The SWIFT global payments innovation initiative

February, 2017 SWIFT scrl is the global provider of secure financial messaging services 40 years serving 1980: First Asian countries connect to SWIFT 2001: SWIFTNet goes live 1986: SWIFT launches value-added services 2004: ISO 20022 introduction the global 1987: SWIFT launches securities services 2008: SWIFT launches Alliance Lite financial 2009: SWIFT launches Innotribe community

24 years serving 70s 80s 90s 00s 10s India’s financial community

1973: Swift is born 2012: SWIFT India joint venture 1976: First operating centre opens 1977: SWIFT goes live – first message sent established 1979: North America connects to SWIFT 2015: SWIFT India approved to provide Now serving domestic messaging services, and platform is live India’s domestic 1992: Interbank File Transfer goes live 1994: Customer support centre opens in Hong Kong financial markets 1997: SWIFT technology centre opens in the United States The correspondent banking model is under pressure

End customers increasingly demanding Customers and regulators push for better payments service Domestic payments going real-time

Regulatory intensity and increasing Banks rationalize their costs correspondent banking networks Network rationalization

Disintermediation Digital innovators offer new disruptive solutions Enhanced value proposition

GTR 2017 4 Corporate expectations vs. cross-border bank services

Uncertainty after payment initiation

Predictability of the payment reaching the beneficiary account

Inconsistencies between amount sent and received

Fee transparency, including FX costs and deducts

Cumbersome handling of exceptions and investigation

Payment traceability and automation (STP)

Incomplete or missing remittance information

Simple reconciliation of invoices and payments

GTR 2017 5 SWIFT gpi: secure, faster, traceable & transparent cross-border payments

Intermediary Your bank bank 2 Traceable End-to-end payment tracking

gpi a1700db1-90b2-4948-83d8-6309c5c34a3d

Invoice SWIFTgpi Your company Rulebook $

1 Faster payments Same day use of funds* Beneficiary’s bank Beneficiary Transparent fees 3 Full remittance data Deducts and FX 4 Unaltered reconciliation info

GTR 2017 6 *Within the time zone of the receiving gpi member SWIFT gpi concept

Messaging technologies Accessible by any bank

Still reach non-initiative SLA rulebook banks Core transaction banks

Reaching any bank

Tracker

Directory Observer

SWIFT gpi overview - December 2016 Value-added product suite Payments tracker “in the cloud” (bank view)*

Transparency of total fees and time

“One-glance” status overview Unique, end-end tracking number

Track path, in real-time Central payments database, hosted at SWIFT

Updated via MT199 or API Details of banks along the chain Data consumption via GUI, via MT199 (push) or via API (pull)

GTR 2017 8 *The gpi service may vary across banks Objective: deliver a better customer payment experience

“After” “Before” The SWIFT global payments innovation (gpi) Traditional correspondent banking initiative

1. Slow, can take multiple days 1. Fast(er) (start with “same day”) 2. Expensive, multiple deducts 2. Higher efficiency & less intermediaries 3. Secure and compliant 3. Secure and compliant

4. No transparency on cost and time 4. Transparent, with payments tracking

5. Convenient and ubiquitous 5. Convenient and ubiquitous 6. Open and inclusive (global reach) 6. Open and inclusive (global reach) The objective is to first fix these key pain points

GTR 2017 9 The SWIFT global payments innovation (gpi) initiative

Delivering the future of cross-border payments ̶ Proactively respond to evolving customer needs for more speed, transparency and traceability in cross-border payments ̶ New multilateral rulebook, initially focused on business-to-business payments ̶ Building on the foundation that banks provide in security, resiliency and compliance ̶ Delivering real-world innovation: building on existing platform, embrace new technologies along a strategic roadmap ̶ Global reach, collaborative industry-wide initiative, organised by SWIFT ̶ Open model, participation based on operational quality

 Fast  Secure  Real-world innovation  Transparent  Resilient  Global reach  Traceable  Compliant  Open model

GTR 2017 10 SWIFT gpi customer credit transfer – Value proposition for corporates

Key features Benefits for a corporate

Faster, same day use of funds* Grow international business

Transparency of fees

Enhance supplier relationships End-to-end payments tracking

Increase treasury efficiencies Remittance information transferred unaltered

(*) within the timezone of the receiving gpi member

GTR 2017 11 SWIFT gpi customer credit transfer – Value proposition for banks

 Increase operational efficiency in your customer claims and Reduce investigations management Costs  Ability to do cash forecasting and optimise your liquidity management

 Enhance customer satisfaction by offering speed and Delight transparency in cross-border payments Customers  Build a reputation of leader in global payments innovation

Grow  Retain and attract new customers Business  Sell payments services to third parties

GTR 2017 12 SWIFT gpi initiative banks

50% 30% 1. ABN AMRO Bank Europe, 63. Asia Pacific 2. ABSA Bank Middle East, 64. 3. Alfa-Bank Africa 65. Nedbank 4. Australia and New Zealand 92 66. Bank* Banking Group* initiative banks 67. Oversea-Chinese Banking Corporation 5. Axis Bank 68. PKO Bank Polski 6. Banco Bilbao Vizcaya Argentaria Channelling payments 69. Promsvyazbank 7. Bangkok Bank into 224 countries 70. 8. Merrill Lynch* 20% 71. Raiffeisen Bank International 9. * Representing 71% of all Americas 72. Resona Bank 10. Bank of New York Mellon* SWIFT cross-border 73. Royal Bank of Canada* 11. Bank of Nova Scotia payments Regional representation of 74. Royal 12. Bank of the Philippine Islands SWIFT gpi banks 75. Sberbank 13. Bank of Tokyo-Mitsubishi UFJ* 76. Siam Commercial Bank 14. Banco Bradesco 31. Crédit Agricole 47. ICICI Bank 77. Silicon Valley Bank 15. 32. Crédit Mutuel-CIC Banques 48. IndusInd Bank 78. Skandinaviska Enskilda Banken 16. Banco de Crédito del Peru 33. Credit Suisse 49. Industrial and Commercial 79. Société Générale 17. Banco do Brasil 34. CTBC Bank Bank of China* 80. SpareBank 1 18. Banorte 35. * 50. ING Bank* 81. Standard Bank of South Africa 19. Banque Européenne d’Investissement 36. DBS Bank* 51. * 82. Bank* 20. * 37. 52. Intl. FCStone 83. Sumitomo Mitsui Banking Corporation* 21. Bidvest Bank 38. DNB Bank 53. Investec 84. 22. BNP Paribas* 39. Ecobank 54. Itaù Unibanco 85. Tadhamon International Islamic Bank 23. Bank 40. E.Sun Commercial Bank 55. JPMorgan Chase Bank* 86. TMB Bank 24. CaixaBank 41. Bank 56. Kasikornbank 87. Toronto-Dominion Bank 25. Canadian Imperial Bank of Commerce 42. Fifth Third Bank 57. KBC Bank 88. UBS 26. China Construction Bank 43. FirstRand Bank 58. KEB Hana Bank 89. U.S. Bank 27. China Merchants Bank 44. 59. 90. * 28. * 45. Landesbank Hessen- 60. Bank 91. United Overseas Bank 29. Commonwealth Bank of Australia Thüringen 61. Maybank 92. * 30. 46. HSBC Bank 62. Mizuho Bank*

13 GTR 2017 (*) Pilot bank SWIFT & Trade Digitization

GTR 2017 14 How SWIFT supports Trade digitization

FileAct FileAct MT7xx MT798 UCP 600 MT798 URDG 758 ISP98

1 2 3

MT798 MT798 Buyer MT 7xx Seller

Buyer’s bank(s) Seller’s bank(s)

Streamline the L/C, Guarantees and open account trade transactions Automate workflow of the trade life cycle to reduce cost Accelerate handling of discrepancies and settlement Move to paperless transaction processing GTR 2017 Enhance visibility on credit lines 15 Win-win benefits for corporates and banks

Benefits Corporates Banks Consolidated Trade finance positions and increased visibility Single multi-bank & multi-business channel Dematerialization & standardization Re-use bank-to-bank FIN MT7xx data fields with Corporates Re-use of FileAct for any needed documents to be included in the information flows Overall cost reduction Improved straight-through processing end-to-end Improved overall transaction time Only one interface development to integrate to Bank back office (no need for vendor-specific interfaces, procedures, contracts, formats) Corporates and banks can make independent decisions on technical platforms and implementations

GTR 2017 16 Questions? www.swift.com Contact: [email protected]

GTR 2017 17