SWIFT on course for bigger price reduction

Deloitte CFO

SWIFT expects to deliver a 57% price reduction on its messaging services by the end of 2015, exceeding the original target of a 50% reduction set out by the company in 2010 under its SWIFT2015 strategy.

In 2010, a 30-50% price reduction was pencilled-in between 2010 and 2015, a goal the co-operative achieved at the high end of the commitment in 2014, one year ahead of schedule. By the end of this year the total price reduction over the five years is expected to reach 57%.

SWIFT noted that its price reduction efforts began in 1996 with a 30% decrease in messaging prices. Since 2001, these have been enhanced through formal price reduction commitments and principles, including:

  • Encouraging usage as opposed to maximising profit.
  • Recognising the contribution of large users and their role in creating economies of scale.
  • Maintaining the cooperative spirit and transparency.
  • Reducing barriers to entry for smaller users.
  • Responding to competitive threats.
  • Being economically sustainable.

The new strategic five year plan, SWIFT2020, challenges SWIFT to continue investing in the security, reliability and growth of its core messaging platform, whilst making additional investments in existing services and delivering new and innovative solutions.

An additional part of this plan is the new long-term, structural price reduction programme that will be put in place in January 2016. This is the fourth strategic pricing plan SWIFT has introduced to the community in the last 15 years. The new plan calls for a 30-45% price reduction by the end of December 2020, taking into account the necessary investments to grow the business.

ISO 20022 harmonisation

Separately, SWIFT announced that a group of financial market infrastructures (FMIs) have endorsed a Charter to jointly implement a global framework enabling ISO 20022 harmonisation across the industry.

The Australian Securities Exchange (ASX), Bank of Canada, Clearstream, Canadian Payments Association (CPA), CLS, Euroclear, Hong Kong Interbank Clearing (HKICL), Russia’s National Settlement Depository (NSD), Southern African Development Community (SADC), VP Securities Denmark and ACH Colombia are among the first to commit to the plan for an industry designed framework for ISO 20022 implementation.

“With over 200 initiatives around the world aimed at implementing ISO 20022, the need for harmonisation of the rollout is clear,” said CPA president and chief executive (CEO) Gerry Gaetz. “If each region makes a concerted effort towards harmonisation, the global community will benefit. Without this, we run the risk of fragmentation, ultimately making the implementation process more complicated and reducing potential benefits.”

The ISO 20022 harmonisation Charter is based on four principles:

  • Share information between FMIs about ISO 20022 usage.
  • Adhere to global market practice where it exists and contribute to new global market practice initiatives.
  • Introduce stricter message version control and release management process and timing.
  • Publish up-to-date information about standards on a common platform, including market practice compliance, messages and versions used and message release timeline.

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