Your global platform for person-to-person payments, now mobile enabled

Workers’ Remittances

Michael Whyte, Senior Market Manager 22 October 2010

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Agenda

•  The importance of remittances •  Challenges in service delivery •  SWIFT Workers’ Remittances

Workers' Remittances

Remittances is big business

Total transactions 1 to 1.5 billion Formal / Informal TX 85 / 15 % Industry revenue USD 15 billion Bank share 20 to 30%

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Transactions received

Transactions sent

USA 140 mn

Mid-East 49 mn

EU (11 countries)

92 mn

Canada 22 mn

Australia 16 mn

Mexico 45 mn

India 27 mn

Morocco 10mn

LATAM 30 mn

Philippines 34 mn

Pakistan 10 mn

China 47 mn

Workers' Remittances

Strategic importance of remittances for banks

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More revenue More customers More sales

Transaction fee and forex

income

Customer acquisition

and retention Cross-selling opportunities

Workers' Remittances

Challenges in service delivery

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1.  Proprietary network

3.  Bilateral agreements

Total control over product, but costly to deploy in many countries

4.  Franchisee of money transfer operator

Ready made product, but bound to operator’s offering and conditions

Specific offering, but costly to scale and maintain across multiple corridors

SWIFT’s Workers’ Remittances service solves these issues

2.  Correspondent banking Widely used, but not tailored to provide consumer price and time transparency

Workers' Remittances

SWIFT Workers’ Remittances

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Business framework Technical framework

Contract template

for service conditions

Rulebook with market

practice

Directory with participant reference data

XML standards for instructions, status and return

FileAct messaging

service

Workers' Remittances

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Market Practice Rulebook

-  Participants -  Participants’ Agents

-  Service levels (instant, urgent, non-urgent) -  Two product groups (account, cash, v-wallet disbursement) -  Transaction ID specification (sender defined)

-  OUR (DEBT) charging default -  FX guidelines -  Reject/returns charging practices

-  Definition of sorting, transmission etc. -  Transmission timing relative to service level

-  Gross bilateral settlement -  Serial method recommended, but guidelines for Cover incl. -  No restrictions on provider or currency choice

Participation

Products

Charging practice

Clearing

Settlement

Workers’ Remittances service architecture

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Rules and guidelines

FileAct store & forward ISO 20022

Sender Beneficiary Agents

Distribution network

Sending country

Distribution network

Receiving country

Participants Participants Agents

End-to-end service conditions

Workers' Remittances

Settlement Agent

cover payment

Reference data

…. Now mobile enabled!

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SMS or phone call “I paid $100. You can pick it up at XYZ

bank. Give 123 as reference”

•  Mobile instruction •  Mobile access to online banking

application

•  SMS notification •  Cash pick-up •  Credit bank account •  Store on mobile wallet

ISO20022 payment via Workers Remittance

Mobile phone numbers as account identifier or beneficiary identity verification

to authorize cash pay-out

Mobile notification and pay-out

Payment instruction (mobile or other channel)

SWIFT’s value proposition for mobile remittances

Service is mobile enabled

Driving industry standards

Support mobile instructed payment, mobile notifications and pay-out Mobile phone number can be used as account identifier or beneficiary identity verification to authorize cash pay-out.

Connecting mobile eco-systems

Enable Banks’ mobile payment/mobile banking service for WR Enable regulated Mobile Payments Service providers for WR

Promoting ISO 20022 for mobile payments. Active member of Mobey forum as Vice-chairman of the remote mobile payment workgroup.

Workers' Remittances 10

47 Participants and 18 Certified Banks (Oct-2010)

Workers' Remittances 11

Europe, Middle East and Africa (19)

Americas (19) Asia Pacific (9)

Certified live capability

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Benefits of SWIFT Workers’ Remittances

Compelling consumer experience

Commercially neutral

Easy to integrate

Easy to scale-up

•  Product directory allows to give clear, up-front transparency on cost and execution time

•  Supports any product: account-to-account, account-to-cash, mobile notification & payments, …

•  No conditions on branding •  No commercial exclusivity

•  Uses ISO standards instead of proprietary formats •  Integrates with existing payments applications •  Re-uses existing clearing mechanisms

•  Contract template •  Service capability directory

Workers' Remittances

Case study: La Caixa

About La Caixa •  Third bank in Spain, first in retail •  11 million customers •  5,200 branches, 8,000 ATMs

Workers’ Remittances business •  6 years of experience •  10% of customers are immigrant •  3 main corridors: Latin-American,

Morocco, Eastern Europe •  1.5 million remittances in 2008

Current situation •  14 countries, 25 partner banks •  3 channels: Internet, MT 103 and FileAct. •  12 solutions (formats, status info, returns…) •  Each agreement: min. 6 months

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Benefits SWIFT Workers’ Remittances •  Standardised definitions •  Technical framework similar to SEPA

(ISO 20022 XML pacs) •  Centralised information database: all

we need to know about counterparties •  Complemented with Alliance Integrator

Using SWIFT’s service

Each new agreement -> 80% lower cost

Time to set-up new counterpart -> reduced from 6 to 2 months

Workers' Remittances

Case study: RUSSLAVBANK

About RUSSLAVBANK •  Full service commercial bank •  More than 500 Russian and foreign

correspondent banks •  Acts as clearing bank for CONTACT

System of International Money Transfers and Payments

Current Challenges •  Expand services to new markets

without increasing infrastructure costs

•  Standard messaging formats that can easily be used for its remittances business and reduce manual intervention

•  Solution that can be enhanced quickly as business evolves

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Benefits of SWIFT Workers’ Remittances •  Fast time to market and stronger reach

thanks to interoperability of the service and scalability

•  Expanded commercial opportunities to new product and service evolutions due to internationally recognized messaging standard (ISO 20022 XML)

•  Reduced total cost of ownership by maintaining same infrastructure and having an increased automation of remittances workflows

•  Faster return on investment by speeding bilateral contract negotiation with no additional internal platform investments

Workers' Remittances

Service Implementation

E-banking Call-desk Teller Customer ATM Mobile

Front office services

Back office services

Network services

Workers’ Remittances

FileAct

Messages ISO 20022

Workflow Market practices

Transaction initiation

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Linked to your multiple front-end

channels

Integrated within your IT and applications

infrastructure

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Getting started

•  See Workers’ Remittances customer list

•  Agree product offering - use contract template

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•  Remittance application

•  Generate ISO 20022 XML file

•  Send/receive FileAct

•  Integrate with SWIFTNet

•  Define product conditions including eg FX

•  Link front-office apps to payment apps

•  Train staff

•  Test with counterpart(s)

•  Go live

•  Find right contacts

•  Facilitate meetings

•  Testing / Certification •  Integration project

mgmt & middleware •  SWIFTReady providers

on swift.com •  Training

•  Application integration

•  Project planning •  On-boarding and

service roll-out

Workers' Remittances

SWIFT can support you

Contact partner banks

Implement application

Integrate in front-office

Test and roll-out

Join SWIFT

•  Financial Institutions join SWIFT as SUPE member and get connected to SWIFTNet for FileAct

•  Help in application process

•  Find right connectivity pack for FileAct

About your project

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Current products & volumes Product offering:

# remittances/year:

Bank partners:

Main corridors (countries, partners, channels): 1: ………………………………………………. 2: ………………………………………………. 3: ……………………………………………….

Application vendors ………………………...……………………… ………………………...……………………… ………………………...………………………

Challenges   Reach target retail groups   Product features: cost, options, …   Find new business partners   Cost to set up new arrangements   ……………….……………………………….

Future business Target corridors (countries, partners)

1.  ……………………………………………… 2.  ……………………………………………… 3.  ………………………………………………

New product features 1.  ……………………………………………... 2.  ……………………………………………... 3.  ………………………………………………

Workers' Remittances

More information?

•  Your SWIFT contact – Americas: Jairo.namur@swift.com – EMEA: Thierry.chilosi@swift.com – Asia/Pacific: Alex.lee@swift.com – Generic e-mail: workers.remittances@swift.com

•  swift.com

•  www.swiftcommunity.net/SWIFTremit

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