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Wrap-up report

Delegates from the Ukrainian financial community gathered at the Fairmont hotel on Tuesday 9 October for the second SWIFT Business Forum Kyiv.

The event was organised jointly with UkrSWIFT, the SWIFT national member and user group for Ukraine. The theme of the event was “Ukraine on the path to global integration – progress and challenges”, and sessions throughout the day focused on the key trends affecting the financial industry as a whole and the impact that they have on financial services in Ukraine.

Ilona Pouna, Regional Manager, Central and Eastern Europe at SWIFT opened the event, noting during her welcome remarks that Ukraine is growing its position very positively in the global financial community.

Pouna went on to say “it is important that SWIFT continues to support the Ukraine financial community with innovative new services such as gpi.” Innovation is important in Ukraine, and banks and FinTechs support each other to improve service levels for customers and provide the conditions for future economic growth.

SWIFT2020 update

Following Pouna’s introduction, SWIFT Board member, Soren Haugaard, provided an update on the SWIFT2020 strategy, which is now past the mid-cycle point. “SWIFT’s strategy is a living thing” he said, “and services introduced in response to market needs - such as gpi and the Customer Security Programme - clearly show how much flexibility there is in the Board’s and Executive Committee’s governance”.

Haugaard went on to report that the Board had reviewed the strategy in March this year and mandated SWIFT management to accelerate the strategy in key areas, particularly gpi and APIs, to allow SWIFT to continue to respond rapidly to the changing market and competitive environment.

The Board had also asked SWIFT management to step up the game in three areas:

  • The migration of cross-border payments to ISO 20022;
  • The application of data analytics to provide business insights, which are crucial for SWIFT members;
  • The continued evolution of the CSP to address the evolving threat.

At the same time, SWIFT was asked to continue its successful strategies in securities, instant payments, and financial crime compliance.

Financial infrastructure in Ukraine

Yuri Vlasenko, Executive Director of UkrSWIFT highlighted the strength of the local community in working together on a programme to modernise the financial landscape in Ukraine by getting rid of paper-based processes, implementing international standards such as ISO 20022, the IBAN, and the LEI. “The Ukraine community has always worked together to develop solutions that can be used by many in the future,” said Vlasenko.

Sergiy Kholod, Vice Governor, National Bank of Ukraine and Timur Khromaev, Chairman, National Securities and Stock Market Commission then spoke in their respective keynotes about the efforts being made to develop infrastructure of Ukraine to align with the EU. “The payments ecosystem is on the verge of radical change with FinTechs changing the role of banks,” said Kholod, continuing that “banks will have to focus on a part of the end-to-end service where they can be most effective”.

He also noted that ISO 20022 made sense as a canonical standard given its unique position unifying business models and allowing for multiple syntaxes, from XML for messages to JSON for API calls.

Khromaev noted that it is important for the financial community to build trust with the public, saying “it is important that the people of Ukraine understand that the improvements to the financial infrastructure are for their benefit, as well as that of Ukraine’s economy and internal development”.

The panel on Ukraine’s financial market infrastructure was comprised of Fady Alrayyes, Associate, Local Currency and Capital Markets Development (LC2), EBRD; Mindaugas Bakas, CEO, National Depository of Ukraine; Oleksandr Jablunivskyy, Head of Payment Systems, NBU; Andrii Suprun, Head of Depository of Goverment Securities, NBU; Bogdana Yefremova, Head of GSS Ukraine, Raiffeisen Bank Aval; and was moderated by Matthieu de Heering, Head of Central and Eastern Europe, SWIFT.

The panel discussed several key topics including standards, cyber security and regulation. On standards, the panel agreed that the market was moving rapidly from local proprietary standards to embrace common international standards – in particular ISO 20022 with the NBU announcing its intention to start an ISO 20022 migration project with SWIFT’s Standards advisory services - skipping some intermediate steps taken by their peers in other European countries.

On cyber security, efficient cyber protection and community efforts to implement best practice were recognised as essential in countering cyber threats, as well as the need to act quickly when threats arise; also, the CSP framework was confirmed to be largely applicable to non-SWIFT carried messaging, for instance, in Ukraine, to smaller securities market participants interacting with the CSD.

The panel moderator, de Heering, confirmed that a number of Market Infrastructures across the globe had mentioned this to SWIFT. These reforms, together with regulatory alignment with other European countries, are understood to be necessary to foster inward investment in the Ukrainian economy and promote economic growth.

Cyber preparedness

Brett Lancaster, Global Head of Customer Security, CISO Office, SWIFT, delivered strong messages on the cyber threat, saying it is here to stay and the risks are increasing. In fact the World Economic Forum places cyber as the third top global risk in 2018, with only extreme weather and natural disasters as higher. Cyber criminals are clever, patient persistent, coordinated and highly motivated,” said Lancaster, going on to add that “targeting is specific, and attackers spend a long time doing their reconnaissance, which helps them to hone their attack for maximum impact. “People are both the weakest link in an organisation,” he said, as they click links which can turn out to be malicious, but they can also be the strongest link as they can often tell when something is not right.

He stressed the importance of implementing SWIFT’s Customer Security Programme, and complying with the mandatory security controls by the end of 2018. Those who do not comply, he warned, are exposed to attack – not to mention to a raised eyebrow from the NBU as banking supervisor. The 2019 controls have been released so customers can see, plan and budget well in advance.

Finally, SWIFT’s Payments Control Service, as a last line of anti-fraud defence, filtering MT messages in-network in case a client’s IT infrastructure is compromised, was demonstrated and generated a lot of interest, again aligning with our experience across the world. 

Business Forum Kyiv 2018 - Audience
Business Forum Kyiv 2018

European payments landscape

Isabelle Olivier, Head of Securities Initiatives & Payment MIs, EMEA, SWIFT, gave an overview of trends in the European payments landscape.

The technology environment is also changing with the introduction of new technologies such as APIs, DLT and AI/machine learning, and banks’ technology teams are also required to address escalating cyber threats. Taken together these factors drive demand for platform renewal. Banks need to look at what they want to offer, how, and to whom, and with whom they should partner to offer new services.

SWIFT initiatives and services such as gpi, and AMH as a multinetwork messaging and integration hub, and the ISO 20022 migration help banks achieve these business goals. SWIFT is also supporting the move to instant payments with new connectivity options, namely SWIFTNet Instant and AGI, to instant payment operators.

Customer expectations are high as they require payments to be easy, seamless, available 24/7, transparent, predictable and cheap. Regulatory activity has reduced risk in the years following the financial crisis, and new regulation, such as PSD2, has encouraged innovation, which has attracted non-traditional providers to enter the payments market.

Isabelle Olivier, Head of Securities Initiatives & Payment MIs, EMEA, SWIFT

gpi continues to gain ground

In a panel session on gpi, Marianna Janssen, SWIFT gpi expert EMEA, SWIFT, said there has been significant adoption of gpi worldwide, and banks joining regularly – 80 banks are now live and a further 280 have committed to implementing gpi. “gpi is already delivering benefits to banks in Ukraine,” said Janssen,  “and there is more to come as SWIFT rolls out new services on the platform that are designed to make it easier to stop payments, manage payments exceptions, and ultimately prevent invalid payments from being instructed in the first place.”

Olena Biloshitska, Deputy Head of Back Office, Oshadbank and Oleksandr Kashkin, Deputy Head of International Settlement, Privatbank provided customer viewpoints. Oshadbank had recently gone live on gpi and was the first bank in Ukraine to do so. “Going live with gpi said was an important aspect of delivering up-to-date service to customers,” said Biloshitska. Privatbank is looking at the practical aspects of implementing gpi. “There is a lot of interest from Privatbank’s customers for the increased transparency and speed of cross border payments,” said Kashkin.

ISO 20022 migration

Andrew Muir, Head of Standards Development Team, SWIFT, updated the audience on the migration of cross border payments and cash messaging to ISO 20022. “This is a highly ambitious project for SWIFT,” he said.

Muir went on to say that SWIFT will also provide an ISO 20022 capability for cross-border securities flows for institutions to use on an opt-in basis, but does not currently propose to set an end date for the use of ISO 15022 (MT category 5 messages), following feedback from the global community in response to the consultation seeking feedback on all aspects of the ISO 20022 migration. The consultation also indicated little appetite to stop using MT messages at this time in treasury/FX and trade finance, and there are no plans, therefore, to migrate to ISO 20022 in these business areas.

The start date is currently scheduled for November 2021 and is aligned with the adoption plans of High Value Payments Systems in the Eurozone. The end-date of the migration is 2025, and in between there will be a period of coexistence, enabling interoperability for the community.

Andrew Muir, Head of Standards Development Team, SWIFT

API technology

Deniss Kascejevs, API Product Manager at SWIFT spoke on API technology, which is increasingly being used to enable financial industry automation. APIs allow financial institutions to expose services directly to one another and this will present the industry with opportunities to improve efficiency, share infrastructure and improve the customer experience. “The SWIFT gpi tracker is one example of an API that will improve payments transparency and efficiency for end customers,” said Kascejevs.

A first view of the SWIFT API platform will be available at the end of 2018 and members of the community are already engaging with SWIFT to understand the applicability of this important technology.

SWIFT’s API strategy aims to allow the SWIFT community to take full advantage of this technology with the traditional SWIFT values of resilience, security, standardisation, and strong identity management.

Deniss Kascejevs, API Product Manager, SWIFT

Closing remarks

In closing the event, Matthieu de Heering, Head of Central and Eastern Europe, SWIFT praised the energy of the sessions, noting “the clear commitment of the Ukraine financial community to collaborate for the benefit of the country’s economy and to align with international standards.” Matthieu de Heering thanked everybody for their participation and contribution and looked forward to the next business forum to be held in Kyiv.

View the event pictures