6 September 1982 the first live SWIFT messages were exchanged within South Africa
It was 35 years ago on 6 September 1982 that the first live SWIFT messages were exchanged within South Africa. The process to “kill the telex” had started more than a year earlier in 1981, and the cut over processes in those days took considerable time. There were 10 local banks involved on that historic day, some of which still operate in the country today.
The first connectivity was via the SWIFT ACCESS POINT (SAP), which was hosted in Johannesburg by the local automated clearing house. Only MT100, MT202 and MT199 messages could be exchanged, and a critical minimum traffic volume had to be reached to justify opening the SAP for South Africa. MT300 messages followed some time later, to confirm the Forex leg of transactions.
A major achievement occurred in March 1986 when what could be regarded as the very first High Value Market Infrastructure settlement system using a closed user group was introduced. This innovation was called ZAPS (South African Payments System) and was described at the time as “a service that provided an electronic push service to the participating institutions in delivering interbank gross settlement obligations”. In essence, it can be argued that this was the world’s first RTGS system – not bad for a country at the tip of Africa, far from the financial centres of the world at the time.
This was followed closely by the South African Netting System (ZANS) implementation which was used for US Dollar netting.
In 1994, the first Regional Conference in Africa was held, and it has since grown from strength to strength, testimony that SWIFT is alive and well in Africa. South Africa played a major role in driving this initiative with the main objective being to increase SWIFT usage across the African continent.
One of the SWIFT South African community’s many major achievements over the years was to collaborate with the South African Reserve Bank to use SWIFT as its means of communication for the SAMOS system when it went live in 1998. SAMOS (or the South African Multiple Option Settlement system) brought domestic interbank settlement processes in line with international best practice, and signaled the start of a new era for payment settlements in South Africa. Whilst SAMOS is in the early throes of being replaced, SWIFT will remain the communication protocol, although there will be a migration to the ISO 20022 messaging standard.
Also on the subject of standards, South Africa was the first country in the world to use ISO 20022 standards in the local payments environment with the Corporate connectivity project back in 2007 for both credit transfers and direct debits – SEPA only went live with credit transfers in 2008 and direct debits in 2009.
Another first was when Strate became the first Securities Market Infrastructure to use ISO 15022 back in 1999, using SWIFT as the messaging layer, of course.
South Africa’s efforts to include corporates in local SWIFT structures go back to the early 2000s. The first large corporate was admitted to the User Group in mid-2002 as a Treasury Counterparty, and the involvement of corporates has evolved to them being elected full members of the User Group. In 2005, the major banks and the first major corporate collaborated to define rules for some corporate-specific messages in ISO 20022 format for corporates.
South Africa was instrumental in ensuring that SWIFT was automatically chosen as the communications protocol for SIRESS, the SADC Interbank Regional Electronic Settlement System, which was launched in July 2013 and hosted by the South African Reserve Bank. The system now has 83 participating banks from 14 countries exchanging over 27,000 messages every month.
South Africa has also been significantly involved in the establishment of a set of ISO 20022 market practice guidelines for high value payments systems through its participation in SWIFT’s HVPS+ task force. The task force aims to establish a common foundation on which major Financial Market Infrastructures can build their community implementations, whilst supporting global interoperability.
South African banks also contributed significantly, as pilot participants, to the format and structure of SWIFT’s new e-learning platform SWIFTSmart.
A few of the country’s banks were also early members of the Initiative Group of SWIFT’s Global Payment Innovation (gpi), which is clearly set to become the “new norm” in cross-border payments. Four South African banks are members of the Validation Group involved in the Proof of Concept investigating potential applicability of DLT in the Nostro Reconciliations space.
A significant (and global) first for South Africa this year has been the establishment and implementation of a community deal whereby MyStandards and MyStandards Readiness Portal will be provided through the Payments Association of South Africa (PASA) for the publication of message standards for four South African payments and securities market infrastructures.
It is clear that the creative and persistent spirit of the country’s member group has over the years led to the early adoption of many SWIFT products and services, allowing the country to enjoy many “firsts”.
Bernard Carless, the Chairperson of the South African National Member Group, acknowledges SWIFT’s role in South Africa’s achievements throughout the 35 years. “Whilst the South African community has contributed significantly to the development of SWIFT locally, within the region, on the continent, and globally over the past 35 years, it could not have done this on its own and I would like to thank SWIFT for its years of support and investment in South Africa and the region. The excellent service provided by the local SWIFT South Africa team is also greatly appreciated.”
Denis Kruger, Head of Sub-Sahara Africa, SWIFT, adds: “The close relationship between SWIFT and the SWIFT Users of South Africa is a shining example of collaboration at its best. By working together we are able to ensure that our strategy, products and services support the South African financial community as it continues to move from strength to strength. We are excited about our future work together and will continue to support South Africa as an innovative force both within the African continent and beyond.”