The invisible power of SWIFT
Standard Life Savings’ chief executive, Geoff Towers discusses how SWIFT can support standardisation and automation in the funds industry
Geoff Towers,Chief Executive of Standard Life Savings
Fund platforms and the rise of wrap have changed the face of the fund and life industries. Where historically these businesses have been less driven by the need for instantaneous processes, fund platforms and wrap mean offering 24/7 visibility – and being able to meet the requirement of intermediaries and their customers for real-time access to and information about their investments. This is driving a growing need for straight-through processing among platform providers.
Earlier this year, Standard Life Savings Ltd in the UK – part of major asset manager and insurer Standard Life – became the first fund platform provider in the world to automate the account opening process with SWIFT. Standard Life and SWIFT worked together to deliver ISO 20022 compliant funds messaging for the account opening process, the first practical implementation of which was an enhancement to Standard Life’s Self Invested Personal Pension (SIPP) enabling customers to trade via FundZone, its mutual fund supermarket. As a result, advisers and customers on both individual and group SIPPs can now access more than 1000 funds from leading fund managers at attractive prices through a safe and prompt process.
Standard Life Savings’ chief executive Geoff Towers spoke to Investment Managers on SWIFT about the achievement of this “first win” with SWIFT, and how SWIFT can support further standardisation and automation for the funds industry.
Why did you choose to work with SWIFT for your automation project?
When we looked at SWIFT – and we looked at other suppliers too – the quality it has delivered to the banking industry (I spent many years at Citi and Barclays) was an important consideration. We were reassured that SWIFT understands the importance of right first time, on time, from its pedigree in major international payments.
When we looked at SWIFT – and we looked at other suppliers too – the quality it has delivered to the banking industry (I spent many years at Citi and Barclays) was an important consideration. We were reassured that SWIFT understands the importance of right first time, on time, from its pedigree in major international payments.
Much of the fund and life industry has in the past been less driven by “clear to zero” - the principle that something must happen now. But the world has changed, especially with platforms and wrap, where a customer can say, “I just gave you an instruction, has it been carried out yet?”
As a provider of these services, I need suppliers that understand this, and SWIFT’s banking pedigree went a long way towards assuring us it does.
Was your experience of working with SWIFT a positive one?
For a business manager, one of the best things SWIFT can be is invisible. Services that just run without fail are exactly what we need. If we know it works, we don’t have to think about it. Having a partner that knows the right people in the organisation to work with, and does so, is also very valuable.
A quiet delivery of promises gets notice and approval far more effectively than when people shout at anyone and everyone that will listen.
"For a business manager, one of the best things SWIFT can be is invisible. Services that just run without fail are exactly what we need. If we know it works, we don’t have to think about it"
One of the things a business service provider can do really well is to find the right people to engage with, so that people at the senior level can just say, great, my experts are talking to their experts, and it’s all working.
Our project with SWIFT involved counterparts at FNZ and elsewhere, so the SWIFT people were working in a situation in which there were a number of players in the room, different commercial enterprises with possible different priorities, approaches and opinions, and they found their way through that.
What challenges do you believe SWIFT faces in achieving wider take-up in the funds industry?
One of the challenges SWIFT has is how to get the message across to business managers without bounding into rooms and hitting us with technical terms that make us feel stupid. The question is how to get the message across to both operational executives and senior business executives – and it’s important to recognise that the messages are different.
For the business executives, the focus needs to be on aligning with international standards, on the fact that SWIFT is seamless from the business side, and on the “clear to zero” banking pedigree.
People who have grown up through the funds world don’t necessarily know SWIFT, and that’s also part of the challenge. And having given SWIFT great credit for its banking pedigree, I would also say SWIFT needs to understand very deeply the different complications that exist in life and fund companies – and to ensure that its credentials in this industry are clearly perceived. SWIFT needs to reach further into the investment market, and show people that it understands this business.
How important is standardisation in supporting your efficiency goals?
Standardisation is very important. If you look at the comparative costs of processing mutual funds in the US and Europe, we’re looking at cents versus dollars, and that tells us something about the power of standardisation. Clearly it lowers the cost.
It’s easy to forget that at the end of the day there is a real customer out there, with real money, making decisions about how to spend it. To them, the difference between $10 and 50 cents could well be material. Losing sight of that doesn’t help the customer, and if you can take $9.50 out, and lower the platform cost or the cost of advice, this is beneficial to the end customer because competitive forces will ultimately drive down costs for them.
The quality of the administration chain is also very important, from the adviser creating the order through to the fund manager receiving the cash into the portfolio. Weaknesses in that chain cause the customer enormous angst, especially in the current market. If they have placed an order, they want to know what price they got. If a dividend payment is late, the customer will assume the worst. So a second benefit of standardisation is in helping to rebuild consumer trust.
It’s easy to think that given where SWIFT sits in the value chain it looks so far out from the customer, but I’m convinced that clean, efficient administration makes the whole process look better to the customer.
The challenge with standards is that one man’s have got to be the same as the next man’s. Everyone has their own top favourite solution, and there’ll all different – but where SWIFT with its co-operative approach could lead on this is to ensure it is everyone’s second favourite solution, adopted by all.
Maybe SWIFT could do more to lead the industry on this. While the platform market is still very new, this is a great time to drive some standardisation.
Do you plan to build on what you’ve done with SWIFT to achieve further automation?
We’ve enjoyed working with SWIFT so far in terms of our platform business. SWIFT needs to keep talking to us about what it is developing, and where its thinking is going. SWIFT has won its spurs, and the first battle, and now it’s a communication issue – SWIFT should tell us what we need to be thinking about.
We have achieved a first win, and there is no reason we shouldn’t go after more.
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