27 November 2015

Interoperability and innovation drive agenda at 6th SWIFT Business Forum Romania

The forum has become an important fixture in the yearly agenda of the Romanian banking industry.

The 6th edition of SWIFT Business Forum Romania, organized by the Romanian Banking Association and SWIFT, took place on 28 October 2015 in Bucharest. The event, which has established itself as a platform for information sharing, networking and collaboration for the Romanian banking industry, brought together 120 representatives of the financial banking community, regulators, market infrastructures, corporate customers and SWIFT, to discuss the most challenging issues facing the industry. Topics on the agenda for the day were the future of standards, SWIFT’s 2020 strategy, solutions to address the financial crime compliance challenges, the latest trends in the banking and financial industry, opportunities brought by technology evolution and the current status of projects run by the Romanian community.

Opening the forum, Radu Gratian Ghetea, Romanian SWIFT Member Group Chairperson, CEO CEC Bank and President of Honour of the Romanian Banking Association stressed the importance of the technology evolution driving the digital era, which will significantly change the shape of banking operations in the near future. Talking about how SWIFT can support financial and banking institutions through this wave of change, Ghetea referred to SWIFT's KYC (Know Your Correspondent) Registry as an example of a product that could be crucial in order to lower risks within the banking community.

We have already seen much interest for the SWIFT KYC Registry and I can say that CEC Bank is already part of this project. I hope that, in a couple of days, our bank will be ready to publish our data on The KYC Registry.

— Gratian Ghetea

"On the one hand, we have to find solutions to adopt new technologies and keep up with technological evolution, and on the other hand, we must avoid adopting solutions that would lead significant risks materialising in banking operations in Romania. We have already seen much interest for the SWIFT KYC Registry and I can say that CEC Bank is already part of this project. I hope that, in a couple of days, our bank will be ready to publish our data on The KYC Registry," remarked Ghețea.

Perspectives on the Romanian Banking System

Sergiu Oprescu, Chair of the Board of the Romanian Banking Association and CEO of Alpha Bank Romania underlined some facts and figures about the Romanian banking sector, which has proven to be very resilient in the last years, with the solvency ratio standing at the high level of 18%, one of the highest in the region. Remarking that the Romanian banking sector is among the few banking sectors in the European Union which did not need to bail out financial institutions with public money during the crisis, Oprescu added that the banking sector has permanently supported the Romanian economy and has increasingly contributed to its growth.

Every time a crisis occurs we tend to over-protect, driving to over-regulation. I hope we have the wisdom, in Romania, to strike the right balance between regulation and innovation.

— Sergiu Oprescu

Oprescu stressed that changing customer behaviour, non-performing loans, over-regulation and competition from non-bank institutions are among factors of impact on the Romanian banking system. "In my opinion, three things have had an impact on us. First are the non-performing loans, changing customer behaviour and new ways to manage the risks, plus the corporate governance. All these things meant challenges and the banking system had to adjust on a regular basis. Secondly, every time a crisis occurs we tend to over protect, driving to over-regulation. I hope we have the wisdom, in Romania, to strike the right balance between regulation and innovation. A third factor is the shadow banking and increasing competition with non-banking entities. I feel that this competition will help us, the banking system, to be constructive," he stated.

The SWIFT 2020 Strategy

Michael Formann, Head of SWIFT Austria/CEE, presented the key elements of the SWIFT 2020 strategy, which aims to deliver an effective response to external challenges and drivers such as standardisation, new technologies, regulation and continuously evolving customer expectations, and sets an ambitious agenda for the SWIFT community during the next five years. He spoke about the three main dimensions of this strategy: growing and strengthening the core messaging services for payments and securities, expanding and deepening the offerings for market infrastructures and building the financial crime compliance portfolio.

SWIFT Traffic & Pricing Update

André Boico, Head of Pricing SWIFT, underlined the evolution of SWIFT's pricing over the past years and the plans to continue to evolve pricing in the context of SWIFT2020. He spoke about the pricing initiatives and their impact on messaging prices. An example that he gave here was the 80% messaging price reduction since 2003 for larger customers and 57% for the smallest customers. Boico said that the pricing principles remain valid for the future and SWIFT will continue to strive for price decreases for messaging, targeted pricing actions for non-messaging products and for more bundled offers to answer to market demands. Speaking about the strong FIN traffic growth, 9.65 % compared to the same period of last year, Boico mentioned that - in terms of FIN traffic - across the last five years Romania has experienced strong growth of over 50%.

Financial Crime Compliance & The KYC Registry

A key topic on the day's agenda was the compliance portfolio that SWIFT has developed in recent years to help financial banking institutions address the financial crime compliance challenges. Julien Laurent, KYC/AML Specialist, CEE region, SWIFT, presented the key elements of the solutions developed by SWIFT for the sanctions, Know-Your-Customer and Anti-Money-Laundering areas.  Special attention was paid to The KYC Registry, a global platform to centrally store qualified documents and data that financial institutions can employ while on-boarding, updating or re-evaluating their correspondent relationships.

The Future of Standards

The Forum continued with a session dedicated to standards. Rodica Tuchila, Romanian SWIFT User Group Chairperson opened the debate regarding the future of standards in the financial and banking industry, describing the current situation of many coexisting standards and stressing the role SWIFT plays not only in defining and maintaining standards, but also in providing interoperability between financial institutions, market infrastructures and end-user communities.

As ISO 20022 emerges as the preferred choice of messaging standard for financial market infrastructures and also gains traction in the corporate-to-bank space, the SWIFT community has expressed some concerns about the challenges that come with the growing adoption of this new standard. Margaux Monforti, Expert ISO 20022 Business Development SWIFT, presented the trends and status of ISO 20022 adoption and the role that SWIFT plays in supporting the community as it adapts to the standard and seeks to exploit the business opportunities it offers, through the ISO 20022 Industry Harmonisation Framework.

Referring to European market infrastructures and ISO 20022, Luiza Lucaci, Head of TARGET2 Department of the National Bank of Romania, spoke about the status of the TARGET2 platform migration to ISO 20022, and also about the TARGET2 Securities project using the same messaging standards. From the securities industry perspective, Michael Formann underlined the initiatives of ISO 20022 adoption in the securities market and the status of ISO 20022 Funds migration. The standards session ended with a case study on the Romanian Banking Association's project for implementing SWIFT's MyStandards Portal to efficiently manage the payments standards at the banking community level, presented by Luminița Soitu, Financial Banking Consultant.

Update on SWIFTRef

Next, and just before a session dedicated to financial technology,  Judit Baracs, Senior Account Director Austria/CEE SWIFT, delivered an update on  SWIFTRef, the industry-wide utility for sourcing, maintaining and delivering payments reference data. In her presentation she covered the existing SWIFTRef portfolio and the new developments that are planned for delivery in the months to come.

FinTech Highlights

FinTech Highlights was the Forum's last session, and it focused on the latest trends in the banking and financial industry - changes driven by the technology evolution, opportunities and challenges, role of innovation and collaboration. Kevin Johnson, Innotribe Startup Challenge Manager, SWIFT, challenged the audience with some facts regarding the digital disruption, new entrants in the payments landscape and correspondent banking disintermediation. He stressed the need for collaboration between the banking sector and the FinTech companies in these times with an exponential pace of change.

Corina Mihalache, Chief Executive Officer, Allevo, described the challenges that entrepreneurs face today and spoke about the importance of collaboration between the banking sector and the FinTech companies in order to develop and deliver products and services to customers in a timely manner and in accordance with market requirements. Addressing the topic of digital channels, which are increasingly taking the place of traditional banking channels, Alexandru Bita, Director eBusiness, Libra Internet Bank spoke about the digital channels launched by his bank on the Romanian market, based on the collaboration and partnership between the bank and its customers.

Elie Lasker, Senior Market Manager, Financial Market Infrastructures SWIFT, presented an update on real time payments systems, the role that SWIFT is playing in the area, and underlined SWIFT's role in real time payments solutions, based on its deep standards expertise, secure infrastructure and experience in complex large-scale market infrastructures projects - through the example of the Australian NPP system, where SWIFT will be delivering the messaging layer for the real-time payments.

Remarking that SEPA has long dominated the financial industry agenda, but Europe's next major payment project - instant payments - is just around the corner, Laurențiu Mura, Payments Product Manager at TransFonD, the Romanian payments infrastructure operator, presented TransFonD's vision for a real time payments system and the challenges for developing such a system at the national level.

Closing the event, Rodica Tuchila mentioned the great value that such events bring to the Romanian community and the commitment of the Romanian Banking Association to continue to work with SWIFT to organize annual events focused on subjects of interest for the Romanian financial banking community.