Saqib Sheikh, Chief Operating Officer, SWIFT India, writes about the financial outlook in India, SWIFT’s platform for domestic financial transactions, technology and financial standards and more
India is making great strides in transitioning to a truly digital economy. Once a centrally planned, permit-raj based, lumbering market, the country is now a much more agile and vibrant economy. The private sector, led by individual entrepreneurs and small & mid-sized businesses, is waking the sleeping giant and driving business and technological innovation. This is largely due to our demographic dividend of young, persevering and literate populace, and also a consequence of easing regulations and improving infrastructure.
Our national communications infrastructure is one of the pillars on which the foundation of this growth and innovation is built. The speed, security and efficiency of communications of individuals and businesses are predicated on standardised and open networks.
To support and strengthen this foundation, SWIFT is laying financial rails on which the financial sector too will grow and innovate. In partnership with leading banks of India and in consultation with financial regulators, SWIFT has established a joint venture and made live a highly secure and reliable messaging platform for domestic financial transactions. This platform interconnects and integrates banks, payments systems, exchanges, central counterparties, brokers and investors, such that they can seamlessly and reliably communicate with one another and conduct their business with confidence.
|SWIFT India was created by the Indian community, together with SWIFT, to serve India’s domestic market needs. The current joint venture partners include leading public and private banks: Axis Bank, Bank of India, HDFC Bank, ICICI Bank, Punjab National Bank, State Bank of India and Union Bank of India, with two more public sector banks joining the partnership shortly.SWIFT is a member-owned cooperative through which the financial world conducts its business operations with speed, certainty and confidence. More than 10,800 financial institutions and corporations in over 200 countries trust us every day to exchange millions of standardised financial messages. This activity involves the secure exchange of proprietary data while ensuring its confidentiality and integrity.|
Our role is two-fold. We provide the proprietary communications platform, products and services that allow our customers to connect and exchange financial information securely and reliably. We also act as the catalyst that brings the financial community together to work collaboratively to shape market practice, define standards and consider solutions to issues of mutual interest.
SWIFT enables its customers to automate and standardise financial transactions, thereby lowering costs reducing operational risk and eliminating inefficiencies from their operations. By using SWIFT, customers can also create new business opportunities and revenue streams.
SWIFT, headquartered in Belgium, has offices in the world’s major financial centres and developing markets.
SWIFT has had particular success growing its network in Asia-Pacific. In total, the electronic financial messaging provider has linked up with 13 payment systems and around 3,000 financial institutions in the region.
SWIFT has been in Asia Pacific for more than 30 years, with eight commercial and support offices, as well as an Operational Central Control Centre and a corporate services hub.
SWIFT India provides a comprehensive solution com – prising of messaging standards, infrastructure and security framework, all backed by SWIFT SCRL’s world-class 24/7 premium support services.
With the SWIFT India channel, banks can consolidate all their communication channels with external parties onto a highly reliable, scalable and secure messaging platform, thereby reducing complexity and costs.
Payments, as an example, are seeing explosive growth in volumes. RTGS, or high-value transactions, have consistently grown by 10 percent a year, reaching 250,000 trans – actions a day, and NEFT, or one of the low-value payments systems, sees more than 15 per cent growth year-on-year and now processing 4 million transactions daily. This growth, combined with the proliferation of variety of instruments and intermediaries such as payments wallets and facilitators, puts enormous stress on the technology infrastructure of our financial institutions. By comparison, SWIFT globally guarantees the secure delivery of over 27 million transactions on peak days and over 5 billion transactions a year, between 10,800 financial and corporate institutions worldwide.
SWIFT globally guarantees the secure delivery of over 27 million transactions on peak days and over 5 billion transactions a year, between 10,800 financial and corporate institutions worldwide
To cope, banks rely on a disparate set of channels and standards to communicate with customers, process payments, exchange trade finance and treasury instruments, and report to regulators and government agencies. Further – more, these channels and their standards evolve at different paces. The associated costs and complexities constitute a large portion of spending on IT in the banking sector, as much as Rs 7.1 crore annually as per our estimates. More importantly, mindshare of critical product management, IT and operations resources are pulled from customer-facing value-creating projects. The impact is inefficient allocation of scarce funds and resources on channel integration and operations that provides no competitive advantage.
While many channels exist today, SWIFT alone offers a uniform technology and financial standards across market segments. The business community no longer needs to operate a complex and risky patchwork of technology stacks when communicating with their peers, customers and market infrastructures. Whether remitting payments, collecting funds, hedging supply chain or foreign exchange risks or investing, the entire market can use a unified platform over a common financial language to communicate with one another and conduct business with predictability and confidence.