SWIFT says that the financial services industry is set for accelerated transformation next year with ISO 20022 migration and the activation of its evolving platform

The Brussels-based co-operative reports that its vision of instant and frictionless transactions from one account to another anywhere in the world achieved major progress in 2021.

“SWIFT has delivered on many commitments, including transforming the speed and transparency of low-value payments, removing key frictions by validating payments upfront, and delivering tools for banks to rapidly benefit from rich data in a multi-format environment,” it announced in its end-of-year release. “SWIFT has also been strongly engaged in experiments to integrate central bank digital currencies (CBDCs) and new digital assets into cross-border flows, as well as innovative proofs of concept demonstrating the real-time interlinking of market infrastructures (Mis).”

Progress to date

Looking back on 2021, SWIFT said that the services available to the industry to adopt immediately are:

• Fast, affordable low value cross-border payments. SWIFT Go, launched in July, significantly improves the experience for consumers and small businesses sending low-value cross-border payments. It enables banks to provide their end-customers a fast, predictable and highly secure payments experience with upfront visibility on processing times and costs. It is rapidly gaining traction, with more than 120 leading international financial institutions signed up.
• Frictionless payments with fewer hold-ups. Payment Pre-validation eliminates one of the leading causes for international payments to stop or lose time – incorrect payee information. The service enables banks to verify beneficiary account details before a payment is sent and catch typos or transposed account numbers upfront.
• Improved services to end customers through rich data. In November, SWIFT launched a new in-flow translation service that will ease the migration from the MT standard to ISO 20022 next year. In-flow translation is key to enabling a smooth transition to the rich data standard, while allowing the industry to keep its existing systems running smoothly and enabling financial institutions to adopt the new standard at their own pace through the industry-defined transition phase up to November 2025.

“These developments build on strong momentum for SWIFT, which is on track for another year of double-digit traffic growth and in November had a record 50.3 million messages exchanged over its network in a single day,” the release noted.

Top priorities

Turning to broader innovation, in 2021 SWIFT has prioritised:

• Central bank digital currencies. SWIFT is actively experimenting to see how its evolving platform could interact with the cross-border use of CBDCs and demonstrating that interoperability between different payments systems will be the key to success.
• Market infrastructure interlinking. Driving instant cross-border payments is dependent on the interlinking of real time market infrastructures and financial institutions to enable faster, more seamless transactions around the world. In October, SWIFT announced a proof of concept with EBA Clearing and The Clearing House (TCH) that demonstrated the feasibility of synchronizing settlement across existing instant payment systems with the speed and agility that meets with the Bank of International Settlements CPMI targets.
• Agile innovation. SWIFT is upping its game in terms of driving industry change, and as part of that focus, conducted many innovation sprints in 2022 to rapidly explore areas that are top of mind for customers. Through its Innovation team, for instance, SWIFT is exploring areas such as AI/machine learning with a view to developing new service features.

Accelerating transformation in 2022

SWIFT says that for 2022 it has ambitious plans to accelerate adoption of its new services across the global financial community, with SWIFT Go providing the underlying infrastructure for the world’s low value cross-border payments. The next iteration of the payment pre-validation service, coming in H1 2022, will be powered by sophisticated predictive analytics to further boost coverage and accuracy.

SWIFT also will start introducing an enhanced platform to expand its capabilities beyond messaging. The platform will provide end-to-end transaction management, orchestrating interactions between financial institutions and other participants to minimise friction, optimise speed and provide transparency and predictability. The platform will unlock new experiences for end customers with faster settlement, enhanced end-to-end data and value-added services – enabling a truly instant and frictionless experience across SWIFT’s network connecting four billion accounts in more than 200 countries. 2022 “will be the starting point, with traffic expected to ramp up on the new platform in 2023 and beyond”.