In his current role as SWIFT’s EMEA head, Alain Raes says that he has had significant exposure to Asia during his career. In EMEA he frequently liaised with Asian banks and corporations operating there during his day-to-day work at SWIFT. For example, many global clients based in EMEA have a huge presence in Asia-Pacific.
Standard Bank in South Africa is a case in point. It is 30% owned by the Chinese and that country’s trade with Africa is exploding, points out Raes. Additionally, there are trade corridors between China and South Africa and the Middle East, he explains, as well as connections between India and Bangladesh and Africa. “In the future we should work more at SWIFT to build upon these trade corridors and aid connectivity.”
China, India and ASEAN are Priorities
SWIFT has an Asian strategy that was reviewed and approved within the past year, Raes explained to gtnews at the recent Sibos 2012 trade show held on 29 October-1 November in Osaka, Japan. He intends to use that strategy to focus on the markets and segments where it can have an impact. “We need to be focused on a certain number of priorities,” he says, “and do those priorities well and efficiently.”
One pillar of the strategy is China, which is moving very fast. He says that SWIFT will have an impact in areas such as renminbi (RMB) internationalisation, and there is a role for SWIFT connecting China to the rest of the world.
A second priority is India, and Raes says it is central in the SWIFT strategy. “There is a major project underway to expand SWIFT’s reach across India.” While SWIFT is currently being used by Indian financial institutions (FIs) at a cross-border level, he says, it is also working with the Reserve Bank of India (RBI) and with other FIs to make SWIFT one of the vehicles for local transactions.
A third focus is the Association of Southeast Asian Nations (ASEAN), where SWIFT can use its experience in Europe or Africa to help streamline operations and make systems more efficient and less risky. “We can replicate those benefits and values in these countries.”
Japan is also a market that is important for SWIFT. According to Raes: “Today, Japan is a significant chunk of the business sector in Asia. The reality is that messaging in Japan is already cross-border.” SWIFT is not operating domestically at the moment, however he explains, and only 5% of international trade is going through SWIFTNet. To expand its business SWIFT is working with the Japan Securities Dealers Association (JASDAC), which is moving to implement SWIFT for securities messaging. Some FIs have already committed to using SWIFT as a messaging layer for JASDAC.
What SWIFT is planning in Asia is not that different than in Europe or the US, Raes maintains. “We need to increase the pace of corporate adoption. We should certainly accelerate working more proactively with Asian banks to have more corporates adopt the SWIFT network in the region.”
Its new shared service centre (SSC) in Kuala Lumpur, Malaysia, is designed to support its expansionist goals. “Over the years we will group support and back office functions in Kuala Lumpur,” he says. “We will show that SWIFT is not just a European-based centre, it is also in Asia. We want to develop our presence in the region, domestically and across borders.”
A key metric for Raes is that Asia currently accounts for approximately 28% of global gross domestic product (GDP) and just 20% of SWIFT volume. “How can we keep the same pace of growth and, in three or five years, match GDP? That is my main challenge.”
While initiatives are already underway to expand SWIFT connectivity in Asia, there’s plenty more to achieve and Raes will clearly be quite busy once he moves to Asia early in the New Year.
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