SIBOS, SWIFT’s annual get together, is next week and so they are releasing numerous White Papers to try and get their view over before they all meet in Sydney. Today they released papers on:
- “The transformation of the European payments landscape”
- “How SWIFT is supporting customers through the transformation”
SWIFT seem to have been energised by the launch of their Global Payments Initiative and the presssure from new competitors, e.g. Ripple, etc.
Evolution of the European payments landscape
This new paper covers SWIFT’s view of the evolution of the European payments landscape. The press release explains, “While change is underway in wholesale and retail payments across the world, in Europe, the Eurosystem has set a clear path for financial market infrastructure renewal. This, along with regulations such as the Second Payment Services Directive (PSD2), is driving a period of radical payments transformation across Europe.”
The paper examines the drivers for change in the payments sector, both global and European levels, and outlines the challenges and opportunities for incumbents in a market that is undergoing the most extensive transformation ever:
- Digitisation is driving expectations for fast, frictionless and borderless payments that are embedded in transaction chains and eco-systems, whether for retail purchases or business transactions
- Technology, which is offering opportunities for innovation and efficiency is also enabling competitors – fintechs, global retail giants, card networks and digital start-up banks – to challenge incumbent providers and existing business models
- Regulators are intervening to foster competition, protect consumer rights and promote payments efficiency and innovation, for example, by requiring banks to open customer data to third party providers for account information and payment services (open banking)
The paper outlines some of the choices that financial institutions face and features contributions from five major banks on how they see the future.
How SWIFT is supporting customers through the transformation
In a companion paper, also available on swift.com, SWIFT sets out how it is evolving its portfolio of products and services to support customers through the changes happening in the payments landscape.
3 October white paper: “International Payments: accelarating banks’ transformation”
Findings from a joint white paper produced by Boston Consulting Group and SWIFT examine the forces in international payments that are driving profound changes to the banking industry as a whole and specifically to mid-sized banks.
The paper concludes that banks will have to change their business models significantly, as follows:
- Global transaction banks, though well-positioned to address change because of their size and scale, still need to ensure successful integration of new technologies;
- Smaller banks will need to continue to maximise their close relationships with preferred customers while outsourcing their subscale international payments operations to larger players;
- The situation of mid-sized banks is the most problematic. As banking becomes more automated and regulated, their costly branch networks and lack of scale is putting them at a serious disadvantage. These banks may perhaps need to consolidate and transform their business models in order to maintain relevancy in tomorrow's international payment landscape.
But what about Ripple
Alex Rolfe, Editor - Payments Cards & Mobile, wrote, in June, that Ripple and Swift were in arm wrestle over cross-border payments supremacy. He concluded that, “These developments are unlikely to cool the rivalry between Ripple and Swift.”
While The Financial Times review in June summarised the position: “More than 100 banks have signed up with the blockchain-based challenger but the incumbent is fighting back.”
Ripple are fighting these series of white papers with their own ‘insights’. Yesterday they published a Insight: “Unlocking Global Liquidity Bottlenecks with RippleNet” that argues it provides a faster, lower cost and more transparent international transaction experience for financial institutions by providing flexible solutions for various types of liquidity provisioning, because it doesn’t rely on nostro accounts.
CTMfile take: This competition between SWIFT and the other solutions is good for corporates. International, cross-border payments are now improving rapidly.
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