swift for payment market infrastructures an efficient platform to support your payment systems...

SWIFT for Payment Market Infrastructures An efficient platform to support your payment systems transformation

Mr. Paul Landvogt, Equens

Mr. Ed Kelsey, Bank of England

Mr. Stéphane Ernst, SWIFT

27 October 2010 14:00 – 14:45

Agenda

SWIFT for PMIs - 27 October 2009

Key challenges of the payments market infrastructure ecosystem


High-value payment MI

Central bank

Participants

Direct Participants

Low-value payment MI

ACH

Indirect Participants

CSDGovt

Entities

Participants Direct Participants

How to mitigate systemic risk?

Do I have the right risk/cost balance per payment?

How to secure settlement

finality?

How to achieve cost reduction & scale

business?

How to optimise my liquidity?

ConsumersCorporates

How to transfer funds quickly at

low cost?

How to reach my

counterpart?

How to manage my collateral efficiently?


• Message price reduction by an average 20%• Reduced TCO – standard messaging protocol• Services to ease implementation

• Multi-payment scheme and instrument support • Any format & channels (m-/e- payments)• Payment instructions, cash management and reporting • Application-to-application or user-to-application • Reference data

• High operational availability for messaging & RTGS • Liquidity and collateral control • Security, non-repudiation, delivery notification, • Role-based access control • Regulatory reporting

• SWIFT messaging MT or MX• Standards ISO2022• Market Practice groups• E2E business modeling • Standards validation

Trends in Payments Market Infrastructures

• Global reach• Single platform• Direct and indirect • Bilateral or multilateral • Copy services (Y-/T)

SWIFT response…

SWIFT’s 5-pillars offering for Payment Market Infrastructures


A comprehensive solution

Integration

PKIHSM

Delivery notification

Multi-site

Standards MessagingServices

FIN, InterActFileAct, BrowseCopy

MT messagesMX (ISO20022)

Market practices

Security

Alliance InterfacesIntegration tools

Alliance Connect Bronze/Silver/Gold

Your Payment Market Infrastructure system

ConsultingImplementation

Project Management

TrainingCustomer support

Mr. Paul Landvogt, Equens

Payment factories to optimize the processing flow & manage liquidity risk An end-to-end payments processing service challenge

Leading the way to the future

Europe’s first truly pan-European cards & payments processor (EACHA, IPFA)

Lowest possible processing and routing costs

Highest standards of quality, reliability and security

Distinctive range of modular, innovative and future-proof processing services

One-stop-shopping for customisable packages and practical advice

Core

value

From 3.4 to 5 billion card transactions

From 9.4 to 13 billion payment transactions

Retain current clients (BE, DE, FI, FR, GR, IT, LUX, NL, SE, UK) and attract new clients

Maintain top position in Europe (DE, FI, IT, NL)

Expand presence in Europe through partnerships, mergers and acquisitions

Strategy

Card processing: merchant acquiring, acquiring processing and issuing services

Domestic and cross-border payment processing services

From generic Clearing & Settlement to tailor made Bank Payment Processing services

Innovative solutions: eInvoicing, mobile payments, healthcare information, biometric

Supporting services: connectivity, risk, management information, customer services

Portfolio


From core payments processing towards extended bank-to-bank supporting services

Core

Extended

Cost efficiency

Reliability

Security

Availability

Scalability

Bulk transfer

Any instrument/ scheme

Standard

Reach

Regulations

Community rules

Payments servicing

banks

RTGS (High value payment)

ACHs

Correspondent banking

Bilateral Clearing

Payments servicing

banks

Clearing & Settlement

Back-office processing


Cash and liquidity risk management, treasury reconciliationPayment exceptions and investigation

Core

Extended

Near-real time execution

m- & e- channels

Information on fees

Payment tracking

Payments servicing

banks

Financialinstitutions

Corporates


Common interface to ERP

Real-time access

Standards

Payment E&I

Cash optimisation

Liquidity risk management

Payment services

Consumers

Supporting banks in servicing their customers

End-to-end payments factories (“cockpits”) to optimise processing & manage liquidity risk

Core

Extended

Basic payments processing services for communities

Extended centralised data flow management

Addressing all market players requirements

Automation to optimise processing end-to-end

On-line exposure visibility to reduce liquidity risk

Standard connectivity, formats and business flows

Cooperation with key global partners

EACHA, IPFA

SWIFT (global service partner)

Clearing & Settlement

Payment capture




Payment delivery

Conclusion and key points

• Extension of service portfolio from core payments processing to a payments factory and a centralized control center covering the complete value chain with all the different aspects and requirements

• This needs partners join hands while concentrating on their core competence under the condition of a collaborative and cooperative approach

• SWIFT is one important partner both in the way of offering product & services (communication, …) and the area of defining standards based on best market practice


Bank of England and SWIFT for High-Value Payment Systems

Mr. Ed Kelsey, Bank of England

27 October 2010 14:00 – 14:45

History

• RTGS was launched in 1996 as a platform to effect real-time payments in central bank money

• Driven by the goal to remove risk from the settlement process

• Inter-bank payments are made through the CHAPS payments scheme, operated by CHAPSCo.

• The communications network was upgrade to SWIFT in 2001

• DvP link to Crest introduced in 2001


What We Do

• RTGS settled, on average, £744bn per day, and £908bn on its busiest day last year

• Through RTGS, the Bank of England provides payment facilities to:– CHAPS Sterling payment system– CREST settlement system – Lower value net clearings:

• BACS• Cheque and Credit• The Faster Payments Service• LINK

• RTGS also plays a key role in the implementation of monetary policy, with the voluntary remunerated reserve accounts which sit at the heart of the Bank’s Sterling Monetary Framework held in the RTGS processor


Why SWIFT?

• Used to transmit the payment messages via SWIFT FIN Y-Copy made between banks:– Security– Availability– Non-repudiation

• Also used for the RTGS Enquiry Link to enable:– Activity on a bank’s account to be monitored– A bank to receive information about their account– And, in certain circumstances, transfer funds between their

accounts


Future Developments: Drivers

• Liquidity Savings Mechanisms

– Financial crisis means more liquidity is required, and that already available will need to be used more efficiently

• Management/Business Information

– Financial crisis means the banks need to see what liquidity they are using, and when

• Enquiry Link Upgrade

– Technology is dated and costs are incurred by the banks when implementing a “fat GUI” in their premises

• Market Infrastructure Resiliency Service (MIRS)

– Enhancing the resiliency of RTGS, to bring it into line with best international practice


Future Developments: The Bank’s response

• Liquidity Savings Mechanisms

– We are looking to implement changes to the settlement algorithms within RTGS, to be introduced in 2011/12

• Management/Business Information

– We upgraded to SWIFT FIN full Y-Copy in September 2010 and will implement a payments database for members in 2011/12

• Enquiry Link Upgrade

– We are exploring using SWIFT browse with full SWIFT Interact messages

• Market Infrastructure Resiliency Service (MIRS)

– We are working with SWIFT and other central banks to build a “generic” RTGS system which could act as our 3rd site


SWIFT supports Payment Market Infrastructure to address future challenges

18SWIFT for PMIs - 28 October 2009


• Messaging price adapted to market conditions

• Single messaging platform for all financial businesses

• Support bilateral models with no need of investment for a ACH

• Cope with legacy and innovations• Support any industry standard • Payments and reporting

• Guaranteed payment execution• Traffic and duty segregation • 99,999% operational uptime/ disaster recovery• 24/7 dedicated support for critical infrastructures• Monitor and control liquidity positions • Reliable and efficient exceptions management

• Best industry practices • Business model and physical

representation (XML)• Tools / partners for message

conversion and application integration

• Reference data for payments routing

Benefits for Payments Market Infrastructures

• 8000+ banks in +200 countries

• Access indirect participants through Service Bureaus

A comprehensive messaging solution

Thank YOU

Q&A

Payment Market InfrastructuresLive system status as of September 2010

AfricaAngola Algeria BotswanaCentral African States (BEAC) EgyptGhana Kenya LesothoMauritius Morocco NamibiaSouth Africa Swaziland TanzaniaTunisia Uganda ZambiaZimbabweWest African States (BCEAO)

Asia PacificAustraliaFijiHong KongNew ZealandPhilippinesSingaporeSri LankaThailand

Central & Eastern EuropeAlbaniaAzerbaijanBosnia & HerzegovinaBulgariaCroatiaHungarySloveniaRomaniaPolandNorth America

CanadaUS (TCH)

Central & Latin AmericaBahamasBarbadosChileDominican Rep.GuatemalaTrinidad & Tobago Venezuela

Western EuropeDenmarkNorwaySwedenSwitzerlandUKEurozoneTarget 2EBA ClearingAustriaGermany GreeceIrelandItalyNetherland Spain

Middle EastBahrainIsraelJordanKuwaitUAE (DIFC)Qatar

62 high-value MIs240+ million payments/year

21 low-value MIs5+ billion payments/year

2000+ banks

90+ countries

LegendBoth HVP and LVP MI LVP MI only HVP MI only

Marie-Christine Diaz

Market Manager

Mobile : + 32 474 99 10 65

[email protected]

Stephane Ernst

Market Manager

Mobile : +32-476-896087

[email protected]

Payment Market InfrastructuresSWIFT Contacts

SWIFT for PMIs - 28 October 2009 21

High-Value Payment

Market Infrastructures

Low-Value Payment

Market Infrastructures

swift for payment market infrastructures an efficient platform to support your payment systems...

Documents

introduction swift

agenda swift

payment systems transformation

endtoend payments

messaging rtgs liquidity

processing flow

future challenges qa

service challenge slide