Swift to launch AI-powered fraud defence for cross-border payments

From January 2025, Swift will be rolling out an AI-powered fraud detection capability that aims to help the financial industry tackle increasingly sophisticated forms of financial crime.

This enhancement builds on its existing Payment Controls Service (PCS) and follows a pilot with financial institutions across Europe, North America, Asia and the Middle East. The rollout is part of the cooperative’s broader collaboration with its global community of more than 11,500 banks and financial institutions to test how AI can solve pan-industry challenges. 

According to Nasdaq's 2024 Global Financial Crime Report, fraud was estimated to cost the global financial services industry $485bn in 2023 alone. To help solve this problem, Swift is harnessing AI to give financial institutions stronger and more accurate insights into potentially fraudulent activity.

Using pseudonymised data from billions of transactions across the Swift network, the service is designed to detect and flag suspicious activity, enabling banks to respond more quickly than was possible before. 

Swift says that the rollout of this enhanced service is a milestone in its strategic vision to make end-to-end international transactions instant and frictionless while maintaining trust, security, and compliance.

Since February, Swift has also been working with global financial institutions to explore how federated learning, combined with privacy-enhancing technologies, could enable market participants to share information without revealing their proprietary data. The group has so far developed a number of fraud detection use cases which are set to be tested in a sandbox environment.

 

SkySparc and Kyriba partner to accelerate treasury transformation 

SkySparc and Kyriba have announced a strategic partnership designed to enhance treasury management implementation and integration. This collaboration brings SkySparc’s technology accelerators and deep implementation expertise to Kyriba’s global client base, with the pair hoping to significantly reduce time-to-benefit for treasurers worldwide.

The partnership uses SkySparc’s technologies, including the OmniFi automation platform and iBAV bank account validation tool, to complement Kyriba’s financial management solution. This combination offers treasurers a toolkit that should enable them to rapidly deploy, integrate, and optimise their treasury systems. 

By streamlining the implementation process and enhancing system integration capabilities, the relationship aims to minimise the time and complexity typically associated with treasury technology projects.

This collaboration builds on SkySparc’s recent expansion in the Americas, led by Jeff Struzenski, who brings over 25 years of industry experience, including his role as Senior Vice President of Global Banking at Kyriba from December 2020 to November 2022.

“This collaboration aligns perfectly with our commitment to driving innovation in treasury and finance and eliminating liquidity gridlock,” said Ara Gopal, Global Vice President, Partnerships and Alliances at Kyriba. “By integrating SkySparc’s technology with our treasury platform, we offer clients a fast track to optimised treasury operations, enabling them to manage the complexities of global finance with greater agility and confidence.”

 

Singapore’s business continuity exercise to bolster financial sector’s operational resilience

The Monetary Authority of Singapore (MAS) and The Association of Banks in Singapore (ABS) jointly conducted a business continuity exercise with financial institutions to strengthen the financial sector’s crisis management and operational resilience. 

Codenamed “Exercise Raffles”, this seventh edition of the exercise included 20 financial institutions from the banking, payments, securities and insurance sectors. Participants were put through simulated exercise scenarios ranging from IT outages, cyber-attacks and operational disruptions. 

The aim was to test institutions’ ability to effectively respond to and recover from operational and business disruptions, as well as their crisis communication plans. The learning points gleaned from the exercise will be used to further reinforce the financial sector’s crisis response and operational resilience. 

“Exercise Raffles, conducted since 2006, is an important platform for the financial sector to rigorously test and enhance our resilience in the face of potential disruptions,” noted Ong-Ang Ai Boon, Director of ABS. “By working closely with MAS and other stakeholders, we ensure that our systems stay resilient and continue to deliver essential services. We appreciate the dedication and commitment of the various working committees which made this exercise possible.”

 

Margin optimisation back in focus for derivatives market

A report from Coalition Greenwich has found that new competition in the market for trading and clearing interest-rate futures and swaps is causing the industry to refocus on margin optimisation, a process that allows market participants to reduce margin requirements – and, ultimately, the cost of trading.

Most experts agree that regulations mandating central clearing of derivatives trades have been effective in reducing systemic risk. However, this risk reduction comes at a cost to market participants in the form of margin requirements. Margin requirements can be safely reduced when offsetting positions within a firm’s portfolio are held at the same clearinghouse. However, today’s competitive landscape has largely kept US dollar-denominated swaps and futures tied to US Treasury and SOFR rates separate.

Higher capital costs have compelled derivatives market participants to be more strategic about how they optimise their margin obligations, driving changes to where they trade and how and where they clear the instruments.

Banks interviewed recently by Coalition Greenwich say “capital efficiency through netting and margin optimisation” has become an important factor in how they measure their relationships with central clearinghouses (CCPs).

“Given the prevalence of market participants holding both futures and swaps, a significant opportunity exists to reduce margin requirements and costs by consolidating those positions in a single clearinghouse,” said Stephen Bruel, Senior Analyst at Coalition Greenwich Market Structure & Technology and author of The Portfolio Margining Imperative for Interest-Rate Derivatives. “Not only would individual trading entities benefit, but the financial system would see an improvement in risk efficiency.”

A partnership between FMX and LCH is aimed directly at the costs associated with these fragmented margin pools and has reignited the cross-margining discussion among market participants. FMX launched an exchange for US SOFR futures that clear through LCH’s Listed Rates clearing service. It plans to launch US Treasury futures in Q1 2025. In this model, there is the potential to offset margin at scale between the futures and interest-rate swaps aiming to compete with the incumbent.

“We project that market participants who clear SOFR swaps and futures bundles in one place could potentially realise significant margin reduction,” added Bruel.

 

Keyrock and Deutsche Bank partner to advance global digital asset operations

Keyrock, a global digital asset market maker, and Deutsche Bank have announced a partnership designed to enhance payment and foreign exchange (FX) operations for market making and OTC trading.

The collaboration will use Deutsche Bank’s institutional-grade infrastructure to support Keyrock’s digital asset market-making operations and OTC activity by providing multi-currency accounts in over ten currencies with integrated FX services. This enables Keyrock to trade in the various required currencies and improve settlement times with their counterparties across the EMEA, APAC, and LATAM regions.

With access to over 100 currency pairs and multi-currency accounts, this partnership expands Keyrock’s ability to execute FX spot trades with near-instant settlements, optimising the handling of fiat currencies. By consolidating services with a single provider, Keyrock says the collaboration reduces counterparty and settlement risks.

“Providing our services to Brussels-based Keyrock as one of the leading digital asset liquidity specialists in Europe aligns with our dedicated commitment to supporting tech and fintech innovation,” said Kilian Thalhammer, Global Head of Merchant Solutions, Deutsche Bank. “We look forward to working closely with Keyrock to enable cross-currency management and transactional FX services, thereby shaping a still emerging digital asset industry.”

 

Pivot Payables joins American Express Sync

The fintech Pivot Payables has announced an integration with American Express that offers AmEx US business and corporate card members the ability to generate virtual cards within PivotLynx, the fintech’s accounting automation application. This should ensure requests are routed to managers for budget approval and cost accounting. 

The integration also allows virtual card spending controls to be individually applied. At statement closing, PivotLynx automates the reconciliation between the card statement and the general ledger, eliminating manual accounting steps. To achieve this integration, Pivot Payables is participating in the American Express Sync Commercial Partner Program.

Eligible AmEx US business and corporate card members using virtual cards in PivotLynx can establish specific controls for each on-demand virtual card payment, including setting spending limits or expiration dates, and changing controls or deactivating on-demand virtual Cards at any time. The tool can also help manage budgets specific to projects and maintain visibility and control over spending with spending limits and expiration dates.