The future of cross-border transactions took centre stage on the Swift programme at Sibos 2022. Here are our top 10 takeaways.
Coming back together in person for the first time in three years, the atmosphere at Sibos 2022 was electric. Over 10,000 delegates attended the event, joining a wide range of Swift sessions spanning payments, securities, innovation, compliance, standards and much more.
If you missed anything on the Swift programme, don’t worry. We’ve put together our top 10 takeaways to help you catch up.
1. CBDCs & tokenised assets: Interoperability is essential
Throughout Sibos, central bank digital currencies (CBDCs) and tokenised assets were hot topics. Multiple Swift sessions focused on the results of our recent breakthrough experiments that showed how CBDCs and tokenised assets could be used internationally, and the role Swift can play to enable interoperability between distributed ledger and fiat networks.
What role digital currencies will play in the future is still yet to be seen, but as the various panels pointed out, we need to start preparing now. And interoperability sits at the heart of this – linking up the new with the existing will be key to their growth going forward.
“We are in the early stages of CBDC design, and to talk about interoperability now is the right thing to do so that eventually we get to seamless, frictionless transactions,” said Sudhir Pai, Chief Technology & Innovation Officer, Capgemini.
2. Low-value international payments are booming
Discussions around the rapid growth of international retail and SME payments generated many interesting discussions at Sibos, with panels unpacking what banks need to do to take advantage of this booming market.
From more transaction transparency and predictability, to creating a sleeker user experience, discussions highlighted a number of steps banks can take to remain competitive in this crowded market, including adopting Swift Go.
“There’s a huge opportunity in this space. This is a very large market and it’s growing double digit,” said Gayathri Vasudev, Head of Global Clearing Product, J.P. Morgan.
3. Friction removing services are available today
Sending money around the world should be simple. And with services like Swift GPI and others, we’re making this a reality. Together with the financial community, we’ve developed new solutions ready to be used today that eliminate remaining sources of friction in the payments process.
Many of these were on display at Sibos, including solutions like Payment Pre-validation, which spots payments errors before they occur, Case Management, which streamlines exceptions and investigations, and Payment Controls, for fast and efficient fraud detection. By adopting these services today, banks can deliver the experience that end-customers expect and stive for a frictionless financial future.
Speaking about Pre-validation, Joanne Fraser, Head of TB Cash Product Europe at Standard Chartered said: “This tool is really helpful in driving predictability. It’s a great example where, by understanding what’s happening, we can avoid rejections and ultimately drive that frictionless experience.”
4. Transparency is key to removing settlement fails
Securities settlement fails create both added costs and operational risks for trading counterparties. And these challenges are only intensifying under CSDR’s Settlement Discipline Regime and the decision by certain markets to adopt T+1. Increased transparency on securities transactions is essential if the industry is to reduce settlement fails moving forward.
At Swift, we’re working closely with the industry to tackle this. First through industry adoption of a unique transaction identifier (UTI) for securities transactions, and also with our new Swift Securities View service that leverages the UTI to provide end-to-end transaction tracking.
Referring to industry adoption of the UTI, Paul Baybutt, Global Product Head – Middle Office at HSBC said: “It gives us much more traceability and more information about where the trade is failing. And that will enable us to speed up the settlement.”
5. ISO 20022 will lead to significant benefits
High quality payments data is becoming a reality with ISO 20022 . And many discussions at Sibos focused on how financial institutions can reap the benefits of its rich, structured data.
Isabel Schmidt, Co-Head of Payment Products at BNY Mellon, outlined three main benefits of ISO 20022: operational efficiency, improving risk processes, and enhancing customer experience. On risk reduction, she said: “We anticipate a significant reduction in false positives. The breadth of identifiers that can be embedded in the payments allow us to really improve the quality of the risk checks that we do. That means, for one, that you eliminate the noise, which means eliminating costs. And you can then spend a lot more energy on the risks you really want to identify.”
6. Collaboration is needed to remove trade friction
Trade is an essential driver of global economic development, facilitating access to goods and services for corporates, SMEs and consumers all over the world. It accounts for more than half of cross-border payments, which is why removing friction is essential to ensuring supply chains are resilient and markets continue to grow.
Today, paper documents are still used in the global trade process. And at Sibos, we heard thoughts on how tackling friction and reducing fraud could be achieved through digitisation and collaboration. As Ben Arber, Managing Director, US and Canada at MonetaGo said, “We believe, globally, there’s the ability to actually identify some of these fraudulent flows through collaborating broadly.”
7. Market infrastructure interlinking enables instant and frictionless payments
Market infrastructures have a key role to play in enabling instant and frictionless end-to-end payments between bank accounts in their own communities. But what do you get when you interlink them? A much wider reach and a better payments experience across borders.
At Sibos, we looked at how we’re working with market infrastructures to combine Swift’s global presence with their domestic reach. “When you focus on interconnecting those systems,” said Erwin Kulk, Head of Service Development and Management, EBA Group, “you get something that’s unique – with 24/7 payment certainty and rich data.”
8. The Swift platform is the foundation for future innovation
With Swift’s enhanced platform , our community is poised to take the next steps towards instant and frictionless transactions. Moving from individual messaging to end-to-end transaction management, our platform will bring together common data, services and standards.
At Sibos, panelists explained the benefits of transaction management, including supporting the payment industry’s migration to ISO 20022, improving efficiency, reducing total costs, bringing new business value, and opening avenues for future innovation.
Discussing the opportunities presented by the Swift platform managing transactions with data that is centrally available, Christian Fraedrich, Head of Business Architecture at Deutsche Bank, said: “Pre-validation, anomaly detection and case management – those are all very good examples that bring us close to frictionless payment execution.”
9. Accurate and transparent data is needed on ESG
Environmental, Social Governance (ESG) topics were high on the agenda at Sibos 2022. And more and more, ESG is top of mind for investors too. However, meeting investors’ needs for ESG information can be a challenge, because data often comes from multiple sources and today there is no global standard for ESG information.
As Anthony Harper, Head of Sustainable Finance, ETFs and Asset Managers at Euroclear said: “There are 24 taxonomies in place. That number is not going to go down. It’s going to go up. The challenge for us as an industry is to figure out how you map these things as they develop.”
10. Fighting financial crime means working together
Payments are rapidly moving to an instant and frictionless experience, but how can we fight financial crime and make compliance processes fit for purpose in an instant and frictionless world? The answer lies in collaboration.
Jocelyn Tait Norval, Global Head of TM and Screening at ING, outlined the value of a collaborative approach when fighting fraud: “A really key theme I’ve seen running throughout Sibos is how we can work better together to tackle financial crime. We know that criminals work globally, and work across all the banks, so the only way we can really tackle this is to be collaborative.”