Recent trends in Russia & CIS – a SWIFT perspective
Matthieu de HeeringHead of Russia, CIS and Mongolia - SWIFT
Rouble Trends 2016 event – Moscow – 10-Nov-2016
Digital disruption in payments
33Digital disruption in payments – October 2016Digital disruption in payments – October 2016
Disruption is creeping up from C2C to SME and B2B, where most of the banks’ transaction revenues are
Source: McKinsey Global Payments Map; Project team
1 Revenues include transaction fees, FX fees, exclude revenues not directly linked to individual transactions (account maintenance fees, interest income) and FI to FI flows2 Currently in the B2B/B2C/SME space but actively pushing towards entering into the B2B corporate space (e.g., Western Union Global Pay app)
44Digital disruption in payments – October 2016
Distributed ledger technologies (DLT) can present some opportunities
Distributed database
Information propagation
Beyond payments, e.g. trade
financeTraceability
55Digital disruption in payments – October 2016
Digital disruption in payments – October 2016 6
DLTs – conclusions of the technology assessment
• Distributed ledger technologies (DLT) can present some opportunities
• Existing DLTs are currently not mature enough to fulfil the requirements identified
• There are promising developments in each of these requirements
• Significant extra R&D work is needed in all these domains before DLTs can be applied at the scale required by the financial industry
Distributed database
Information propagation
Beyond payments, e.g. trade
financeTraceability
7
Need for change, also rejuvenate business model
Technology Business
Digital disruption in payments – October 2016
The correspondent banking model is under pressure
Customers and regulators push for better payments service
Banks rationalize their correspondent banking networks
Digital innovators offer new disruptive solutions
End customers increasingly demanding
Domestic payments going real-time
Regulatory intensity and increasing costs
Network rationalization
Enhanced value proposition
Disintermediation
Digital disruption in payments – October 2016 8
Objective: deliver a better customer payment experience
“Before”Traditional correspondent banking
“After”The SWIFT global payments innovation (gpi) initiative
1. Slow, can take multiple days
2. Expensive, multiple deducts
3. Secure and compliant
4. No transparency on cost and time
5. Convenient and ubiquitous
6. Open and inclusive (global reach)
1. Fast(er) (start with “same day”)
2. Higher efficiency & less intermediaries
3. Secure and compliant
4. Transparent, with payments tracking
5. Convenient and ubiquitous
6. Open and inclusive (global reach)
The objective is to first fix these key pain points
Note regarding prices: it will be at the discretion of each SWIFT gpimember to decide the pricing strategy vis-à-vis its customers, including other financial institutions
Digital disruption in payments – October 2016 9
Still reachnon-initiativebanks
Accessibleby any bank
Reachingany bank
Tracker
Directory Observer
SWIFT gpi concept
SLA rulebook
Core transaction banks
Value-added product suite
Messaging technologies
Digital disruption in payments – October 2016 10
SWIFT gpi initiative banks
Regional representation ofSWIFT gpi banks
50% Europe, Middle East,Africa
30% Asia Pacific
20%Americas
63. Nordea Bank* 64. Oversea-Chinese Banking Corporation65. PKO Bank Polski66. Promsvyazbank67. Rabobank68. Raiffeisen Bank International69. Resona Bank70. Royal Bank of Canada*71. Royal Bank of Scotland72. Sberbank73. Siam Commercial Bank74. Silicon Valley Bank75. Skandinaviska Enskilda Banken76. Société Générale77. SpareBank 178. Standard Bank of South Africa79. Standard Chartered Bank*80. Sumitomo Mitsui Banking Corporation*81. Swedbank82. Tadhamon International Islamic Bank83. TMB Bank84. Toronto-Dominion Bank85. UBS86. U.S. Bank87. UniCredit*88. United Overseas Bank89. Wells Fargo*
46. ICICI Bank47. IndusInd Bank48. Industrial and Commercial
Bank of China*49. ING Bank*50. Intesa Sanpaolo*51. Investec52. Itaù Unibanco53. JPMorgan Chase Bank*54. Kasikornbank55. KBC Bank56. KEB Hana Bank57. Lloyds Bank58. Mashreq Bank59. Maybank60. Mizuho Bank*61. National Australia Bank62. Natixis
28. Commonwealth Bank of Australia29. Commerzbank30. Crédit Agricole31. Crédit Mutuel-CIC Banques32. Credit Suisse33. CTBC Bank34. Danske Bank*35. DBS Bank*36. Deutsche Bank37. DNB Bank38. Ecobank39. E.Sun Commercial Bank40. Erste Group Bank41. Fifth Third Bank42. FirstRand Bank43. Handelsbanken44. Helaba Landesbank Hessen-
Thüringen 45. HSBC Bank
(*) Pilot bank
1. ABN AMRO Bank2. ABSA Bank3. Alfa-Bank4. Australia and New Zealand
Banking Group*5. Axis Bank6. Banco Bilbao Vizcaya Argentaria7. Banco Bradesco8. Bangkok Bank9. Bank of America Merrill Lynch*10. Bank of China*11. Bank of New York Mellon*12. Bank of Nova Scotia13. Bank of the Philippine Islands14. Bank of Tokyo-Mitsubishi UFJ*15. Banco Santander16. Banco de Crédito del Peru17. Banco do Brasil18. Banque Européenne d’Investissement19. Barclays*20. Bidvest Bank21. BNP Paribas*22. Budapest Bank23. CaixaBank24. Canadian Imperial Bank of Commerce25. China Construction Bank 26. China Merchants Bank27. Citibank*
Digital disruption in payments – October 2016
85+initiative banksChannelling payments
into 224 countries
Representing 71% of all SWIFT cross-border
payments
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Market Infrastructures
v01
General Market Infrastructure trends R themes
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• Fighting financial crime & regulatory compliance• CPMI-IOSCO, Sanctions, Intraday liquidity, CSDR, PSD2
• Increasing / changing (cyber) threats• Compliance with CPMI-IOSCO guidance
• Operations: multi-currency, extended opening hours, rationalisation• Replace aging technology• Drive towards ISO 20022
• Increasing international connectivity/interoperability of infrastructure• ISO 20022 adoption• Examples: T2S, SEPA, SADC, ASEAN, CIPS, MILA, ASEAN
Regulation
Regionalisation
Renewal
Resilience
• 24/7/365 real-time retail payments, for example, AU NPP, US TCH, SEPA Inst
• Towards a single platform for all payments (HVP vs RTP vs LVP)
Real-time
Changingvalue proposition
Market Infrastructures
Towards 2020
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SWIFT2020 Strategic Priorities
Software &
Connectivity
Messaging
Shared Services
One-to-Many MIsMany-to-Many FIs
MIFI
FI
FI
FI
FI
FI
FI
FI
FI
FI
FI
Market Infrastructures
• Payments• Securities• Treasury / FX
Core
Compliance
FMIs are an important segment for SWIFT and a major part of the SWIFT2020 strategy
Market Infrastructures
Strategy and ReachFMI Reach and Evolution
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Shows domestic FMI systems where SWIFT traffic is ‘live’. FMI may not use SWIFT for all its operations
100
120
140
160
180
200
220
240
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
FMIs 'Live' on SWIFT
Market Infrastructures
ISO 20022 & Harmonisation
September 2016
v01
Share information• ISO 20022 information including Message
types, release timelines, and declaration of compliance with global market practice
StandardsISO 20022 Harmonisation
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Publish
Adhere
Share
Publish information on MyStandards. Disseminate message types, message versions, release timeline and market practice
ISO 20022 Harmonisation Charter
Proliferation of ISO 20022 implementations (200+) means increased variability in deployment, multiple message versions, market practice rules and release cycles
ISO 20022 HarmonisationCharter ensures less variation and more global market practice
Signed by Major FMIs
Payments
• ACH Colombia• Bank of Canada• Canadian Payments Association• Hong Kong Interbank Clearing• Southern African Development
Community
Securities
• Australian Securities Exchange• Clearstream• Euroclear• LCH.Clearnet• Russia’s National Settlement
Depository• Singapore Stock Exchange• Ukrainian National Securities and
Stock Market Commission• VP Securities Denmark• VP Securities Luxembourg• VPS Norway
FX
• CLS
Market practice and Release Management• Adhere where possible to ISO 20022
Global market practice• Synchronise maintenance timeline with
SWIFT MT/FIN• Minimise number of simultaneous message
versions
www.swift.com
SWIFT Instant Payment Solution 18
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