SWIFT actions required to restrict Russia’s global communications capabilities
The Society for Worldwide Interbank Financial Telecommunication (SWIFT), a cooperative of financial institutions founded in 1973 and headquartered in Belgium, is managed by the National Bank of Belgium and other major central banks, including the US Federal Reserve, the Bank of England and the European Central Bank. SWIFT acts as a secure messaging system connecting more than 11,000 financial institutions in more than 200 countries and territories, notifying banks of the imminence of transactions.
According to SWIFT, an average of 42 million messages per day were processed in 2021, an increase of 11% over 2020. Russia accounted for 1.5% of transactions in 2020.
With Russia's invasion of Ukraine shaking the world, countries around the globe are considering actions to impose financial stress on Russia. According to reports, one way to accomplish this is to block Russia from access to SWIFT, disabling the ability to send and receive information about international bank transfers with Russia.
Furthermore, SWIFT does not hold funds or manage customer accounts, but banks (including national banks) can be excluded from the system if the European Union, of which Belgium is a member state, imposes sanctions on financial institutions. In previous years, SWIFT disconnected EU-sanctioned Iranian banks from its network in 2012 and 2018, shocking their economy severely.
Currently, the US and EU are holding off on blocking Russia from SWIFT, noting that the stress of this action would affect other countries as well. However, they have not closed the door on making such a move as events progress.
TrickBot malware evolves while targeting financial roots
The TrickBot malware has resurfaced, attacking customers of at least 60 major US financial companies, including Bank of America and Wells Fargo, with phishing attacks through web injection. Organizations are advised to have phishing awareness training for employees to identify fraudulent emails. Check Point Research described this banking Trojan as a relatively simple attack, but it has evolved into more modular malware that can adapt to widespread attacks.
According to Chuck Everette, Director of Cybersecurity Advocacy, Deep Instinct, TrickBot's modular design, which uses template-based metaprogramming, is elusive because it can be customized and includes automated defence-in-depth protection. This malware was initiated in 2016 and continues to evolve, focusing on finance and online banking, which was where it initially targeted.
This multi-layered defence is extremely difficult for the financial sector due to its ability to prevent researchers from analysing its internal mechanisms and its ability to assist in attacking cybersecurity solutions and controls. TrickBot cyber gangs chase money like any other criminal organization, and this money is typically in cryptocurrency, which is targeted heavily.
While financial institutions typically have strong risk management regarding cybersecurity already, they are pushing to continue to evolve to stay ahead of attacks.
Cloud infrastructure digitally transforms US Bank’s financial landscape
As more financial institutions race towards digitalization in meeting customer demands, US Bank announced a significant investment in technology-based modernization of their current infrastructure by choosing Microsoft Azure as their primary cloud provider for applications. The bank stated that cloud computing will enable them to adapt to an increasingly digital world by enhancing most of their infrastructure and application portfolios. Additionally, lenders want to be able to quickly access and analyse data, reduce time to market, scale products faster and strengthen their workforce.
According to the report, AI and machine learning are transforming applications and infrastructure. The move to the cloud will further enhance the security of data, financial assets and customer privacy, stated the report. Dilip Venkatachari, Global CITO, US Bank, commented that this transformation will enable them to accelerate change, deliver new products and services faster and provide enhanced, customized customer experiences.
The initial migration to the “cloud”, according to US Bank, will be for customer-focused applications, such as consumer banking, small business banking and wealth management. Additionally, the bank’s application programming interfaces will also migrate to the cloud, enabling partners, such as Fidelity and State Farm, real-time data access (US Bank issues credit cards for Fidelity and offers consumer and small business products through State Farm, increasing their retail footprint).
By adopting innovative digital tools, financial institutions are paving the way towards reengineering their traditional processes into simpler, less burdensome and quick to market product offerings.
Booming e-commerce market in Latin America targeted by Thunes
Singapore-based fintech and global cross-border payments provider, Thunes, is accelerating its global expansion by establishing a U.S. regional hub in Miami, FL, to expand into the new Latin American market. This development follows the recent announcement that it is expanding its presence in Greater China. Jenna Wyer, Senior Vice President for the Americas, Thunes, will spearhead Thunes’ growth strategy in Latin America’s markets and establish partnerships with local digital payment players.
There is a growing demand for smooth and easy payments in Latin America, and Thunes hopes to seize this opportunity. Two growing trends are online shopping and mobile payments. Latin America has the fastest growing international retail e-commerce sales growth, and mobile payments enable many who do not have access to traditional bank accounts the ability to make purchases. It is stated (The Mobile Economy - Latin America) that within the next three years this market should see approximately 100 million additional smartphone connections, increasing the total to 532 million by 2025, which is an adoption rate of roughly 80%.
Citizens Bank promotes real-time billing as a possible supply chain solution
Citizens Bank believes corporate clients can benefit from instant invoicing and real-time payments and potentially offset the uncertainty in supply chains. The Citizens Financial Unit plans to launch Request for Pay (RfP) through its accessOptima financial management system, which covers both business-to-business and business-to-consumer transactions, during the first half of 2022. According to the American Banker, the launch is a result of banks beginning to link RfP with The Clearing House’s RTP rail, forming a combination of instant billing and real-time payments. Some of the benefits noted have focused on overdraft protection for consumers as well as businesses addressing the difficulty in forecasting supply payments.
Financial institutions and tech companies have provided products to address the supply chain crisis tied to the pandemic. For example, BNY Mellon used bank-backed membership in the Marco Polo trade and finance consortium to build cross-border payments and financial products for corporate clients. Also, Rapyd, a tech company, recently acquired Neat, a global business provider to support international supply chain transactions.
In the early stages of the pandemic, companies moved employees away from their centralized offices, making B2B transactions less dependent on paper-based invoicing and payment collection. Citizens plans to transition to digital permanently, even with employees returning back to the office.
Recent surveys have found high demand for real-time payments and corporate recognition of its significant benefits. Louise Shorthouse, Senior Payments Consultant, Icon, commented that despite demand, RtP adoption among banks has been slow due to the small number of options for corporate customers.
While approximately 200 banks, including JPMorgan Chase, PNC Financial Services Group, BNY Mellon, and U.S. Bancorp, have adopted real-time billing, only 18% of banks and payment companies Icon surveyed currently offer RtP services, and approximately 27% plan to provide this service within the next 12 months, according to Icon.
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