opportunity for standardization (e.g. use of common standards and messaging)

17

Types of RTP systems

RTGS “AU Approach” Hub approach

A B RTGS

A B

RTGS

A’ B’

A B RTGS

Bank A Bank B Bank A Bank B Bank A Bank B

Examples

Clearing

Settlement

AU (only use-case so far) UK, SE, SG, PL (majority of existing RTPs)

CH, MX, CZ

Key features • Interactive clearing • 24/7/365 (most) • Settlement either via pre-

funding or netting

• No distinction between high and low value

• No interactive clearing (combined with settlement)

• No 24/7 (although close)

• Interactive P2P clearing • Settlement untangled from

clearing and performed directly by RBA

• 24/7

HVP

FSS* RTP Hub

FSS: Fast Settlement Service

Clearing

Settlement

RTP Update

Update on Real Time Payments

Update on Real Time Payments

18

Questions for consideration

RTP Update

• Do you recognise this trend towards real-time?

• Will it affect SWIFT’s current business?

• If so, in what time frame?

Reality? SWIFT’s role? SWIFT’s offer?

• Should SWIFT go beyond evolving its existing RTGS business and develop a more pro-active approach towards domestic real-time retail payment systems?

• Should SWIFT expand into building domestic solutions/infrastructures (i.e. cater for local processing)?

• Should SWIFT take a more opportunistic approach leveraging its global platform?

Update on Real Time Payments

19

Next Steps

RTP Update

1. Continue consultations and understanding of regional perspective – meeting at Sibos

2. Work out a generic value proposition for RTPs, acknowledging the ‘inevitable’, yet unquantified, adoption of RTP

3. Approach will leverage existing solutions or components to limit upfront investment and risk

4. Outline our proposed approach in our December 2020 DP and possible Whitepaper

International Person-to-Person Payments

• MTOs: 50-60%, Western Union

• Entrants: 20-30% PayPal

• Banks: 15-20%

Market

share

• Consumers expect

faster, cheaper, easier

• More entrants incl. online

networks and innovation

• New regulation, can be

- or + for banks

Trends Value

proposition

MTOs

Entrants

Banks

• Volumes expected

to grow 2013-2016

• Increased international

mobility & services

• SWIFT: 25% cross

border MT 103 < $1K (1/4 “real” P2P)

+9%

* MTOs: Money transfer operators (e.g. Western Union, MoneyGram) 20

International P2P payments: Key questions

• In your view, which are the most relevant drivers?

‒ Changes in consumer expectations

‒ New innovations

‒ Regulation

‒ Other drivers?

• If relevant to banks’ business, should SWIFT support banks in

international P2P payments?

If so, do you agree with the proposed way forward?

‒ Identify target corridors where a coalition of willing banks could

take the lead

‒ Discuss the possibility of defining a scheme with common

business rules

‒ Evaluate the need to evolve or reuse the underlying technology

platform

21

THANK YOU