SWIFT delivers on pricing promise
Fixed Fee Pricing Programme proves popular among high-volume customers
Published on 16 September 2008
Under SWIFT2010, the strategic plan guiding SWIFT’s operations till the end of the decade, the co-operative has set itself the challenge of repeating its earlier achievement of a 50% decrease in pricing over five years. “We are actually ahead of where we expected to be by this point and are well on track to meet the 50% price reduction,” says SWIFT CFO Francis Vanbever. 
Last year saw the introduction of a new strategic pricing option for high-volume users, based on a three year fixed fee. Those signing up can increase their yearly messaging usage by up to 50% at no extra cost. “We targeted the largest players first,” says John Ellington, Director, Global Transaction Services Operations, UK & Europe, The Royal Bank of Scotland and Chairman of the SWIFT Pricing Board Task Force, “since additional volume growth is most likely to come from this group in the first instance”.
The results so far are impressive. Of the 52 banks initially targeted, 32 have already signed up. These account for 55% of total SWIFT traffic, says Ellington. Others are in the pipeline. While it is probably too early to judge the impact of the strategy on those who have signed up in recent months, Vanbever believes the strategy has made SWIFT a more attractive long-term option for this constituency. In addition, says André Boico, Director, Pricing and Information Services, SWIFT, “there are a number of cases where the fixed fee was a trigger for moving traffic onto the network”.
Low volume customers
For smaller users, says Ellington, the issue is more total cost of ownership than the price of individual messages. The focus has therefore been on reducing connectivity and infrastructure costs for these customers.
“That’s where Alliance Lite comes into its own,” says Ellington of the new connectivity option launched yesterday at Sibos.
The entire community, meanwhile is benefiting from the structural price reductions put in place last year and which also herald a shift from rebates to upfront price decreases.
| “We targeted the largest players first, since additional volume growth is most likely to come from this group in the first instance.” |
The tough economic climate over the past year has reinforced SWIFT’s ambition to meet pricing expectations. “Although, up to now, the credit crunch has not affected our volumes, our owners are under tremendous cost pressure and that gives us even more of a responsibility,” Vanbever says.
A further indication of this sensitivity is the reduction in pricing for TARGET2 and EURO1 messages agreed by the SWIFT Board over the weekend preceding Sibos.
“In 2009, we are also looking at other ways to reduce TCO for smaller users,” Vanbever adds. “We will continue to take targeted pricing actions to respond to competitive pricing situations. We will apply our attention in areas where there is elasticity.”