In the closing plenary on Thursday, host Leonard Schrank, SWIFTÆs CEO, asked panelists to summarise the weekÆs events and articulate the challenges that stand in the way of achieving SWIFTÆs four-pronged expansion strategy.
The general comments from the stage were positive. ôSibos has no doubt become a major industry gathering,ö says Jacques-Philippe Marson, president and CEO of BNP Paribas Securities Services and a SWIFT board director. ôI was astounded by how many people were attending the standards forums.ö
Mark Hodgkinson, general manager of ShellÆs regional treasury centre in Singapore, says: ôAs a corporate I have been very impressed by how slick this show is. ItÆs been a privilege to get under the skin of SWIFT and see how it works.ö
Schrank then turned to the topic of integrating India and China further into the SWIFT organisation. ôThere is no doubt that the countries of Brasil, Russia, India and China (BRIC) represent great opportunities but how do members overcome some of the pitfalls of operating in these countries, particularly in India and China?ö asked Schrank.
Hodgkinson, who claims ShellÆs business in China is worth $7 billion, says the biggest challenge for people in the back offices of corporates and banks is to keep up with the lightening pace of the front office. ôJust because we might want to perfect our processes and standards further isnÆt going to stop the front office from racing out and signing up new business. Infrastructure in these markets is certainly lagging and it needs to be kicked along a bit.ö
Subramanian Ramadorai, CEO of TATA Consulting Services, reckons the constantly evolving regulatory framework in the region is one of the biggest challenges facing companies and banks. ôThe regulatory framework needs to be better understood by players in the market. They must appreciate that setting regulation in places like India and China is a slow process but that it is heading in the right direction.ö
One way of deepening this understanding is to partner with the locals, says Marson. ôOur recipe for success has been to buy into local banks,ö he says, stating that BNP Paribas has a 20% interest in Nanjing City Commercial Bank. ôIn China, we know that this will hold us in good stead when the government relaxes the rules to allow foreigners to deal directly with corporates in RMB business.ö
The fourth panelist at the plenary then turned the tables, focusing attentions on SWIFT. Lynn Mathews, the networkÆs board member for Australia, says that if SWIFT wants to be more involved in the region it first has to solve its image problem. ôIn Asia, SWIFT is perceived as a Euro-centric body that is only involved in cross-border business and is mainly a technology provider. For us to succeed in the region, we have to change that image.ö
Ramadorai says SWIFT has a great opportunity to do well in markets like India where technology is the main way of engaging future banking customers. ôTechnology is the best way to come into contact with new customers as they come out of poverty.ö He says opportunities for foreign participation in India include becoming involved in the governmentÆs $320 billion programme to improve public infrastructure, and converting the 20% savings ratio into investments.
From BRIC, the discussion changed to the greater automation of alternative assets. It was acknowledged by all on the panel that the biggest gap in the straight-through-processing of alternatives is not in listed derivatives but in over-the-counter derivatives and hedge funds.
ôIn the OTC market there can be transactions that remain unconfirmed for around 25 days,ö says Marson. ôBecause hedge funds are run by investment bankers, there is more attention paid to structuring the instrument than watching the back office.ö Marson says automation solutions arenÆt going to be straight forward and will probably employ different technologies than those used by exiting securities members. ôOne way to move forward is to create screen capture technology for the investment bankers that are structuring the derivatives.ö
From here Schrank directed the discussion to one of the more popular topics at Sibos 2006 û the plan to give corporates greater access to the network. The panelists agreed that while the right moves were being made to let corporates in, banks need to do more to introduce their clients to the network. The real problem in achieving greater take-up is the level of customisation that exists in propriety bank-to-corporate communication systems and the fact that banks are still competing with each other on their technology offerings.
Hodgkinson from Shell admitted that large multinational companies like his were responsible for driving the non-standard approach to bank-to-corporate communication. ôNo two corporates are the same, so perhaps SWIFT is never going to achieve true standardisation in this area. Maybe there needs to be more flexibility in how the messaging platform is developed.ö
Ramadorai says SWIFT needs to focus on educating corporates about how the network can help their business processes. ôFor SWIFT to work in the corporate space it has to acknowledge the small- to medium-enterprise market,ö he says. ôIn the emerging markets in particular, large corporates are supported by clusters of SMEs and SWIFT must decide whether it is going to focus on just big businesses or whether it will include the rest of the supply chain too.ö
The last of the 2010 strategies to be discussed was European integration and the introduction of the Single Euro Payments Area (SEPA). Marson says while the banking industry in the euro-zone still needs to do some work on the formation of standards, progress has been made. ôI think the biggest issue is the lack of commitment from the public sector to make sure that the laws are there to support SEPA when it comes in to force in 2008.ö
Schrank says the message that he picked up during the week was that banks still had some work to do to engage their corporate clients in their SEPA plans.
At this point Hodgkinson drew parallels to the corporate access debate. ôIn general there needs to be more dialogue between banks and corporates. The banks I have spoken with during the conference say that they wouldnÆt bring their clients along to the event because it would expose them to their competition. But I think they need to move beyond these fears and invite more corporates along to the forum. Corporates need to be brought into more SWIFT discussions.ö
Attendees at Sibos 2007 in Boston will no doubt be debating how far SWIFT and its members have come in solving some of these issues.
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