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Digital disruption and new
entrants in payments
1 – 2 September 2015
Dan Moran
Head of Technical Sales Services, SWIFT
2 SWIFT Latin American Regional Conference 1-2 September 2015
5 mega trends impacting correspondent banking
3
Greater compliance, transparency and liquidity requirements on banks
De-risking, rationalizing correspondent network, more controlled traffic flows
Unclear regulatory framework for non-banks but likely to increase to same level
Compliance
Regulators push to open access to payments systems and bank accounts (PSDII)
Regulators push for more (non-bank) innovation (FCA in UK)
Breaking the value chain, specialization, partnerships, APIs
Open access
Customers looking for simpler, real-time experience, domestic and international.
Also expect lower price, more transparency, full certainty
Increased willingness to shop around, use non-banks
Real-Time
Off the wire
Solution of 70’s, superior to Telex, not fit for purpose anymore for all payments
Multitude of intermediaries, results in inferior service (speed, transparency…)
New technology innovations like crypto-protocols
Trend to central clearing systems – direct to ACH
Growth Return to sustainable growth – trade flows grow faster than GDP
Revenues expected to grow at 8% per annum in next 5 years
Two speed growth, shift to East and to RMB – 64% expected growth in RDE’s
SWIFT Latin American Regional Conference 1-2 September 2015
Focus on domestic Real Time Payments
Live in 17 markets, 5 more in planning / development
4
Africa Nigeria
South Africa
Central & Latin
America Brazil Chile
Mexico Colombia
Asia Pacific India Japan
Singapore South Korea
Taiwan Australia
Hong-Kong New-Zealand
Europe Denmark Iceland Poland Sweden
Switzerland Turkey
UK Finland
SWIFT Latin American Regional Conference 1-2 September 2015
SWIFT’s Financial Crime Compliance roadmap
Key features
• Comprehensive,
growing set of
solutions
• Initial focus on
correspondent
banking
• Cohesive, mutually
re-enforcing offering
• Cloud solutions
• Strong customer take-
up
5 SWIFT Latin American Regional Conference 1-2 September 2015
The unbundling of banks Source: https://www.cbinsights.com/blog/disrupting-european-banking-fintech-
startups/?utm_content=buffer2f104&utm_medium=social&utm_source=facebook.com&utm_campaign=buffer
6 SWIFT Latin American Regional Conference 1-2 September 2015
Correspondent banking disintermediated at origination
7
Local bank Local bank
PSP PSP
ACH ACH
GTB GTB
End customer
(retail, SME, corp)
End customer
(retail, SME, corp)
Correspondent Banking
Co
rre
sp
on
de
nt
Ba
nkin
g d
isin
term
ed
iati
on
Transfer
Agent
Transfer
Agent
*Icons are representative example
of each model SWIFT Latin American Regional Conference 1-2 September 2015
Rationalizing the hype
8
Peer to peer,
no correspondent
banking ‘side effects’:
delays, costs,
counterparty risk
Bi-lateral
agreeme
nts
Real time,
continuous
payments
Lower cost
for FI
Open source
internet protocol,
distributed ledger
End-to-
end
SLA Value
dates
Back
office
24/7
Sanction
screening
Liquidity
trapped
Reconcil
iation
Security
Confide
ntiality
Integrati
on
Governa
nce
Release
manage
ment
SWIFT has done an in-depth analysis on crypto protocols and
distributed ledger technologies, positioned for international and real-
time funds transfers. This analysis included technical aspects like
messaging, security, reliability, resilience, quality of service, ease of
implementation and also commercial, business practice, legal and
compliance considerations. This analysis is available upon request.
Cla
im
Ch
allen
ge
SWIFT Latin American Regional Conference 1-2 September 2015
Bank-grade payments system requirements
9
Addressing
real
challenges
compliant Clear ROI for
banks Scalability
SWIFT Latin American Regional Conference 1-2 September 2015
Need for a change
10
Technology Business
SWIFT Latin American Regional Conference 1-2 September 2015
• “Blockchain is a really disruptive development and banks have a lot of fear
concerning this technology because, in the pure theory of blockchain, a lot of
processes within a traditional bank would be obsolete”, Thomas F Dapp,
Research Analyst, Deutsche Bank
• “Blockchain technology will not only change the way we do payments but it
will change the whole trading and settlement topic”, Oliver Bussmann, CIO,
UBS
• “Blockchain technology continues to redefine not only how the exchange
sector operates, but the global financial economy as a whole,” Bob Greifeld,
CEO, Nasdaq
• “In time, distributed ledgers will support smart contracts – computer
protocols that verify or enforce contracts. This will lead to a wide variety of
potential uses in securities, syndicated lending, trade finance, swaps,
derivatives or wherever counterparty risk arises.” Santander Innoventures
What are the banks saying
11
Source: The Financial Services Club's Blog by Chris Skinner
SWIFT Latin American Regional Conference 1-2 September 2015
What are the banks saying….and doing
• “Blockchain is a really disruptive development and banks have a lot of
fear concerning this technology because, in the pure theory of
blockchain, a lot of processes within a traditional bank would be
obsolete”, Thomas F Dapp, Research Analyst, Deutsche Bank
• “Blockchain technology will not only change the way we do payments but
it will change the whole trading and settlement topic”, Oliver Bussmann,
CIO, UBS
• “Blockchain technology continues to redefine not only how the exchange
sector operates, but the global financial economy as a whole,” Bob
Greifeld, CEO, Nasdaq
• “In time, distributed ledgers will support smart contracts – computer
protocols that verify or enforce contracts. This will lead to a wide variety
of potential uses in securities, syndicated lending, trade finance, swaps,
derivatives or wherever counterparty risk arises.” Santander
Innoventures
SWIFT Latin American Regional Conference 1-2 September 2015 12
Call to action
13 SWIFT Latin American Regional Conference 1-2 September 2015
SWIFT Latin American Regional Conference 1-2 September 2015 14
Questions.
SWIFT Latin American Regional Conference 1-2 September 2015 15
Digi-voting
SWIFT Latin American Regional Conference 1-2 September 2015
On a scale of 1 to 5 please rate your level of
satisfaction with this session.
Lowest Highest
16
SWIFT Latin American Regional Conference 1-2 September 2015
On a scale of 1 to 5 please rate your level of
satisfaction with the session speakers.
Lowest Highest
17
SWIFT Latin American Regional Conference 1-2 September 2015 18
Agenda what’s next
• Coffee Break SWIFT Lab: 11:00 – 11:30
• Plenary: 11:30
Sponsored by:
www.swift.com
SWIFT Latin American Regional Conference 1-2 September 2015 19