Swift to focus on transaction management to fuel faster payments

After two years of helping banks connect globally to domestic faster payments rails, Swift is planning to expand on that concept.

The Brussels-based organization will spend the next two years retooling its cross-border infrastructure into a digital platform to more consistently deliver instant payments and securities processing.

Swift says the effort goes beyond its financial messaging service to a more comprehensive end-to-end transaction management service that will support and accelerate other innovations at banks in the network.

Swift's latest strategy comes four years after it established the Global Payments Innovation service to address the need for all banks in the network to follow similar standards, communication procedures and preparations for technology advancements. In many ways, GPI was Swift's way of saying it was time to get the most out of legacy systems, so that new technology and procedures could operate in tandem.

“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," Swift CEO Javier Perez-Tasso said in a Thursday press release. "We will introduce data innovation that embeds risk and control elements expected from Swift, creating peace of mind for business-critical operations."

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By combining these elements across Swift's reach of more than 11,000 institutions in 200 countries and territories, Swift is 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,” Perez-Tasso added.

Swift's enhanced platform will manage interactions between financial institutions and other participants to minimize friction, increase speed and provide end-to-end transparency and predictability from one account to another anywhere in the world.

The next-generation digital platform will use APIs and cloud technology to provide a set of common processing services that banks have historically invested in individually, saving the industry time and money. New and extensive data capabilities will enable the pre-validation of essential data, fraud detection, data analytics, transaction tracking and exception case management.

Swift says the coordinated effort has the potential to power instant and frictionless transactions between 4 billion accounts serviced by financial institutions across the Swift network.

“It’s good news that Swift is evolving from being a messaging carrier to a provider which supports our own Deutsche Bank transaction platform for international payments," Stefan Hoops, managing director and head of corporate bank at Deutsche Bank, said in the release. "Speedy, secure and compliant transaction management fits perfectly with our clients’ workflows and needs."

Deutsche Bank plans to connect Swift's solution to its own products and client services "that manage payments for all types of financial institutions, corporates and fintechs,” Hoops added.

In laying the groundwork for an expansion of its faster payments strategy, Swift worked last year to establish a service in which it would connect banks to domestic faster payments rails. Swift conducted a successful two-month test in connecting with Singapore's Fast and Secure Transfers network as well as GPI connections to Australia's New Payments Platform. It reported the connections in Australia resulted in cross-border payments to China in 18 seconds.

In Europe, Swift has been moving GPI real-time payments through the Target Instant Payment Settlement process. At the same time, it has been encouraging banks to adopt both GPI and the ISO 20022 messaging standard for faster cross-border payments. In using ISO 20022, payers have thousands of data fields to deploy in describing payments and pinpointing where they should go.

Last year, Swift expanded the GPI service to corporations, allowing those businesses to initiate and track payments across multiple banking partners from a single source.

“Citi is very supportive of this new path that Swift is embarking on," Manish Kohli, global head of payments and receivables at Citi, said in the release. "With its new platform strategy, Swift is evolving from just making incremental improvements to its traditional store and forward messaging capabilities and towards truly transformative change based on API dynamic connectivity, a vastly improved data model and extremely relevant ‘payment orchestration’ services."

The "reimagined Swift platform" builds on the progress of GPI, and moves network banks toward payment ubiquity with the ability to make frictionless and instant cross-border payments across the network, Kohli added.