SWIFT and the Banks – Time for Co-operation?

by Stefano Gemelli, Head of International Cash Management Sales Italy, UniCredit

Having gained certain experience in implementing ‘SWIFT for Corporates’ projects, I often ponder the main advantages customers expect from such activities and the most common unexpected discoveries they are asked to face.

Standardisation in formats, global reach and optimisation of infrastructures can be considered as the most common goals. And they are certainly attainable with various degrees of completion in every project, depending on the level of integration the customer has obtained within the group and the flexibility of the initial setup they are using.

The longest discussions and explanations are usually linked to another betrayed expectation. Customers would like to implement the project only once and they expect banks to be able to exchange instruction files between themselves, providing feedbacks about delivery and execution.

As of today this is not possible, not for technical but for organisational reasons. A global standardisation body should act as the main hub of the system, making sure that configurations are applied to the various banking systems and data are exchanged in pre-defined uniform standard.

Shouldn’t this be the role of SWIFT? They are certainly able to perform this additional duty and probably willing to do so.

Then why is this not happening? It must be the old ‘co-operation vs competition’ dilemma the banking industry is often facing. Look at what happened in Italy with the domestic corporate banking network. Banks were worried that the CBI would soften competition, by allowing full domestic reachability to all participants, simply by permitting customers to have a single link to the system, using one bank as the main door into the network. Alas, this proved not to be the case.

Co-operation is limited to standards and to the level of service of the central infrastructure, while pure competition is allowed in the ‘last mile’, in the customer fronting solutions. Special reconciliation services, file format transformation, pure personal service and other factors make the real difference in such cases, price being one of the criteria but not the very first.

Then isn’t it time to call banks and SWIFT together to start this discussion? Couldn’t it be the case that the industry itself would benefit from this initiative?

I am sure that implementation costs and the time to market of the various solution would be positively impacted, while banks would shift competition to where it matters most: innovation in payments.