Swift calls for collaboration to help build the future of global transactions

Sean Sarginson, global head of innovation, and Nick Kerigan, head of innovation execution at Swift, talk about the cooperative’s ambitious new strategy to reinvent global financial transactions and how it wants to collaborate with both banks and fintechs to build the future of payments and securities.

Swift has recently launched its new strategy, which will shake up how global transactions are handled. Can you tell us what is behind this move and the role that collaboration will play in bringing it to life?

Nick Kerigan, Swift

Kerigan: New technologies and rapidly changing customer expectations are challenging existing business models – and creating new opportunities for financial services players. As we plan and build for the future, it is clear that individual institutions cannot develop tomorrow’s infrastructures, systems and services alone – it will take collaboration at an industry-wide level to deliver on the needs of the modern global economy and serve all our customers’ needs moving forward.

That is why Swift is working with players from across the global financial ecosystem to innovate on its platform. We want payments and securities transactions to be instant, frictionless and transparent, with end-to-end integrity and global reach. So over the next two years and beyond, we’ll be working to enable seamless, frictionless and instant payments from one account to another, anywhere in the world.

Sarginson: That’s right. We are going to leverage our unique assets like Swift gpi, secure private cloud and standardised APIs to move our platform beyond today’s capabilities by managing end-to-end transactions, mutualising services such as pre-validation of essential data, fraud detection, data analytics and transaction tracking. This will enable our customers to significantly increase efficiencies and reduce costs.

To deliver on this promise, we will work with financial institutions, fintechs and other trusted third parties to explore new ideas and co-create new products and services as we enter a new era of for digital payments and transactions. transaction management. We are already engaging with fintechs to explore how they can help us accelerate our strategy – not just to develop our new platform but also to co-create the next generation of financial services with us, as we enter a new era.

There is a perception that Swift has traditionally only innovated with its banking members, but it sounds like there are many opportunities for fintech collaboration. What led to this move?

Kerigan: We understand that longstanding institutions cannot solve all challenges alone and that is why we need to be open and ready to work with all players across the ecosystem. This, of course, includes fintechs.

Having been involved in many fintech partnerships, what we see is they have a focus on bringing expertise on very specific problems. They also have an agility in the way they work, and use new platforms that allow for much faster creation of products than existing scaled technologies.

Swift is in a great position to partner with this rich and vibrant ecosystem. We have a lot to learn on how best to do that but the rise of new technologies such as APIs also made collaboration with third-parties easier than ever.

For fintechs interested in working with Swift, can you tell us more about how you approach innovation?

Sarginson: Swift plays a critical role in underpinning cross-border financial transactions and it has a real impact on people’s lives. Innovation has always been part of our DNA and our platform has constantly evolved over the years to meet the needs of our clients.

To do this, we have to focus on, and always start from, customer challenges. Our guiding principle in the innovation team is to accelerate and de-risk the creation of new products and services that solve the challenges our customers face every day. We are not trying to develop ‘nice-to-have’ solutions, and we are not doing it out of fear of missing out (FOMO).

This purpose-led approach translates directly into how we run innovation projects on the ground.  We invest in a balanced portfolio of industry initiatives and co-innovation sprints that aim to solve some of the biggest challenges such as simplifying the industry’s journey to the cloud, delivering the next generation of real-time, standardised, API-based services, reducing fraud and money laundering whilst keeping costs down.

Recently, Swift and Suade Labs teamed up as part of the G20 Techsprint initiative to help drive innovation in financial reporting, what was the outcome of this collaboration?

Sean Sarginson, Swift

Sarginson: This collaboration was framed within the inaugural G20 Techsprint, which was essentially a hackathon organised by the Bank of International Settlements (BIS) and the Monetary Authority of Singapore (MAS).

Swift and Suade Labs recently teamed up to explore how to give regulators better and faster insights on market liquidity, whilst reducing the reporting burden on financial institutions. The area of financial regulatory reporting is ripe for innovation: there is a need for solutions that provide the financial data regulators require to oversee the markets.

Suade has developed software that helps financial institutions automate their regulatory reporting requirements, and in 2016, the firm received funding from the European Commission to develop the financial regulatory (FIRE) data standard. But it also needed a scaled data set that Swift’s community can offer to make it successful. It was a win-win collaboration leveraging our combined strengths.

Of course, not every partnership will end up with a live product, but we believe it is a great way to explore opportunities and learn, and we are looking forward to collaborating with more third-parties in the future.

With data fast becoming the new frontier, artificial intelligence (AI) and machine learning (ML) seem to have the potential to transform the industry. Is Swift looking at this space?

Kerigan: As Tom Zschach, our chief innovation officer, underlined at Sibos, we view AI and ML as some of the most important trends in the industry. Yet, we find people usually talk about them in very theoretical terms, when we are trying to have a more grounded view.

Why is AI important? It comes down to the ability to predict rather than being backward looking. Our analytical tools today tend to be around analysing what happened in the past, but what AI and ML allow us to do is to be much more confident about what may happen in the future.

Swift has some unique data assets, that have privacy, control and legal frameworks. We’re looking at using these new technologies to build mutualised services that will bring value to the community – allowing us to be predictive in preventing financial crime and fraud. AI has now passed the time of “hype” and is ready for actual use cases, and Swift is looking at deploying these use cases at scale with its community.

Banking and capital markets leaders increasingly recognise the benefits of cloud. How is Swift approaching this technology?

Sarginson: Cloud technology has been trending for a number of years now and a growing number of our members have programmes in place to move many of their services to a cloud environment, either public or private. In this context, what many established institutions find is that while there are great benefits to being in the cloud, actually moving existing scaled applications to the cloud can be quite challenging.

The benefits are clear and the industry is fully aware of them. However, it is also clear that major financial institutions are going to take some time to transition, and our role is to be ready to support them when they are ready to do so. That is why we are working closely with our clients on their migrations plans, but also with cloud providers such as Amazon Web Services (AWS), Microsoft Azure or Google Cloud. Migrations are challenging and need to be done responsibly, with the highest levels of security in place. This is something we can only do in partnership with our community.

Swift recently announced a move into the low-value payments space, while fintechs have been proposing a number of innovative solutions in recent years. Is that a space where collaboration could bring value to the entire industry?

Kerigan: Yes, there’s potential there.

With our new strategy, we are looking at helping financial institutions strengthen their position in the business-to-business (B2B) space, whilst also working on an exciting new service to help financial institutions improve the experience for small and medium-sized enterprises (SMEs) and consumers who send low-value cross-border payments. The new service will enable these bank customers to make faster, easier, predictable and competitively priced payments all around the world.

We are already working with firms across the globe to develop this service. At the same time, we are aware that fintechs have been active in this space for a number of years and we are keen to also have them play a role and work with us to make this a reality.

The Sibos Hackathon went entirely digital in 2020. What were your main takeaways from the event?

Sarginson: The set-up of the Sibos hackathon is unique as it’s not banks versus fintechs versus technology vendors, but each team is made up with members from across functions and institutions with banks and technology players. This is also facilitated by Swift’s unique position, enabling us to get competitors to work together on common industry challenges.

The virtual event brought together a strong selection of talents from across the financial industry with 50 developers and data scientists from 25 organisations and 18 different countries working together on unlocking the power of data in financial services. For the occasion, we also provided the teams with synthetic data from the Swift network, allowing them to develop solutions in a context as close to the reality as possible.

The solutions proposed were impressive and addressing real-world problems. The winning team, composed of individuals from Citibank, Itaú and Clearstream, looked at improving cybersecurity by providing a payment messaging traffic-screening tool that would alert their security teams in case of an abnormal payment message sent on the Swift network.

The hackathon highlights the massive potential for collaboration within the financial ecosystem to bring the industry to the next level. Alone we might go faster, but together we go further. Our future is our collective mission and we will keep working closely with banks, fintechs and technology vendors alike to facilitate interactions and build the financial industry of tomorrow.

How can fintechs find out more about collaborating with Swift?

Sarginson: Contact us directly at [email protected] and we will be happy open up a dialogue on how we could collaborate to help build the future of global transactions.