SWIFT, the financial messaging provider for more than 11,000 financial institutions and corporations in more than 200 countries and territories, announced that it has extended ProFIX as Business Partner for new regions: Czech Republic and Slovakia. Since 2019 ProFIX Company delivers the full range of SWIFT’s products and services for six countries: Armenia, Belarus, Czech Republic, Georgia, Slovakia&Ukraine
ProFIX Company is a leading system integrator focused on the banking and financial sectors, with 23 years’ experience in 30+ countries. ProFIX first started working with SWIFT in 2002, SWIFT Business Partner status in 2013 became an extension of SWIFT cooperation, and today in 2019 we have 120+ customers in 6 countries using services to access the SWIFT network.
As a SWIFT Business Partner ProFIX provides tailored, expert commercial support to customer in key markets, and works to meet the requirements of SWIFT clients across a broad range of products and services. In particular, the main focus in the service portfolio for 2019: SWIFT gpi for fast and transparent cross-border payments, Payment Controls – a service for monitoring and blocking real-time suspicious and fraudulent payments (cybersecurity), Sanction Screening – service that screens your incoming and outgoing messages against the latest sanctions lists, SWIFTRef for reference data and KYC – shared platform for managing and exchanging standardized Know Your Customer (KYC) data.
Since January 2019 with ProFIX cooperation customers in Czech Republic and Slovakia will be able to benefit high-quality service and easy access to the specific commercial support they need.
Source: Sibos Insider, http://cib.db.com
The third day of Sibos 2018 was notable for the race 5K run&walk, sponsored by Oracle, which wound around the Darling Harbour waterfront from Metcalf Park. More than 250 runners, joggers, and walkers took part in the race.
The Wednesday breakfast keynote with Dr Ayesha Khanna went down a storm. Diving into how to leverage the potential of Artificial Intelligence, she advised audience members to “see every problem as an opportunity for financial innovation.” She explained how AI is becoming ever prevalent in the megacities, shielding some of them from terrorism for example, with 176 million surveillance camera’s built into the eyewear worn by the police. The technology uses two billion images provided by the Chinese government to train on. Using AI and data, anything is possible.
In another example, Khanna explained how UK company Babylon Health is using AI to give patients online advice, alleviating an overstretched national health service. “The very fabric of our existence depends on data, IoT and AI”, she said.
This is why companies are constantly adapting their service offering to co-exist with technology. Nowadays it’s hard to figure out who does what, said Khanna. Companies want to capitalise on their data and their technologies to give new services to customers and eight out of 10 times that request relates to fintech and financial services.
For example, Norwegian telco Telenor bought a microfinance company in Pakistan to use its data and AI to provide loans to the many millions of the unbanked in Pakistan. In a country with 206 million people, very few people have bank accounts and companies have been slow to innovate to meet this demand. Through Telenor’s acquisition they now have an easy app-enabled account through a service called easypaisa. This is the reality we live in now and for which we need to prepare, says Khanna.
Are we prepared for this disruption? Khanna argues that everybody needs to learn about these fourth industrial revolution technologies and until that is done their education is incomplete. This is why Singapore gave grants to fintechs to set up AI hubs there, “so financial services professionals are equipped with the skills and resources to be a financial hub”, she said. “But without their domain expertise I couldn’t imagine this replacing people. You need a team of super heroes, then you need to ensure the team of the future has a mixture of AI experts, technologists, bankers and sociologists in them and that is all relevant to make the product needed by your consumers.”
Khanna stressed the need to redefine education and work in intra-disciplinary teams. “This is why we shouldn’t treat AI as a piece of technology, but as colleagues. Our domain expertise is empathy, strategy and business knowledge. It is not an option for you not to understand AI. With the advent of more regulations in the European Union, some decisions need to be explained by humans and not by technology.”
In a panel discussion titled SWIFT gpi – Maximising its value through APIs (moderated by SWIFT’s Head of Messaging Product Management Steve Dumont), Paula Roels, Head of Market Infrastructure & Industry Initiatives, Cash Management, Deutsche Bank, joined Michael Thomas, Divisional Executive, Global Business, Transactional Services, Nedbank and Hau Peng, Deputy General Manager, Operation Management Department, ICBC, to share their experience of how API connectivity to gpi has enabled them to provide their clients with the same experience they are used to in their personal lives.
Using APIs, it integrates easily into the bank’s applications and the client is served better as a result. “Our customers wanted full transparency on a daily basis – we allowed them access using our front end Cash Inquiry app via an API layer on top, so that they can make a call to the tracker via the API interface to track their payment.”
Nedbank’s Michael Thomas spoke with equal fondness about the gpi payments tracker which helped customers with their remittances to 34 African countries. It addresses the client frustration of accessing the underlying payments themselves. They now have access to the visibility of a payment in the enquiries process area.
While nobody could miss all the SWIFT gpi sessions resonating from the SWIFT hub zone on Level 2, with 80 banks now live with 15 of them having integrated the gpi tracking system into their portals (including Deutsche Bank), the next question in the gpi journey was how corporates could use gpi given their inevitable preference to multi-bank.
This was answered in the other cracking gpi session that day (this time with a corporate perspective) entitled SWIFT gpi – Delivering value to multi-banked corporations and chaired by SWIFT’s Sebastian Rojas (who chaired a similar panel at EuroFinance), with the corporate camp occupied by Martin Schlageter of Roche, and Peter Claus Landi of General Electric. Representing the banks were Deutsche Bank’s Global Head of Payments & Collection Products, Christof Hofmann and Citi’s MD of Global Clearing and FI Payments, Mark McNulty.
Panelists shared with a packed room the work done by a group of international corporations and gpi cash management banks to streamline the gpi experience for multi-banked corporates. More information on this can be found in the flow article, ‘Moving swiftly on’.
"Knowing how long it will take for a payment to get there is a huge benefit, and transparency is crucial – when I use Amazon I know what is being shipped and when it gets to my doorstep," said GE’s Landi. He added, “Without sight of all bank transaction deducts, the corporate does not get the full picture."
Schlageter added that another pain point for multi-bank corporates was having to go into each bank’s payment tracker to reconcile what had happened to one payment. It was these issues that prompted the formation of the pilot group in November 2017 to test a SWIFT gpi for Corporates (g4C) standard that enables corporates to initiate and track gpi payments, via multiple banks, directly from their ERP and treasury management systems.
The solution lies in the Unique End-to-End Transaction Reference (UETR), the equivalent of a parcel tracking number, starting with the corporate, which is sent to banks around the world and then “we get it back, with the reconciliation and tracking of our payments.” He pointed out that this single tracker in real time is a much more professional solution.
Scalability is key, “we need all of our banks to sign up”, said Landi. Deutsche Bank’s Hofmann pointed out, “We have an environment which is undergoing massive change. The emergence of open banking and real-time payments as well as new competitors in the payments area have helped to create a sense of urgency. Also, some of the technology available now that wasn’t around ten years ago makes it easier to implement the gpi solution.”
The following day on 25 October 2018, SWIFT announced that nine corporates supported by seven gpi banks had successfully implemented multi-bank gpi payments and tracking through their treasury applications. The platform also gives corporate treasurers full transparency over fees and FX.
Just as Singapore decided to disrupt itself by inviting a fintech in so that its banks could learn about AI and other new technologies, Wednesday’s Big Issues Debate on ‘Disruption in the payments landscape’ carried this idea forward by talking about the importance of collaboration to meet customer demand.
Banking is not enough
With these technologies and instant payments transforming the financial landscape, the Big Issue Debate featuring Michael Spiegel, Deutsche Bank’s Global Head of Cash Management carried an important reminder: It’s no longer enough to turn up and be a bank. In addition, factors including the regulatory drive for open banking and consumer demand for real-time payments has led to the rise of fintechs and new players in the industry, causing disruption in the once relatively unchanged payments sector. Banks need to engage in this new ecosystem and collaborate with others.
Spiegel joined Ulku Rowe, Technical Director, Financial Services, Google, Esther George, President and Chief Executive Officer, Federal Reserve Bank of Kansas City and Leila Fourie, Chief Executive Officer, Australian Payments Network to discuss how collaboration and the adoption of those technologies should be customer led.
Banks had been leapfrogged by the tech giants in innovation, while they were dealing with their post financial crisis strategic challenges. They are now catching up, said Spiegel. But these institutions should not wait to see what new technology comes in and then decide what to adopt and who to partner with. The reason for this is simple: something phenomenal is happening with the rapid evolution of technology creating a level playing field for everybody, and providing lots of access for interactions with clients that have never been possible before. The time to act is now.
Old with the new
The balancing of legacy and new technology was also discussed. New tech rails have come up, but it’s a question of how they will work with legacy infrastructure, which is still used extensively. Illustrating this, George reminded the audience that the infrastructure for cheque processing is still being used, with about 18 billion cheques moving through the system.
Spiegel explained that some legacy is always required even if for the simple reason that it creates opportunities to have some connectivity with APIs. The way payments and settlement are done won’t change but the communication with customers will change a lot. “The challenge is that we don’t know where payments are going to land but the good news is that we are working with the fintechs and offering the same services as they are on a retail basis.” Examples of working together to overcome this challenge were explained in a whitepaper titled Piecing together the global payments puzzle.
Echoing the words of Mark Twain, who said that reports of this death were greatly exaggerated, Spiegel said that the threat of complete overhaul of the banks by the fintechs were “greatly exaggerated”. “Instead, the industry is now in a connected ecosystem that will drive a better environment. We need everybody’s support and help in the future.”
And this includes the regulators’ visibility of the payment system because new technologies and incumbents also carry a risk. If a wallet provider suddenly disappears there is a different challenge to protect the customers, said Spiegel. “It’s about how technology is going to change future customer demands, so we need to work with regulators to create a collaborative environment.”
Secrets of success
To that end, it’s less about whether fintechs or banks will dominate the space but there are a few characteristics of success: those who own the front end of the customer relationship, those who are agile and can respond to customer demands and those who use artificial intelligence, machine learning and are able to store, manage and manipulate data in a meaningful way.
What are corporates demanding? Instant payments are important in the ecommerce environment. It keeps customers super happy. But it needs collaboration between banks and fintechs to add value since 50% of corporate customers want to work with fintechs, but they want a bank to help choose them. “Corporate treasurers cannot easily incorporate a fintech, so we go to them and say here is the trust element we can provide,” said Spiegel. Echoing his article in the Sibos Insider newsletter, where a survey conducted with the Economist Intelligence Unit revealed that corporates value trust and safety over speed, he said that these customers are more likely to use a fintech if incorporated within a bank’s platform.
Spiegel explained this preference in a flow article: Most of the fintechs provide innovative and sound solutions but in narrow fields. Yes, in theory treasurers could replace a transaction bank, but they would need to onboard a multitude of fintechs, or work with a large technology player to cover off the equivalent services. If a provider ended up consolidating all these services onto one platform, it would then resemble and function as a bank, and may get regulated as such.
In that article he indicated that corporates are looking to the banks to design and influence solutions that give them the right experience and called on banks to on-board the right players, provide connectivity and work with other banks in areas where there is no competitive advantage.
The future is now, concluded Spiegel. “Expect the unexpected all the time. Create scenarios and engage in the developing new ecosystem.”
The ProFIX Company team wishes you peace, joy and prosperity throughout the coming year! Thank you for your continued support and partership. We look forward to working with you in the years to come.
On the second day of Sibos, key themes that emerged were those of a new world order, rules of competition that were founded in trade and infrastructure, and how to navigate cross-border risk and payment journeys. The participants have heard how to harness cloud and APIs to future proof financial services.
Source: Sibos Insider, http://cib.db.com
Markets not territory
Setting the tone for Day 2 at breakfast Parag Khanna, founder of Future Map, a data and scenario based strategic global advisory firm. He said while the world remains as competitive as it has always been, the battlefield has changed, and increasingly, “antagonists are connected to each other”.
The speaker noted that today there is much more focus on gaining a trading partner and a market, than on geographical territory.
As for trade wars, he said, they are “nothing new” and “we are battling a trade war every single day” now that “who rules the supply chain rules the world”. Khanna predicted, “We will build more infrastructure over the next 40 years than we have in the past 4000 years.”
Are instant payments really instant?
This Sibos session ‘Instant payments – a real-time reality’ with Australia’s New Payments Platform (NPP) CEO Adrian Lovney, and Karen Birkel of the ECB (TIPS in Europe), and Petia Niederländer of EBA Clearing, Erste Bank Group (RT-1 in Europe) moderated by SWIFT’s Carlo Palmers. All three payment platforms were built on SWIFT rails.
Lovney demonstrated how the NPP worked using OSKO, the first overlay service that sits on the platform with a payment moving in seconds to a pay ID. This provides reach to 50 million accounts.
Niederländer explained how RT-1 started in November last year to process SEPA payments, with around 80 banks next month and 70,000 transactions a day. “We are happy we have one of the oldest banks in the world as well as banks that have only had their licences six months,” she said. TIPS is due to go live next month, said Birkel, and they are still testing. They have seen successful liquidity transfers in the test environment. “We are very confident we will go live successfully on 30 November.” She said this was a small start – 20 banks at the end of November – but more are expected to join in 2019.
Other countries are also on the road to implementation, and Lovney’s observations were that building the central kit was relatively easy, but “back office integration is likely to be more complicated than you think it is”. Banks, he said, are big beasts with a lot of legacy systems. And, you have to be willing to live with imperfection to achieve speed. “We all know you never switch on a system like this and expect ubiquitous reach on Day 1. We agreed around a year before we were due to go live on the minimum critical mass we were prepared to launch with.” The platform focused on person-to person (P2P) payments but they catered for who might need to drive standardised messages across the industry. He also confirmed they have made available an API sandbox to encourage API makers to play around with the tool in the cloud.
Trade wars and new technologies – a new era for trade finance
Economist Dr Rebecca Harding, was back by popular demand, moderating ‘Trade wars & technology – a new era for trade finance’ with Jason Kelley (IBM BlockchainServices), Samuel Mathew (Standard Chartered), Rajkiran Rai (Union Bank of India) and Deutsche Bank’s Daniel Schmand. Faster payments are all very well, but of course reduce the need for working capital, and a resurgence in nationalism and protectionism has ended the steady run towards globalisation over the past 20 years.
“One could argue this is a measure being used to force a single isolated position which has nothing to do with trade and the underlying economics,” said Schmand. “There is no war, it is just an exchange”, said Kelley. However it is an act of aggression – “remember the banana wars in the late 1990s?” said Mathew. He sees the bigger problem being the creation of an environment of uncertainty that could deter investors. Rai made the interesting point that India is a beneficiary of the trade “war” between the US and China once the supply chain gets disrupted, but that there is wider damage to the financial system that hurts everyone because “a lot can happen in 180 days” (the average tenor of a documentary credit), and banks are now exposed to greater risks during that period than they were before.
Turning to the Holy Grail of digitalised trade finance, the difficulty comes when you move outside a national closed ecosystem where rules and regulations are clear (eg Singapore) and go across borders. Schmand said that the issue is not the technology – “it is there and it works” – but a solution that could be tested in a closed ecosystem and then branch out. Another idea was to look at agreeing a new currency and settlement system outside the dollar, euro and yen as the technology continues to evolve. He reminded delegates that trade finance “flows on the back of commercial flows”, and a poll of the packed room indicated 75% of those present thought trade wars were “here to stay” and protectionism, along with trade disagreements, will be “ongoing”.
And for this reason, an improved digital solution to all that paper is all the more urgent.
Correspondent banking blues
Two Cass Business School speakers – Barbara Casu Lukac, Professor of Banking and Finance, and former Citi regulatory guru Ruth Wandhöfer tackled “The future of correspondent banking cross-border payments”.
This looked at whether and how technology and policy measures can unlock some of the impasses in correspondent banking and cross-border payments, by looking at new business models, and investigating additional services to make this a safer business that reconnects people across the globe after the recent period of widespread de-risking.
A brief online questionnaire distributed by SWIFT revealed pain points including opacity in transaction-related costs, for example who paid which fees to whom for validation, AML and counterparty risk, ahead of costs for messages and bank charges.
The results were put to industry participants and discussed in focus groups including the Financial Stability Board on how a model could be designed to overcome these points. They came up with a set of key requirements for future cross-border payments models covering: settlement, liquidity efficiency, predictability, interoperability, transparency, ubiquity and interoperability.
A set of seven design scenarios for an improved cross-border payment process emerged including those already existing such as SWIFT gpi and new ones:
- SWIFT gpi: “This is an example of the importance of the network effect”, said Wandhöfer. “gpi is addressing the fact transparency plays a key role and uses cloud and APIs”.
- A narrow clearing bank.
- Connecting clearing houses – the ACH today are not for high value payments
- Integration of regional RTGS (real time gross settlement) systems managing flows between different countries, with a blurring of boundaries between high and low value clearing
- Global settlement utility to achieve settlement finality in central bank money
- Synchronisation using DLT technology such as settlement coin
- Next level of gpi including more services, with sanctions, KYC and more transparency through the new release implementing the UETR.
Game of homes [data]
The 4th Industrial Revolution & Geopolitics: Are advances in technology worsening geopolitics or are rising geopolitical hostilities raising barriers in technology? The answer, according to the panel with this very long title, was that was not really the main issue and what was really needed was more cross-border collaboration on cyber-security, as well as opportunities (picking up Khanna’s breakfast point of territory gains being much further down the political agenda than market access).
This was all debated by Norm Judah (Microsoft), Josh Kalimer (Information Technology Industry Council), Rob Sloan (Dow Jones), ably moderated by Alison Tudor Ackroyd, Managing Editor of Finance Asia and Corporate Treasurer.
It was agreed by panellists there should be more cross-border collaboration on cyber security. They explained how companies and governments sometimes don’t know that they have been attacked and struggle to come back from one. Norm Judah (Microsoft) said that the struggle of governments to get a handle on cybercrime contributes to geological tension. “For example, Vietnam requires the localisation of data on the belief that it keeps that data safe. While the motivation is sincere, the response is suboptimal.
Attention turned to IP theft and leakage, and we heard how it is the mind-set of how you deal with the failure of protection and the recovery that is so important. “While information sharing should not be stopped, there needs to be a set of rules to avoid information leakages,” said Judah. Kallmer pointed out that these happen not always because of deliberate theft, but because people move around.
The overall conclusion on this was that both tech providers and the banks have to take a position on information sharing and leakages, but some guidelines from the governments are needed. For example, the financial services industry has been lobbying the US government to allow facial recognition. As soon as the governments have a policy there will be smaller preventative projects such as these.
Up to the atmosphere
‘Cloud and API – embracing disruption in financial services’ was one of the key sessions of the day, not only evidenced by a packed room but the general mobbing of the speakers afterwards.
It starred Polina Evstifeeva from Deutsche Bank’s GTB Chief Digital Office, alongside Chet Kapoor from Google Cloud, Claus Richter of Nordea and Eli Rosner of fintech provider (the former Misys) Finastra, moderated by Christine Leong of Accenture. A poll of the room indicated that most delegates did have some sort of API strategy or were at least thinking of putting one in place.
Nordea’s Richter set the scene with “cloud and open banking is about how we deliver business today and deliver the business of the future.”
Data gravity and computing power
Rosner developed this by pointing out that it was a means to an end and the transformation of a business model. “If you have an API it means you are future protecting yourself by exposing your capabilities through a standard interface and opening yourself up to communicate with other partners in the ecosystem. When you look at Cloud, it means that you now have today a significant collection of data gravity in one place, alongside infinite computing power, enabling you to drive a business transformation. Banks can transform their business model and diversify their business and grow,” he said.
Another room poll suggested most see APIs as a product evolution strategy rather than a regulatory obligation, but Deutsche Bank’s Evstifeeva provided some background to the regulatory drivers.
“We see a lot of data growing each day - everyone is producing data. So it’s about how you store and exchange it. Data and cybersecurity are under the regulatory spotlight. If you think about APIs, they are nothing new. But now we are talking about them all the time and there are eight or so sessions here at Sibos dedicated them. In Europe, the PSD2 requirement for banks to open up their data and systems to third parties has been the catalyst.”
She added, “Regulators do understand innovation and are looking at how they can support API and cloud solutions being adopted by banks and how they can facilitate that. This is really important support we can get from regulators on this journey which will help us drive this forward.”
Kapoor reminded everyone, “At the end of the day the centre of all this is the user. Our consumers are asking us for technology they are not getting and industry, corporations and regulators need to work together to make this happen.” He said he had seen many implementations and the successful organisations “think of technology as a competitive advantage, as something they use to change their business – it’s not just about cost savings.”
He added, “When you embrace technology you think about it as a time to market. You realise quickly you cannot implement technology with old rules. Your planning cycles cannot take nine months. You have to make cultural and process changes. Good organisations realise they have to move the goal posts, and the successful implementations are those that move quickly where APIs are regarded as products and not projects.”
Change or die
Evstifeeva reflected, “Let’s not forget the requirement to open up the data has only just come up. Banks are only just into the new reality. It was the norm that banks owned the data and now they need to open it up. Look at what we did with IATA – where Deutsche bank is taking the role of the third party provider to provide a payments solutions. The key is to embrace the change and become a market leader and play a new role. If you don’t you put your business at risk.” Further detail on her points can be found in the Deutsche Bank white paper, “Regulation driving banking transformation”.
Rosner gave everyone additional food for thought when the observation that a bank’s greatest asset is trust and “if they have multiple corporations banking with them and those corporations serve each other, the bank can be a trusted adviser and aggregator of that data and provide new services.”
ProFIX Company acted as a technical partner in the joint project of MoneyGram and the chain of convenience stores R-kioski in Finland. The service provides an opportunity for MoneyGram customers to send and receive money transfers at R-kioski retail outlets. Users need to visit https://r-kioski.moneygram.com/portal , complete the send transaction information requested online, then sender prepares the sum of money and document, the receiver have to inform the number of the transfer and show the document.
ProFIX provided technical part of the project: making of a shared portal and integration with R-kioski system of cash registers and accounting, administration and management system, support service. The project implementation period from the setting of business requirements to the launch took 6 month.
About MoneyGram International
MoneyGram is a global provider of innovative money transfer and payment services and is recognized worldwide as a financial connection to friends and family. Whether online, or through a mobile device, at a kiosk or in a local store, we connect consumers any way that is convenient for them. We also provide bill payment services, issue money orders and process official checks in select markets. More information about MoneyGram International, Inc. is available at moneygram.com.
R-kioski is a part of Reitan Convenience, which comprises Narvesen in Norway and Latvia, Pressbyrån in Sweden, 7-Eleven and Shell/7-Eleven in Norway, Sweden and Denmark, R-kiosk in Estonia and Lietuvos Spauda in Lithuania. Reitan Convenience is the Market Leader in all seven countries. Reitan Convenience had a turnover of EUR 1,76 billion in 2016, 2 300 stores and 14 600 co-workers.
ProFIX is a top-ranked IT-company focused on banking and financial sectors with more than 20 years’ experience in Ukraine and in other countries. The mission of Company is stable for many years - to provide the maximum range of IT services for the banks.
ProFIX is a Certified Global Technological Partner of MoneyGram International, SWIFT Business Partner for Armenia, Belarus, Georgia, Moldova and Ukraine with delivery of the full range of SWIFT’s products and services.
Today, company provides solutions to 250+ banks in 30+ countries.