Skip to main content
Header logo

The global provider
of secure financial messaging services

Poland strengthens its position as a financial hub for CEE

Poland strengthens its position as a financial hub for CEE

Business Forum,
15 June 2015

Third SWIFT Business Forum in Warsaw looks at recent developments in Poland’s economy and market infrastructure landscape and assesses how well it is prepared for the future.

BF, Warsaw, PolandThe third SWIFT Business Forum in Warsaw took place at the Warsaw Stock Exchange on 20 May 2015. Organised in partnership with The Central Securities Depository for Poland (KDPW) and the Warsaw Stock Exchange (WSE), the event attracted over 100 delegates  under the theme "Comply, create and innovate: strengthening Warsaw's position as a financial hub for CEE."  The agenda for the day kicked off with welcome remarks by Ilona Pouna, Regional Manager, CEE, SWIFT and Grazyna Cheetham, Polish SWIFT National Member Group Chairperson.  A keynote speech by Prof. Malgorzata Zaleska, Member of Management Board, National Bank of Poland focused on the sustainable growth of the Polish economy, with special attention to the financial markets and the banking sector. In her speech, Zaleska talked about the opportunities and challenges that the Polish economy and banking sector face, especially in relation to its future inclusion in the Eurozone. Following on from Zaleska, was a SWIFT update session featuring a presentation by Christian Kothe, Head of CEE, SWIFT on the company's achievements in the last two strategic cycles as well as an overview of the SWIFT 2020 strategy and a discussion on the relevance of the various elements of the strategy for the Polish SWIFT community.

Business Forum, News, WarsawAfter the SWIFT update, the focus moved on to the Polish securities market, with a presentation by Iwona Sroka, President of Management Board, Central Securities Depository of Poland (KDPW) followed by a panel discussion with senior experts from the Polish securities market discussing the progress that has been made in developing Poland's securities market infrastructure and the solid foundations that this has laid for the market's continued competitiveness in the highly regulated European securities landscape. The session on the payments market that ensued, was introduced with a presentation by Michal Szymanski, Vice President, KIR who later joined a panel of senior experts who concluded that tectonic shifts in the payments market have become inevitable, that advances in technology and the rise of instant payments will change the shape of the landscape. All is not lost for the banks though, they said, although their future role will depend very much on their ability to adapt, evolve and continue to keep their customers happy.  Closing the day was the Compliance topic, with a presentation on AML and OFAC sanctions by Joanna Grynfelder, Head of Compliance, Bank Alior and an overview of SWIFT's Compliance portfolio, with a particular focus on The KYC Registry by Julien Laurent, KYC/AML Expert, SWIFT.

A full report of the event can be found by reading on below.


Business Forum, News, WarsawOpening the third SWIFT Business  Forum in Warsaw,  Ilona Pouna, Regional Manager, CEE, SWIFT, welcomed the over 100 participants in attendance and thanked our hosts and partners for the event, the Central Securities Depository for Poland (KDPW) and the Warsaw Stock Exchange (WSE). Under the theme "Comply, create and innovate: strengthening Warsaw's position as a financial hub for CEE," the event set out to assess how far Poland has come on this journey, and how far it still has to go. Looking briefly at Poland's economic situation, Pouna mentioned that Poland's GDP doubled from 2003 to 2013 and grew by 3.3% in 2014, making it the second fastest growing economy in the EU 27. "Poland's economic growth is based on intellectual potential and hard work, rather than natural resources and financial steroids," she stated, and  went on to say that with this growth, supported by its state of the art financial infrastructure, in both the payments and securities markets, Poland is more and more integrated with global, and especially European economies.

Poland’s economic growth is based on intellectual potential and hard work, rather than natural resources and financial steroids.

— Iona Pouna, SWIFT

Business Forum, News, WarsawTaking over from Pouna,  Grazyna Cheetham, Polish SWIFT National Member Group Chairperson, thanked the organisers of the event and gave a brief overview of the importance of Poland to SWIFT and SWIFT to Poland. She explained that SWIFT membership and traffic in Poland have both been increasing, largely as the result of the implementation of SORBNET2, the new RTGS, which is based on SWIFT, and an increased demand for reporting messages driven by to regulatory requirements. This has led to Poland becoming one of the top 20 countries on SWIFT worldwide, by FIN message volumes. As a country with volumes that do not yet qualify it for a SWIFT board seat, it collaborates in a country combination to designate a board member whose role it is to represent the interests of Poland as well as a number of other countries, she explained. Poland is also an active member of ESA, the European SWIFT Alliance, an organization set up in 2001 that cooperates very closely with SWIFT's management and the purpose of which is to collectively influencing the direction of SWIFT through a single voice as a result of the representation of its members. 

A competitive economy

Joining the Eurozone represents a chance, but does not guarantee the certainty of success.

— Malgorzata Zaleska, NBP

In her keynote speech, Prof. Malgorzata Zaleska, Member of Management Board, National Bank of Poland, made a series of reflections on the sustainable growth of the Polish economy, with special attention to the financial markets and the banking sector, which play a significant role in the country's economy. Looking at the banking sector, she stated that in 1993, Poland had 87 commercial banks, a number that has gone down to 38 since. "Growth has been strong though," she continued, "and the capital base has multiplied by 40 over the same period." The Polish banking sector has been praised for being particularly profitable in the face of crisis, thanks to the fact that it is highly diversified, she explained. It has not developed banks that pose a threat to the economy, has no systemically important financial institutions as defined on the international stage. "Small is beautiful," she stated, "but a larger institution is also capable of achieving more." Another area where Poland has outperformed other countries is that whilst assets in the financial sector have decreased as compared to GDP in the Eurozone, this has not been the case for Poland. Zaleska also pointed out that "Poland is not an island," and the share of international capital in its banking sector amounts to approximately 60%.

Business Forum, News, WarsawMoving on to talk about Poland joining the Eurozone in the future, she explained that when Poland joined the EU, it undertook to join the Eurozone. "This represents a chance, but does not guarantee the certainty of success though," she warned, because success will depend on how Poland will function within the Eurozone and it's not enough to just fulfil the Maastricht convergence criteria. "The economy has to be competitive. Poland is prepared, in a good state and competitive, plus we have a low cost of labour," she stated. Continuing on the topic, she explained that joining the Eurozone entails a trade-off of risks and benefits. On the benefit side, are things such as the elimination of FX risk and the perception of the country as more reliable, financially stable and predictable. The downside is an increase in prices, the so-called "price effect", which is the single most important element. In a report recently published by the NBP, it looks at the economic challenges of Poland's integration into the Eurozone. One of the main concerns expressed in the paper is that after the accession to the Eurozone, there will be pressure to increase salaries. This is great for the individual employee, it says, but an increase in salaries represents an increase in the cost of labour, which in turn would lead to an increase in the price of products and could significantly impact the competitiveness that is one of Poland's greatest assets today. Low interest rates are good, as are low cost loans, but they  could lead to a "bubble" warned Zaleska. That said, the Eurozone is changing, regulation is changing and a series of new proposals have been implemented in response to the crisis, so Poland will be joining a very different, changed and integrated Eurozone to that joined by the first wave of countries.

Small is beautiful.

— Malgorzata Zaleska, NBP

Lastly, Zaleska talked about internal challenges. Whilst Poland has an optimum level of foreign capital in its banking sector, she explained, it needs to find funding resources of a much longer-term nature, given that today these are mainly of a short-term nature. Also, new technological developments can be a two-edged sword. Whilst they bring tremendous advantages, they can generate new types of risks that can impact the labour market. Lastly, a significant effort is required to educate customers and protect the consumer. This financial market education is something that NBP dedicates a lot of effort to. All in all, she said, the crisis has shown that the challenges to the Polish economy are greater than was thought before the crisis and this is important to how Poland will change and how the Eurozone will develop. "There is a Chinese saying ‘May you live in interesting times'. I can confirm that indeed we do and the environment that we operate in is highly dynamic. We must draw lessons from the crisis. Experience shows that we tend to forget things all too quickly and we must not make that mistake again. We must learn," she concluded.

SWIFT update - Core, Compliance and Market Infrastructures

Business Forum, News, WarsawThe next session of the day focused on SWIFT, with Christian Kothe, Head of CEE, SWIFT, giving a presentation on SWIFT's achievements in the last two strategic cycles as well as an overview of the SWIFT 2020 strategy, and then being joined by Pouna for a Q&A on the relevance of the various elements of the strategy for the Polish SWIFT community. First praising Poland on what it has achieved to date, Kothe said that Poland is a great example of how you can completely change the financial landscape in a country in a relatively short space of time. Referring to Zaleska's "small is beautiful" statement, he said that the same does of course not apply to SWIFT, as it operates an economies of scale business and further price reductions are dependent on increased volumes on the network. He referred to some impressive performance data underlining SWIFT's financial and operational strength. The number of FIN messages grew by 11% last year up to more than 5.6 billion and SEPA made the number of FileAct messages triple, while the overall 50% price reduction commitment was delivered a year early. Looking at Poland, Kothe explained that over the period 2006-2014, Polish traffic on SWIFT increased by 557%, whilst prices only increased by 171%.

With the successful implementation of SWIFT's distributed architecture and the go-live of the new OPC in Switzerland, the safety and resilience of its core secure messaging network infrastructure has been further improved. Moving forward, Kothe explained, SWIFT will keep driving the business it has in place today, and focus on strong continuity through the Core. At the same time, it will take on a couple of bold and exciting moves that have the potential to transform the company in years ahead, namely in the areas of Market Infrastructures (MIs) and Compliance. The focus on the core business, is important both to Poland and to all of SWIFT's customers, and a key part of this pillar is further expanding SWIFT's reach to bring more and more players onto SWIFT. The MI part of the strategy is also critical, and is being developed against a background of changes that are happening across the financial industry. Disruptive change, he explained, usually brings innovation in response, and this is also true for SWIFT, which looks at where its customers have challenges and develops products and solutions in response to these challenges. The shift to real-time, for example, is a reality, and the work that SWIFT is doing to develop Australia's New Payments Platform (NPP) is a prime example of how SWIFT can innovate and develop something completely new, all whilst maintaining all of the safety, security and resiliency that are core to its brand. Another area where SWIFT is very active, he said, is the increasing adoption of ISO 20022. With over 100 ISO 20022 projects now underway worldwide, and many others expected to follow, "the train has left the station, and it's time for everyone to ramp up expertise and resources to understand and use ISO 20022. SWIFT has the expertise and can offer it to those who need it," said Kothe.

Business Forum, News, WarsawIn the Q&A session that followed Kothe's presentation, he went into each of the areas of the strategy  - Core, Market Infrastructures and Compliance - in further detail , giving concrete further details and examples of how the strategy translates into concrete products and services, aimed at further increasing efficiency, automation and shared services, and reducing cost for the SWIFT community.

The train has left the station, and it’s time for everyone to ramp up expertise and resources to understand and use ISO 20022. SWIFT has the expertise and can offer it to those who need it.

— Christian Kothe, SWIFT

A securities market infrastructure to be proud of

Business Forum, News, WarsawIntroducing the session dedicated to the Polish securities market, Iwona Sroka, President of Management Board, Central Securities Depository of Poland (KDPW) gave the audience an overview of the impact that regulation has had on the structure of the Polish securities market and the steps that KDPW has taken to remain competitive and stay ahead of the curve in this context.  "It feels as if we are always keeping up with regulation," said Sroka, as she explained how the group has adapted its structure and offering to offer CCP services, which the EU has ruled it will be allowed to keep under the same ownership, and launched the only transaction repository in the CEE region. "Our architecture has been developing and adjusting," she said, "and in addition to our core services, we now offer a series of value added services."

It feels as if we are always keeping up with regulation.

— Iwona Sroka, KDPW

Talking about the new trade repository, she stated proudly that in addition to being the only one in CEE, it stands alongside REGIS-TR, which is based in Luxembourg, as the only other true trade repository that is based outside of London. This is a development that has allowed the group's offering to move beyond its domestic market and the hope is that it will become the provider of choice for all players in the CEE region, a trend that is already happening as players from countries where reporting requirements are not being met, turn to KDPW_Trade Repository to use its services. Moving on to the group's current initiatives, Sroka said that they are running 30 different projects in addition to core services projects. Talking about the move to T+2 settlement, she explained that it is also good for compliance with the Central Securities Depository regulation (CSDR). On the CCP side, with only one other CCP in the region - Keler CCP of Austria (which has not yet been authorised for the clearing of derivatives) - KDPW_CCP continues to expand its offering to other instruments and is also planning to add the Euro as a currency. Work continues to standardise and automate corporate actions and run integration projects.

Business Forum, News, WarsawAfter Sroka's presentation came a panel debate in which Sroka joined Blazej Borzym, Executive Director, Head of Markets Division, PKO Bank Polski; Radoslaw Ignatowicz, Head of Group Securities Services and Financial Institutions Poland, Raiffeisen Poland; Andrzej Szadkowski, General Manager, BNP Paribas Securities Services Poland and Michael Formann, Head of SWIFT Austria, the moderator, to discuss the many developments in the Polish securities market and look ahead to the future.  Asked his opinions on the local securities market infrastructure from the point of view of a market player, Szadkowski praised the work done by KDPW and said that as a result of it, Poland is now at the forefront in adjusting to changes in the European landscape. Five years ago, he said, Poland could have been considered a developing market, but all the work done since then has brought the market much closer to being a mature market. On the topic of whether all of these changes will attract new investors to Poland, he was sceptical, as whilst all of the new developments certainly make it more interesting and increase trust in the reliability of the infrastructure, the infrastructure alone is unlikely to attract a whole new wave of investors. Ignatowicz agreed with Szadowski on the achievements of also KDPW and called these a "huge quantitative leap towards the future in many areas." He also agreed that the market is far closer to being considered a mature market than it was market and spoke positively of the opening of KDPW to remote participants.  On the attractiveness of the market to new investors, his view was that: "People don't choose a market because the infrastructure is great, they invest because they find the country attractive to invest in. What matters is that the infrastructure works and keeps investors safe."

KDPW has made a huge quantitative leap towards the future in many areas.

— Radoslaw Ignatowicz, Raiffeisen Poland

Moving on to the topic of T2S, Sroka stated that with Euro settlements in the Polish market standing at 0.00013%, it makes no real sense for Poland to join T2S until after it has joined the Euro. "When Poland joins the Euro and business conditions change, then we will see," she stated. "We are in any case in good company, because the UK and some Scandinavian countries have also opted out," she added, specifying that those countries that still have their own currencies have only joined T2S in a very limited way. Szadkowski, however, talking from the perspective of a European/global player, expressed the view that joining T2S would have attracted new customers. In response to this, Sroka stated that once the market is open enough and it actually pays to join T2S, Poland will do so and that the removal of local barriers to access the Polish market can only be a good thing since isolation, in the long run, makes no sense. Borzym echoed everything that has been said by the other panellists and laid emphasis on the value of having a local CCP. Looking at trends in the Polish securities market, he mentioned that international institutional investors are increasingly turning to Poland and appreciate the improvement in liquidity levels. As the largest retail bank, PKO Bank notices that more and more of its customers are interested in international investments. What Poland is lacking, he said in his closing comments, is an offer with moderate risk levels and decent yields.

The future of payments

Business Forum, News, WarsawIntroducing the payments topic, Michal Szymanski, Vice President, KIR, chose to talk about something that he called "controversial," namely the tectonic shift that the payments market can be expected to go through in the coming years. With people looking at what can be delivered by players outside the banking system vs. what is offered by the banks, there is an increased appetite for network services and the perception that the banks' offering to society leaves much to be desired, he said. "Customers expect mobile and global rather than local," he said, " and common services are more and more important in the portfolios of the banks, which need to revisit their offering," he went on to explain. He then offered the view that there has been a missed opportunity to explore low hanging fruits in the area of user interfaces, enabling customers to use mobile applications to exchange payment data, for example, and that all banks would need to implement the same types of innovation to catch up with this trend, which represents a massive logistical challenge for the banks, given the complexity of their IT infrastructures. Moving on to PSD II, Szymanski said that de-regulation could change the structure of the market significantly, as non-banking entities move in to fill the gaps a market that is used to and expects real-time communication. He announced that KIR will be launching a system that they think will meet the needs of customers and that doesn't currently exist within the Eurozone. What is good, he said, is that the European Retail Payments Council has now provided a clear definition of where they think the market should go, and this is not just about online and real-time payments, but also about better quality payments, that run 24/7 and offer immediate finality and confirmation. These are all things that KIR's Express Elixir system actually offers, he added, but Poland is by no means a pioneer, since there is a plethora of real-time payment initiatives across the globe, 73% of which are driven by regulation.

Customers expect mobile and global rather than local.

— Michal Symanski, KIR

Business Forum, News, WarsawFollowing his presentation, Symanski joined Jacek Iljin, Managing Director Retail Banking Sales and Processes, mBank; Adam Tochmanski, Head of Payment Systems, Narodowy Bank Polski; Pawel Widawski, Director, Payment systems and e-banking, Polish Bank Association and Thierry Chilosi, Head of Market Initiatives, EMEA, SWIFT, who moderated the session, for a panel discussion on the recent developments and the future of the Polish payments market. Tochmanski opened the discussion, stating that whilst there are a number of changes taking place in the non-cash payments market, this has no impact on the balance of non-cash vs cash payments. As a consequence, this is not so important from a central bank perspective in terms of instruments used, although it is important when one looks at it in terms of the parties involved. Widawski was of the opinion that developments will step up very soon and there is still an open question as to what the role of the banks will play, whether they will supply user experience, technology or other. "Regulation stimulates and sometimes enforces the development of new products," he said, explaining that the after the changes already introduced by the PSD and the emergence of non-bank players in the payments market, PSD II will bring a further revolution. Iljin said that the role of the bank will be in the future will no longer be that of a provider of cash, but rather of a participant in the relationships between customers. "It's up to us to offer more than the competition," he said. "Real-time payments will become the standard. The customer expectation is bearing upon us like gravity. It's just a matter of time." In his view the main challenge lies in the still complex and fragmented regulatory environment, which makes it very difficult to come up with solutions at a supra-national level.

Real-time payments will become the standard. The customer expectation is bearing upon us like gravity. It’s just a matter of time.

— Jacek Iljin, mBank

Moving back to the market infrastructures (MIs), Symanski stated that in his view the role of the market infrastructures is to support the banks to develop common functionality that will be crucial to the competitiveness of the sector. MIs should therefore be proactive in helping banks to deliver solutions that will maintain the banking sector's competitiveness vs. non-banking entities trying to enter the market and gain market share. Talking from the perspective of a central bank, Tochmanski explained that the central bank's regulatory role is restricted to the banks but that its systemic oversight role goes beyond the banks and as a result, the NBP has a say in the development of the payment systems as everyone operating in the market needs to have the approval of the president of the central bank. Based on security and operational efficiency criteria, NBP can influence adjustments and might not agree to changes that increase risk, he explained. In its oversight and operational function, the role of the central bank is to adjust the rules in such a way that it follows the demands of the market while maintaining safety and stability, he concluded.

The next and last topic up for discussion was PSD II, which Widawski named as the one piece of regulation that is likely to have the most significant impact, and more precisely therein, the notion of third party account access. Whilst many questions remain to be answered on this matter, it is already clear that the banks didn't get what they wanted and there will be no contract required between a bank and the third party accessing its customer accounts. This, he said, will pose a number of risks to the banks, and whilst the banks themselves can also act as third parties, it is clear that they will need to reshape their business strategies to adjust to what is coming into force and decide whether to adopt more of a dynamic offensive strategy or a passive sit and wait one. For now though, it remains unclear what the ultimate shape of services will be, and the technical requirements are still missing. More consultation is needed and there is no clarity as yet on what sort of business model will be at the base of the payment account access. Iljin said that his bank assumes a worst case scenario, i.e. that access to information and transactions will be universal and that there will be no barriers. Competition from new players will only be feasible and threatening though, if significant customer needs are not catered for by the banks. Coming from an institution that has a history of major investments in technology, he was relatively confident that the banks can and will be able to compete successfully in the future. One of the reasons for this, in his view, is that the likes of Google and Facebook do not count payments amongst their core businesses, so whilst they may start offering payments services, he was optimistic about their willingness to cooperate with the banks in this area.

Spotlight on compliance

Business Forum, News, WarsawThe compliance session was kicked off with a presentation by Joanna Grynfelder, Head of Compliance, Bank Alior, who explained her bank's approach to sanctions. Having given a brief introduction to Bank Alior, which is a recently created bank that began operating in November 2008 and combines traditional banking rules with innovative solutions and products. Grynfelder gave a comprehensive overview of the regulatory framework for Polish banks of the lessons learned by Bank Alior following a failure to comply with AML regulations related to registration of transactions in 2009-2010. The bank has since improved AML procedures, completed a corrective action plan and received confirmation that the bank is in now in full compliance with AML requirements and regulations and has become one of the leaders in the field. Next, she explained the bank's KYC process and the solid system required for the identification of suspicious transactions. Explaining the organisational structure required to support KYC requirements, he said that amongst the "must haves" are: a sophisticated fraud/sanctions detection system working online, well trained staff, experienced AML analysts, internal regulations and a clear approach to risk. It is also essential that support for the system comes from the top, and that the AML team have access to the board of directors. Lastly, Grynfelder spoke about the law regarding the imposition of OFAC sanctions in Europe and the hefty fines that some banks have had to pay for violating OFAC regulations. She closed with a case study exemplifying Alior Bank's strict application of the regulations, whereby since April 2015 the bank's AML & sanction policy does not allow the processing of any transactions for entities form the OFAC list.

Business Forum, News, WarsawFollowing Grynfelder's presentation, came a presentation by Julien Laurent, KYC/AML Expert, SWIFT who talked about SWIFT's activities in the Compliance space and its resolution to get involved and help the market out in an area that is clearly a significant pain point. "With financial crime at the top of the agenda for banks, all geographies and all types of players impacted, significant costs at stake, no competitive advantage for banks and lots of duplication in an area that is a universal challenge, such a community issue calls for a community solution," he said. Having started with the launch of SWIFT's Sanctions Screening product back in 2012, SWIFT's Compliance portfolio has now been added to with a series of other products and services, namely Sanctions Testing, RMA (traffic restriction), Compliance Analytics and most recently, The KYC Registry. Following its launch in 2014, with a first baseline of information agreed on with a group of 12 major banks, growth on the KYC Registry has been impressive, with 420 entities in 114 countries having joined the registry by 18 May 2015. Amongst these, are 5 banks in Poland, of which Raiffeisen Bank, Deutsche Bank and Bank Pekao can be mentioned, he reported, with Bank Pekao having now entered all data into the registry and uploaded all supporting documents. Lastly, Laurent ran through the pricing principles for The KYC Registry and explained that in addition to being free in 2015 for organisations that agree to actively promote the Registry to their network of correspondents, the contribution of one's own data is always free and prices as from 2016 are far below those of other solutions, given that there is a cap on the maximum amount invoiced which is based on the size of an institution on the SWIFT network. "With an estimated 81% of our members in the €3,000 cap range, this is a true community service," concluded Laurent.

Drawing things to a close

To wrap up the day, Kothe ran through some of the highlights of the day's discussions, stating that Poland has a strong financial industry that is small and beautiful and has a highly competitive and dynamic set up, with no legacy to drag into the future with it. The developments of the last ten years in the securities market infrastructure area will serve the industry very well, as will Poland's ambition to attract more international investors. As a result, Poland is on a good track and clearly offering a mature infrastructure and services that are at the top of its league in CEE. On the payments front, he said, there is still not a clear enough view on the potential implications of PSD II, but the audience agreed that the payments industry will see tectonic shifts in the years to come. The industry is definitely up for a change, he explained, but not all disruption of an industry creates a complete change and massive fallout. "The train has left the station, and we are seeing the rise of new technology that will change our industry over time. But banks will only suffer from this if customers are unhappy," he stated. With that said, he thanked the audience and speakers for their participation and cooperation, and looking forward to the next business forum in 2017, closed the event.

Related Links