A New Era for Global Financial Transactions

  • Tom Zschach, Chief Innovation Officer, at SWIFT

  • 08.12.2020 07:47 am

SWIFT’s Chief Innovation Officer, Tom Zschach, speaks to Financial IT about the cooperative’s ambitious new strategy and its innovation agenda moving forward

You have been Chief Innovation Officer at SWIFT for a year now and the world has changed significantly in that short time, how do you see financial services adapting to the ‘new normal’?

The COVID crisis is clearly propelling a significant acceleration in the digitisation of the global economy, and the financial services industry needs to support this. It means that money and payments needs to be fully digital. This has already been happening for some time with the growth of e-commerce and electronic payments but now this process is really accelerating.

The financial world has to move at pace, we must continue to innovate and constantly aim to better meet our customers’ needs in this new world.

SWIFT is a proven leader in driving forward digitisation of financial services and we fully intend to continue. That’s why we are rolling out a new strategy to further support our members with new capabilities for payments and securities in a digital economy.

SWIFT’s new strategy sounds ambitious, can you tell us a little bit more?

Over the past 40 years, SWIFT has created and developed the world’s leading global transaction processing infrastructure with financial messaging at its heart. And we must continue to evolve to remain ahead in an age of rapid innovation and change.

Building on our strong foundations we have set out a bold new strategy that will enable frictionless and instant transactions with the potential to connect more than 4 billion accounts worldwide across our network. To achieve this vision, we are developing a new platform to further improve the speed and efficiency of processing cross-border payments and securities.

“In essence, SWIFT’s new platform will manage each transaction from the centre. Individual institutions will communicate directly with us – via messaging or APIs – and SWIFTwill orchestrate the required interactions with value added services other participants. It will maintain full transaction data at the centre, mediating between users of different protocols and formats, to ensure that no data is lost, corrupted or over-written in the process.”

As SWIFT’s Chief Innovation Officer, what are some of your key priorities on your agenda?

The world is changing very fast and developments we see happening such as in AI, machine learning, digital currencies –  to name only a few – are all set to have a big impact on financial services.  SWIFT is working side-by-side with the global financial community to harness these technologies to deliver innovative solutions that scale in both payments and securities.

Yet, at the same time, we mustn’t forget the enormous impact that innovating around business models, service levels and harmonised standards can have on the quality of the experience we are able to offer our customers. SWIFT gpi is a great example of this. Through responsible, collaborative innovation the financial community now transfers millions of fast, transparent and trackable payments globally every day.

The new platform we are currently developing is another great example of responsible innovation. SWIFT is combining new and current technologies with a change in the approach for end-to-end processing of financial transactions– all to further improve the experience our members can offer their customers.

How has SWIFT evolved its approach to innovation?

Innovation at SWIFT is 100% purpose-led. Since its incorporation, SWIFT has collaborated with financial institutions around the world to identify industry-wide challenges and develop solutions for the benefit of the entire global financial system. In this way, we have co-created with our community the products and ways of thinking that are driving change across the financial services.

This year we set a new course for our innovation approach. Our innovation team is intently focused on working with our internal teams to accelerate and de-risk the creation of new products and services we can deliver to our members. Equally, we working directly with our members and the wider financial ecosystem in ‘innovation sprints’ where our team collaborate and co-create mutually beneficial solutions.

Finally, we remain focused on exploring the latest technologies such as Cloud and AI on behalf of the wider financial community. When making these assessments we always ensure we remain focused on solutions – steadfastly investigating how we can harness the power of the technology in hand to solve real-world industry challenges and transform the products and services we can offer our community.

It seems that you have a packed innovation agenda, alongside the roll-out of the new platform. Could you outline some of the key benefits the new model will deliver?

SWIFT will enable end-to-end transaction management, leading to mutualised services such as pre-validation of essential data, fraud detection, data analytics and transaction tracking, as well as evaluating going deeper into screening services. These are capabilities that today banks invest in individually and is costly and resource intensive. By bringing together transaction data and common services in one place, we will significantly improve end-to-end efficiency, and reduce costs across the entire industry.

The platform will also reduce dependency on major migrations, with the community no longer moving at the speed of the slowest. As a first example of this, we expect the migration to ISO 20022 for cross-border payments to go more smoothly and with much less disruption because the platform will be able to insulate one financial institution’s schedule from another.

What makes you so confident this is the right approach?

We know it is the right path to take having developed this strategy after a lot of analysis and engagement with the industry.. We will of course continue to engage throughout the creation and rollout of the platform.

Our Board, representing the entire community of 11,000 institutions unanimously approved our approach and we are confident we are creating a platform with faster technology, smarter and better services that our customers can trust and will become their foundation for innovation towards their own end-clients.

Where can we find out more?

For more information on how SWIFT is shaping the future of payments and securities, please visit our website here.

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