Pricing for Growth SWIFT Has Introduced a Number of Innovations to Its Pricing Strategy Over the Years

Daily news from SWIFT at Sibos ISSUE 3 • WEDNESDAY Refining sanctions Efficiency compliance as a service Page 3 Page 4 Pricing for growth SWIFT has introduced a number of innovations to its pricing strategy over the years. hen SWIFT was founded the wrong price for everyone.” Differenti- some 40 years ago, the ation became important. “The concept key issue of the time of price tiering has allowed us to reduce Transparency is W was how to replace telex overall prices by over 50% in each of the and paper with an automated process. last three strategy cycles,” says Vanbever an increasingly In addition to improving operational (See Graph 1). In addition, we have, since important element of efficiency, straight-through processing 1992, operated a rebate mechanism, (STP) was also expected to reduce costs allowing us to return excess revenue to our SWIFT’s approach. for the industry. As usage of SWIFT has clients as a percentage of their spending.” Everyone in each grown, so has the ability to reduce the unit “Given that pricing is now more tailored cost of messaging, says Francis Vanbever, than it was when a simple per-message targeted segment chief financial officer, SWIFT. reduction was universally applied, trans- benefits from the “In the beginning, things had to be parency is an increasingly important simple,” he says. “With the business element of SWIFT’s approach,” says same conditions. growing, however, we reached the point Udo Braun of Commerzbank, who chairs Udo Braun, Commerzbank and SWIFT Board where it was clear that one price for all is the Pricing Board Taskforce for SWIFT. “Everyone in each targeted segment benefits from the same conditions.” SWIFT’s pricing policy is governed by a set of six key principles defined by the SWIFT Board, says Braun. These are: • Encourage usage as opposed to maximising profit; • Recognise the contribution of large users and their role in creating economies of scale; • Maintain the cooperative spirit and transparency; • Reduce barriers to entry for smaller Sibos in Florence (1996) when we had users; peak days of three million messages per • Respond to competitive threats; and day. Going into Sibos this year we are • Be economically sustainable close to reaching traffic peaks of up to We will continue to These policies allow SWIFT to pay 30 million messages per day,” says Andre lower prices in the due attention to all segments of its Boico, director, pricing, SWIFT. “In addition membership, while being innovative in to message price reductions enabled by new strategic cycle. bringing benefits to the SWIFT community our increased scale, we have also helped Francis Vanbever, CFO, SWIFT as a whole. “It is almost 20 years since continued on page 2 Visit www.swift.com for more information about SWIFT and its portfolio. continued from page 1 constant spending level, while increasing customers migrate to new platforms, their usage. “The programme now covers further enhancing the opportunity for 80% of FIN traffic and represents the major In addition to reducing total cost of ownership.” contribution to growth for messaging,” A special fixed fee programme (FF) message price says Boico. In addition, a special discount was introduced in 2008 for a number of has also been introduced for high volume reductions enabled by large users, allowing them to maintain a our increased scale, Graph 1: Price reductions: evolution Average Message Price (in EUR cents per Kchar) we have also helped customers migrate to new platforms. Andre Boico, SWIFT bilateral links, ensuring that SWIFT remains competitive in highly concentrated markets segments. “We will continue to lower prices in the new strategic cycle,” says Vanbever. “We are committed to a new challenge of reducing prices by 30% to 45% by 2020, while our non-messaging services and products will be addressed with targeted price actions.”□ SWIFT’s traffic health check Compliance Analytics helps financial institutions analyse their SWIFT traffic patterns to identify potential risk. Compliance Analytics ith regulatory compliance has the potential to requirements spreading help a wide range of globally, the data that W financial institutions must institutions of various analyse to ensure compliance is sizes, complementing expanding. What is more, the larger the bank, the more likely the data is to be our Sanctions Testing spread across multiple IT systems, subsid- and Sanctions iaries and formats. An auditorium session this afternoon Screening services. will show how Compliance Analytics, Brigitte De Wilde, SWIFT part of SWIFT’s suite of financial crime compliance services, can leverage existing Many smaller banks meanwhile are data to help banks identify behavioural being asked by their large correspon- anomalies, unusual patterns and trends, dents to enhance the transparency of and other potential warning signs within the challenges involved in gathering it in their transactions so they do not expose their SWIFT traffic patterns. house may vary with size. “Large institutions them to risks they would not want to take. Unveiled at Sibos in Boston, the service find it hard to centralise the data they need, “Since all the requisite information passes has already attracted a number of large as it is often dispersed around the organi- through SWIFT, that is something we can institutions as customers. “Compliance sation in a range of formats. Consolidating certainly help with,” says De Wilde. Analytics has the potential to help a wide that information at an enterprise level is very To address the needs of smaller range of institutions of various sizes, costly and time-consuming,” says De Wilde. institutions, SWIFT recently introduced a complementing our Sanctions Testing The Compliance Analytics service Compliance Analytics Reporting Service and Sanctions Screening services,” says was designed together with the industry that provides its benefits on a consul- Brigitte De Wilde, head of financial crime following dialogue with major banks about tancy basis. intelligence and services at SWIFT. the specific questions they needed to In addition, a new data quality service She suggests that, faced with increased answer. SWIFT has also predefined a set coming in 2016 will help banks of all sizes compliance requirements, all banks are of reports and analysis that can be tuned address FATF16 data-quality recommen- looking for the type of information that to the specific needs and objectives of dations for originator and ultimate benefi- Compliance Analytics can provide, though each customer. ciary information in payments messages.□ 2 SWIFT at Sibos I Wednesday edition 2015 Refining sanctions compliance Today’s auditorium session, also part of the Compliance We wanted a common, Forum, will outline new functionality in SWIFT’s Sanctions Screening and Sanctions Testing services. neutral, third-party assessment of how WIFT’s Sanctions Screening The main new development is the and Sanctions Testing solutions introduction of a Peer Assessment well the filters are are designed to cater to the service. “We launched Peer Assessment functioning in these Sneeds of small and large insti- this year, after working for two years tutions alike by offering both a hosted with our Sanctions Advisory Group branches. SWIFT’s screening service and a testing facility for and various pilot customers to Sanctions Testing banks’ in-house screening systems. define a framework that provides insight “Since last year, we’ve enhanced the and understanding into how your filter service is helping features, functionality and coverage of operates in comparison with your peers,” us evaluate filter our Sanctions Screening service and explains Tony Wicks, Sanctions Testing now have over 380 clients using it in 120 product manager, SWIFT. performance. countries,” says Nicolas Stuckens, head Unlike benchmarking exercises that Larissa Zalomikhina, Sberbank of sanctions compliance, SWIFT. leave institutions chasing arbitrary institutions struggle with list management “Users can now screen all structured targets, Peer Assessment helps institutions because sanctions lists come in different transaction formats, including SEPA and understand their performance in relation to formats from different sources,” says Fedwire, as well as transactions sent their peers, says Wicks. “Institutions have Stuckens. “We will be introducing a new, over other networks,” explains Stuckens. different business and risk profiles and SWIFT-hosted service in 2016 to help with “Sanctions Screening supports greater may be operating in different geographies,” that process. Providing a central platform flexibility and back-office integration, and is he points out. “The Peer Assessment for list standardisation and distribution better adapted to the needs of corporates approach takes that into account, while will simplify the process of managing and and other institutions that need to screen also enabling users to standardise their customising feeds of data targeted at the ISO 20022-formatted payments used approach in line with industry best practice.” the multiple systems of an organisation. in SEPA. We’ve introduced specific rules It will also support the development of to allow users to tune their settings to Continuous assurance community-based lists of risk information, reflect their own risk appetites and reduce In addition says Wicks, the industry is facilitating industry collaboration on false positives.” moving from annual one-off, point-in-time sanctions compliance.”□ “Regulators are putting more pressure testing to continuous assurance

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