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Worker’s Remittances Conference

Worker’s Remittances Conference. CEMLA - Banco Central de Bolivia La Paz - Bolivia. September 24 th , 2008. José Gambini Sales & Education. Agenda. SWIFT is...... Remittances Market Issues for banks SWIFT and remittances Workers’ remittances 1.0 – features and benefits

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Worker’s Remittances Conference

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  1. Worker’s Remittances Conference CEMLA - Banco Central de Bolivia La Paz - Bolivia September 24th, 2008 José Gambini Sales & Education

  2. Agenda • SWIFT is...... • Remittances Market • Issues for banks • SWIFT and remittances • Workers’ remittances 1.0 – features and benefits • Getting involved

  3. SWIFT HEAD OFFICE – LA HULPE (BE)

  4. 1973 1987 2004 2002 1989 2001 Financial community 2000 1990 1999 1992 1998 1995 … Market players Banks founded SWIFT Central Depositories & Clearing Institutions Exchanges Broker/Dealers Securities Market Data Providers … Fund Administrators Money Brokers MA-CUGs - Registrars Transfer Agents - Custody Providers Securities MIs Treasury Counterparties & Service Providers Investment Managers • - Payments MIs • Proxy Voting Agencies • Non-Shareholding Financial Institutions Trading Institutions

  5. SWIFT in figures • Total number of messages (year to date) 2,529,575,207 • Message growth (total traffic year to date) 10,66% • Average daily traffic (year to date) 15,101,942 • Message growth (average daily) 11,45% • Latest peak day (January 25th 2008) 16,550,075 • SWIFTNet FIN systems (availability) 100% • Live countries 209 • Live members 2,269 • Live sub-members 3,275 • Live Participants 3,068

  6. Markets Trade Treasury Payments Securities

  7. Market infrastructures SWIFTNet FIN More than 8,000 FIN correspondents in more than 200 countries RTGS CLSTARGET 2… AccessingMI’s Accessing thecommunity Interfaces ST A N D A R D S SECURITY Customer solutions SWIFTSolutions SWIFTNetsingle window Accord Exceptions and Investigations Cash Reporting Investment Funds TSU Remittances … MA-CUGs SWIFTNet messaging services Reachingyour customers Usingbusiness solutions SWIFTNet environment – single window

  8. Remittances Market

  9. Market overview Market: • International migrants  200 million • Financial flows  USD 400 billion • Industry revenue  USD 15 billion • Annual transactions  1 to 1.5 billion Providers’ Shares: • Money Transfer Operators  20% + • Banks  20 to 30% • SWIFT  <10% • A remittance is a cross-border, person-to-person payment of relatively low value.

  10. Putting it in context • Cross-border remittances market touches, directly and indirectly, 650 to 800 million consumers • If migrant workers incorporated as a company, their multinational would rank No. 3 on the Fortune 500 list, trailing only Wal-Mart and Exxon Mobil in annual revenue. • Remittances inflows are larger than (*) • direct foreign investment in Mexico • tea exports in Sri Lanka • tourism revenue in Morocco • revenue from the Suez Canal in Egypt (*) Source: Worldbank

  11. Strategic importance for banks • The remittance transaction is: • a turnkey product to build relationships with migrant communities in order to cross-sell other products • Positive externalities of greater involvement of the financial community: • leveraging economic development potential of remittances • Promoting financial inclusion

  12. Issues for banks

  13. Bank options for service delivery Outside of becoming a franchisee of a money transfer operator, banks have the following alternatives: Option: Issue: Build a proprietary network Cost Scalability Build a bilateral service with a correspondent Service Use open correspondent banking arrangements

  14. SWIFT and remittances

  15. Background • 2005:proposed as SWIFT 2010 initiative • 2006: objective to “explore” • 2007: Advisory Group composed • 2008: Workers’ Remittances 1.0 completed • Pilot service October 2008 to March 2009 • 2009: Live service • Release 2.0 specifications

  16. Advisory Group: mission, vision and scope Drive the definition, testing and live usage of…an interbank platform comprising the market practices and architecture for the authorisation, clearing and settlement of cross-border, consumer-to-consumer payments… • that: • accommodates “and-to-any” retail payment media; • delivers global scale and reach; • delivers high STP rates; • enables high speed end-to-end transactions and track and trace • but: • remains in the interbank, collaborative space; • doesn’t extend to bilateral commercial arrangements; • doesn’t restrict choice of settlement providers or currencies; • enables highly distributed processing

  17. Workers’ Remittances Advisory group (WRAG) Banco do Brasil Brazil Bank of New York United States BBVA Spain Citigroup United States Deutsche Bank Germany Equitable PCI Bank Philippines ICICI Bank Ltd India INTESA SANPAOLO S.P.A. Italy La Caixa Spain Société Générale France Standard Bank of South Africa South Africa Standard Chartered Singapore Swisspost Switzerland

  18. Workers’ Remittances 1.0

  19. Workers’ Remittances 1.0 – what is it? An interbank platform for the bilateral clearing and settlement of cross-border, person-to-person, payments Business and Operational Rules and Guidelines Market Practice Rulebook ISO 20022 XML payments clearing & settlement messages, specified for P2P payments Messaging Standards Counterparty data: central repository of participant, agent, and point-of-service in a common format Reference Data Messaging Services FileAct 6.1 Store & Forward Business terms and conditions remains bilaterally agreed between counterparties

  20. Workers’ Remittances 1.0 – benefits • Efficiency : • Tight market practices and rulebook for all participants • ISO20022 offering information granularity and extended service options • All participants with capabilities and point of services are identified by the Reference Data directory • increased STP for cash and account based remittances via various media • Scalability : • 2 tier participation model for federating small FI and retail networks • harmonized clearing & settlement practices facilitating bilateral business development • Predicatibility & speed: • 3 service levels definition for facilitating bilateral agreement on timeline • Cost effectiveness and transparency: • OUR pricing model • All-in per transaction pricing positioned between Generic FileAct for lvp transfers and FIN MT Cat.1

  21. Market Practice Rulebook Participation • Participants • Participants’ Agents • Service levels (instant, urgent, non-urgent) • Two product groups (account & cash disbursement) • Transaction ID specification (sender defined) Products • OUR (DEBT) charging default • FX guidelines • Reject/returns charging practices Charging practice • Definition of sorting, transmission etc. • Transmission timing relative to service level Clearing Settlement • Gross bilateral settlement • Serial method recommended, but guidelines for Cover incl. • No restrictions on provider or currency choice

  22. Messageing standards Message standards for Workers’ Remittances are being developed in consultation with a sub-group of the Workers’ Remittances Advisory Group Message Usage Guidelines include: • ISO 20022 pacs messages • MT Cat. 2 and Cat. 9 • FileHeader XML message New guidelines over existing standards Mapping rules New specifications

  23. Reference Data Directory • Reference Data Directory includes: • Registered participants and agents participants • Participants’ service capabilities • List of Point of Service (POS) • Management of the Directory • Data collection • Data management • Data distribution with access control

  24. WR 1.0: architecture of the service framework for clearing and settlement of remittances Rules + Guidelines Architecture Ref. data participants Beneficiary participants Agents Sender Agents FileAct S&F ISO UNIFI 20022 Distribution network sending country Distribution network Receiving country MT cover payment CB Settlement

  25. SWIFT partner with Remittances specific offerings

  26. Where are we to date ? • Product Definition • Architecture &standard • SWIFTNet WR phase 1 Pack Specifications open for review to FORUM and SWIFT partners • Implementation • WRAG members & Forum • 35 SWIFT Partners SIBOS demo with partners Pilots start • Test and Pilot phase 1 • Pilot preparation • Pilot testing go-live Live services phase 1 Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar 2007 2008 2009

  27. Getting involved

  28. Current status – 24 pilots signed

  29. What you need to get started? • Business: • Business Agreement with counterparties • Application: • Capability to process ISO 20022 (XML) • SWIFT: • FileAct processing capabilities • Alliance Gateway release 6.1 or higher • SWIFTNet Link release 6.1 or higher

  30. ¿Preguntas?

  31. ¡Gracias por la amabilidad de su atención!

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