The panoramic view of lower Manhattan from Swift's New York City offices in Times Square affords a fitting backdrop for Swift's new head of the Americas to talk about extending the not-for-profit cooperative's reach at a time of monumental change in global financial markets. The proprietary communications network has already expanded its role beyond the banking sector to the securities industry and now sees a bigger part to play in the corporate arena, where the need for better connectivity to manage cash effectively and increase visibility of global liquidity has never been greater.
Chris Church became Swift's CEO for the Americas and global head of securities in August, just before the financial crisis took on epic proportions. Church brings 20 years experience in financial services, the last eight spent in the shared market infrastructure space as part of the executive team that founded financial extranet Radianz in 2000 and then as head of BT Global Financial Services after BT acquired Radianz.
While the financial crisis is still reshaping global markets and the way business will be conducted going forward, Church sees a major role emerging for Swift as the ultimate shared service. With revenues and margins declining and looming regulation likely to reduce financial industry returns by 4%, firms are restructuring their business models, he says. "It's a time when TCO [total cost of ownership] is going to be paramount."
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Founded by banks in 1973 in Brussels as The Society for Worldwide Interbank Financial Telecommunication to facilitate financial messaging, Swift has built a solid, global reputation for security, reliability, and resilience and now connects 8,300 banks, securities institutions and corporations in 208 countries.
As a consortium and a shared infrastructure, Swift is in the best position to help financial services firms and other companies drive down costs, Church says. "Because of the cooperative nature of our enterprise, you're not sharing those efficiencies with shareholders from another firm. All those cost savings go to you.
"In a world where the future is anything but certain, if you are going to be changing your business model, partner with someone who is not driven by the balance-sheet winds of the market," he says. "Swift is driven by the industry. If you do put your mission-critical business onto Swift, you know it's not a business that's going to cut corners."
Swift won't be reducing its commitment to resiliency, says Church, but it has felt the turbulence rocking its banking partners. Message volume dropped in December and January after hitting records in September, October and November. The cooperative is adjusting its messaging traffic growth targets for the year and reviewing its budget with an eye toward reducing its own TCO. "We're in the business of driving down costs for the industry. One component is that the more people who use the infrastructure, the costs come down. The other is making sure we're a lean, strong and efficient organization." Hard decisions will be made if necessary, says Church, adding that layoffs have not been ruled out.
Meanwhile, Swift is embarking on a big push in the Americas this year, according to Church, and expects the same forces that make a shared infrastructure the logical TCO play in the financial sector will increase its appeal among corporates.
"There isn't any entity right now that's not looking at the way they conduct business, and asking how they can manage cash liquidity, risk and compliance in a smarter, more efficient way than they are currently doing," he says. "Swift can participate in that."
Swift began working with corporations about six years ago. Early adopters saw that using a single, standardized, secure channel to communicate with multiple banking partners could serve as a foundation for re-engineering their treasury operations with increased straight-through processing, thereby realizing a host of cost savings and increased global liquidity management. Of course, that has proven to be a more complicated process than it sounds, but today about 400 corporates are connected through several different methods, including the newest, quickest and easiest way to connect to Swift, Alliance Lite, for those companies that handle fewer than 200 messages a day.
"Some of the companies that we have done business cases with are seeing ROIs [return on investment] from 120% to 400%," says Church.
"Alliance Lite is important to us because it's part of the strategy of reach," he says, adding that the more people who come on board, the greater the value to the community. In the corporate sphere, "you are going to see more and more automation happening," he notes. "The financial services industry has seen that year after year."
What's new on the corporate agenda? "One of the things we're doing this year is putting a professional services team in place to help firms with any integration and implementation issues they have in connecting to Swift," he says. "We also have a product called Integrator that we will be launching that will help with the implementation of Alliance Lite."
Church says that this won't compete with firms that are Swift service bureaus. "It doesn't cut them out, it complements them. Service bureaus offer other services, which customers may require. Alliance Lite is a browser that allows you to send messages."
Swift is also implementing a "channel strategy" for Alliance Lite, "where we will work with partners to help them act as distribution points–including banks or service bureaus or other organizations that service corporates with technology products. This is one of the technology products they can add to their sales force armory. It's extending the sales reach through partners to make sure we push off our cost of sale and we penetrate as deeply as we can in the target market of Lite," he says.
Church is also interested in exploring ways that Swift can work more closely or partner with other industry infrastructures, such as the Depository Trust & Clearing Corp. (DTCC), to further drive down TCO. "The idea is to engage with these market infrastructures, to think differently and outside of confines of how we did business in the past, because how we do things in the future is definitely going to be different."
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