Blind ambition?

01 September 2006Features

As the Sibos juggernaut rolls into Sydney, Joy Macknight looks at some of the issues delegates will be debating and sounds their opinions.

Sydney, Australia, brings to mind sun, sand and surf — and now Sibos. This year’s leading operations event has the added attraction not only of bankers from all parts of the globe showcasing their organisations and products, but also the Sydney Opera House for participants to experience Australia’s haute couture or Bondi Beach for some pop culture. Participants are looking to use the opportunity to meet prospects, customers and service providers in a single location to identify new opportunities for growth and productivity in the financial industry — plus climb the Sydney Harbour Bridge.

The event has attracted 100 plus speakers, over 150 exhibiting companies and more than 2,100 participants as of mid-July. The Brussels-based standards consortium is expecting close to 5,500 participants, which is smaller than the previous Sibos in Copenhagen. Swift’s online poll has “reinforced the value of Sibos for networking” and indicates the hot conference topics are currently SEPA, corporate access, trade service utility, Target2 and European securities integration.

Sibos was last held in Sydney in 1997 when the cooperative had 6,176 live users in 164 countries and handled around 812,000,000 messages. The theme was “building for tomorrow” and Swift announced the launch of SwiftNet, its advanced IP-based messaging solution. Sibos 1997 saw Swift aiming to increase connectivity, grow FIN traffic, progress STP and support market infrastructure initiatives in clearing and settlement and trade.

Since then Swift has grown, with 7,863 live users in 204 countries and over 2,518,000,000 messages in 2005. The migration to SwiftNet has generally been a success and now that the banks have completed the move to the IP-enabled messaging network, they are keen to leverage this. According to a survey by SunGard — taken among Sibos 2005 delegates — 90% of banks are looking at implementing SwiftNet standards for exceptions and investigations in the near future.

This year’s theme of “raising ambitions” was first raised in Copenhagen by Jaap Kamp, chairman of Swift, in his keynote speech opening the conference. Commenting on the turbulent environment in which Swift works, he suggested that the level of ambition needed to be raised. He said: “We have already agreed on one basic ambition level, which is to continue to focus on being the most secure and efficient messaging network in the world. This alone is a continuing challenge to live up to, in terms of continuous improvements and operational excellence.

“However, it also requires a somewhat higher level of ambition, and should we not ask Swift to really raise its game in terms of significantly contributing to the cost reduction efforts for all of its members, as suggested [in 2004] by Heidi Miller in her keynote speech?” continued Kamp.

Miller, chief executive, Treasury & Securities Services, JPMorgan Chase, delivered the keynote address at Sibos in Atlanta where she questioned whether Swift is still delivering value to banks, and challenged every bank and every payment and securities participant to execute faster and cheaper for corporate customers worldwide.

This year Swift has announced price reductions and commercial actions that will return €70 million to its users by end 2007. Within the same statement in June, it announced it has achieved its Pricing Challenge, set in 2001, to reduce overall messaging prices by 50% over the 2002 - 2006 timeframe.

Francis Vanbever, chief financial officer at Swift, said: “The value of these actions will be €38 million over the second half of 2006 and €32 million in 2007. Our strong traffic and revenue performance in 2006 indicates that we will exceed our financial objectives, and so we are able to finance additional investments to accelerate our Swift2010 strategic initiatives and at the same time to continue to reduce prices to strengthen our competitive position.”

But it hasn’t been all smooth sailing for Swift and the issue of corporate access — a bone of contention last year — continues. In Copenhagen, Kamp saw developments on corporate access as an example of a transformative breakthrough. “I imagine that, initially, this will be a dialogue involving larger banks and larger global companies, but the spin-off of the resulting standards and connectivity models will undoubtedly reach smaller institutions and smaller corporates,” he said.

In June this year, corporate access took a step forward when Swift shareholders approved the addition of corporates as a new participant category. Corporates have had limited access to Swift since 1998 through Treasury Counterparty and Member Administered Closed User Group models. Currently, some 120 corporates are connected to Swift through 100 banks. The new category will enable qualifying corporates to join a single closed user group containing many financial institutions, where corporate-to-financial institution SwiftNet messaging and file transfer are supported. This will enable better standardisation and interaction with multiple banks.

Although Swift has made some advances in the past year, the questions posed by Miller are still lingering in people’s minds. In the next few pages, Banking Technology has taken a vox pop approach to get a feel for what the issues will be in Sydney by talking to a number of executives from financial institutions to hear what they think is the key to Swift’s success — and theirs.