CBPC Roadshow: Swift - Shaping the Future of Finance with Shriyanka Hore [Episode #2]

Speaker A: Hello and welcome to PIT Exchange, a podcast by Currency Research. Join us as we discuss the latest in payments, innovation and technology with the industry's most innovative thought leaders. Today we're bringing you something special. The CBPC Roadshow. Four exclusive conversations with leaders from across the global payments ecosystem leading up to the Central Bank Payments conference this August. Today's payments are changing and moving around the world faster than ever before, and Pit Exchange gives you the knowledge and insights to keep up. Sit back and relax as we join Currency Research, exchanging ideas with today's CBPC Roadshow guest.

Speaker B: Welcome to another episode of the PIT Exchange, Payments, Innovation and Technology. My name is Jens Seidel and I'm your host for today's episode. I'm very happy to have, uh, Srianka Hoare with us, uh, from Swift in London today. Srianka, welcome.

Speaker C: Absolute pleasure to be on the show, Jens, and good speaking to you again.

Speaker B: Likewise, thank you. I've known Sri Anko for quite a few years now. We've been meeting at different conferences in Frankfurt from time to time as well, or in London. So it's great to have a familiar face, uh, with us today and I'm looking forward to this conversation. Um, as usual in my episodes, uh, I like to start with, um, three semi personal questions just to get to know the person, Srianka, before we start talking about payments and what's happening at Swift. So the first very, uh, easy one. Do you prefer tea or coffee?

Speaker C: Tea. I'm a tea person, Jens.

Speaker B: Okay. What kind of tea, may I ask?

Speaker C: Oh, uh, that changes based on the time of the day. Breakfast tea in the morning, and I end my day with a mint tea.

Speaker B: All right. I have to admit, I'm more of a tea person now as well. After I lived for five years in the uk, that changed my whole outlook on tea completely.

Speaker C: No wonder we have foods.

Speaker B: Yes. Okay, good. Then second question. Um, what is your favorite cuisine?

Speaker C: Well, uh, I am quite a foodie, but I, I love to cook Indian food and I, I quite enjoy the cuisine and all the flavors it has to offer.

Speaker B: Okay, all right, nice. And last question. And that is one where you. We talked about this previously, so this is more for our listeners rather than me learning something new about you. Um, you play, uh, an instrument. Do you want to talk a little bit to us about that? What instrument do you play?

Speaker C: Oh, dear. Yes, I do play the sitar, which is a classical Indian instrument, but I like to try contemporary tunes on it.

Speaker B: Oh, wow. 1. I haven't heard you play it yet. And hopefully One day I will get an opportunity that sounds fascinating, especially the contemporary music on a sitar. That, that sounds cool.

Speaker C: Indeed.

Speaker B: Great. All right, well thank you for that. And now let's start to talk about a little bit more about you and your professional context. So uh, you work with Swift. Do you want to tell us a little bit about what your role is at Swift, uh, and what you do there?

Speaker C: Um, I lead up global industry relations at Swift. Um, and I also work alongside the industry. So you know, you can think of my team as the critical link between um, ongoing developments in the industry. We analyze the strategic forces across policy, markets, technology, um, that shape not only uh, you know, operations at Swift, but the trajectory of the entire community, Swift community and the industry at large. Um, and I work increasingly with senior stakeholders, regulators, market infrastructure, banks with a laser sharp focus on development of policy and how technology will impact um, the future of finance.

Speaker B: Okay. And um, maybe taking a step back and I'm assuming that most people that will listen to this podcast will know who SWIFT is, but uh, I've been observing quite a change in the way Swift, um, is positioning itself now over the last few years as well. Where Swift, for I think many years has been that um, messaging service, to put it really easy in very easy terms, but it's so much more. Do you want to talk a little bit about that maybe?

Speaker C: Yes, thank you for asking that. I mean when you think Swift, you think different things. You think correspondent banking networks, sometimes you think SWIFT messages. Um, but at the heart of what SWIFT is, it is a community. We are a global cooperative, um, that sits at the heart of the global financial ecosystem. We have over 11,500 financial, financial institutions on our network and we operate in over 220 plus uh, countries and um, over 145 plus currencies move across our network every single day amounting to the world's gdp. You know that's, that's the kind of scale Swift has. Um, when I say world's gdp, it's every three days. We see that um, in terms of, of um, the evolution uh, of SWIFT over the years. Um, we started off with being uh, a point to point messaging network but over the years it's become synonymous to trust resilience. It is the uh, ecosystem that underpins trust in global finance in a way. And um, we play a very um, significant role as the registration authority of the ISO 2022. And we are also um, respons for uplifting the quality of messaging standards and data standards for the industry and you see it with the recent adoption of ISO 2022 um across the network. Today we have over 98% of messages and structured data that allows for better screening automation and paves the way for a data led way of intelligent systems and how it works. So uh, to sum it up Jens, indeed there's been a lot of evolution from bec, um the network of trust for point to point messaging to taking on a more advanced role of actually being um, uh, the orchestrator for transactions and end to end life cycle management in some ways from traceability tracking uh, predictability even before the transaction originates. So we have gone through a whole journey over the last 50 years in terms of how uh, transactions originate, are tracked, screened and move across the network.

Speaker B: Okay, well there's a lot more change coming obviously and we'll talk about that in a few minutes. Um, but maybe before that uh, again I don't want to presume for our listeners uh, that they fully understand um, how SWIFT operates. Can you talk a little bit about the um, ownership structure of SWIFT as well? Who's actually behind Swift, uh, how does that work?

Speaker C: Well ah, we are a network of banks, um, but it is not limited to banks. We have banks and non banks on the network. We operate over 200 plus uh market infrastructures um, as a technical operator in domestic markets um, and the governance, um, we've gone through a whole evolution of the governance at this point and you will hear more about it in the year to come in terms of how uh, we are becoming more inclusive even from a governance standpoint. But we've always been overseen by the G10 central banks and the shareholders, other banks. So it's a true public private partnership uh, uh, that has sustained the tests of time um, and you uh, know the ups and downs from M macroeconomics to geopolitical shifts and all of that um, that comes with it. And now we're using technology to pivot us into the future of building that future of finance. Um, and I'm very eager to speak to you about that Jens.

Speaker B: Okay, great, well let's move on to that then. Um, talking about the future of finance and obviously there's, I think there's added complexity ahead of us. Right? There's new technologies coming up, whether it is tokenized deposits, stablecoins, um, faster payment systems etc. There's so many innovations in not just the user experience but the underlying technology that enables user experiences. So how, how is that um, changing Swift? How does that change the role of SWIFT in that ecosystem?

Speaker C: I don't think the role of Swift changes. I think um, the service levels of Swift, we continuously try and raise that bar. Um, and it's not only at Swift, it is because um, payments is a team sport and that is where you uh, can establish better, you know more enhanced rules of offering um, customer service. So it's, it's a very organic process in how we do that. So let's first talk about um cross border payments because although you know Swift is the messaging network for cross border trade FX securities, let's zoom in a little bit into payments um today. So but in the whole life cycle of a cross border payment we see you know very fast movement of transactions across the cross border mile. But when it reaches the domestic mile that is where a number of frictions um, exist and that is what uh, is really responsible for the slow cross border payments angle to which many people um, kind of associate frictions to. And some of these frictions are, I wouldn't call them frictions because they're inherent features of the monetary architecture of that, that sovereign jurisdiction. It could be around capital and FX controls currency repatriation draws um, you know regulatory reporting around for foreign proceeds and so on. So the need to stop, check, document and then credit is really what is driven sometimes by overlapping regulations um and controls um, that exist but you know over time um, infrastructure in the last mile, um, we've seen a great evolution there because uh, rtgs we know operate for limited hours and then uh, we have a number of fast payment systems which uh, have come up over the years but are also opening up to cross border payments. Now in that journey we are enforcing a new newer um, service ah level agreement across the network which we call Scheme. And what it does is it taps into the faster last mile that exists in jurisdictions now and it enforces or rather it's an optional scheme that has been built, that has been built very inclusively with over 40 banks. Um but it really um, aims to drive better upfront predictability of payments by disclosure of fees and effects early on even before the transaction starts, uh, full end to end visibility of the journey of the payment and most importantly no deducts and the credit is on the same day. So everything around delayed payments, um, it's really about changing and shifting the game. And all of this is specifically tailored to retail and SME payments. So we are continuously enhancing um, better service levels and predictability on the first mile right even before uh the payment starts the cross border mile in terms of um, resilience in terms of better traceability and they're now extending it to solve the frictions of the last mile. But that is a different uh angle altogether. But because some of these frictions are beyond the control infrastructure or any one single institution.

Speaker B: Yeah. And I'm sure it's no coincidence that a lot of the topics you mentioned there are obviously aligning with the G20 initiative as well to improve cross border payments strategically. Right. You mentioned transparency there for instance, seeing what fees or exchange rates will be early uh on in the transaction, traceability et cetera et cetera. So speed obviously. So I'm guessing this is very much in or keeping the G20 roadmap in mind. Is that fair to say?

Speaker C: Absolutely. So our strategy has always been aligned um uh towards instant frictionless cross border payments and that also aligns very closely to the G20 roadmap. Now while we are um you know uplifting the service levels on existing traditional rails, we are going in for a two track parallel innovation strategy. And the second prong is around bringing um a new layer into our infrastructure which is blockchain based. Um so we're introducing a shared ledger. Again you know it's, it's almost optional but uh, we see some of the largest banks um come onto the ledger initiative and here we are building um, a minimum viable product and we're going to evaluate how distributed ledger technology and tokenized deposits can unlock better liquidity um and visibility of cash positions for commercial banks through um 247 operations. So it's really about unlocking the power of 247 with DLT. Um and this is targeted primarily towards wholesale cross border payments. Whereas everything to do with scheme is about bringing all of the best practices we've developed for wholesale to serve retail and consumer where cost remains a challenge. And the service levels can um, not only um, improve cross border payments for the end users but also lower cost collectively um, in the larger um scheme of things.

Speaker B: Yeah, I think that's also interesting because that seems to be the consensus um at least across most of the industry that the uh, DLT technology and tokenization is really um, important and something that should be driven forward quite quickly in the wholesale space while on the retail side the jury is still out. Ah so to say. So that again your strategy seems to align with that current view of focused tokenization on the wholesale space. But let's use um conventional measures if you like uh when looking at improving the retail uh side of payments.

Speaker C: Absolutely. What we are preparing for um is a multi model, multi rail, multi uh chain and a multi asset world. Right. So Newer forms of money will continue to emerge and Swift's role will remain unchanged at the end of the day. So how do you prepare for that? And um interoperability remains a core value and ethos of our strategy as well. So whether you look at it in terms of um bringing standardized data, standardized rules, policies, service level frameworks it is really about ensuring that the end user should be agnostic to the Rails behind it. Right. It should always have that comfort um that predictability and trust of making payments through a formal banking um uh system. So that is where we really ah kind of align our efforts today.

Speaker B: So where do you see then the, the biggest priorities um when it comes to modernizing cross border payments? What are the, the key areas um that we should focus on?

Speaker C: Because I think you know we're really talking about evolution of today's Rails and you know a complete um uh area of exploration of how systems um of the future intelligence systems, automate, autonomous systems will will kind of come in. Uh I think let's first break it down into leveraging infrastructure that is being built in sovereign jurisdictions to cater to fast payments. Uh today. Um you know typically fast payments uh systems in country were built to serve the local economy um domestic only. And as these fast payment systems today open up for cross border bring on schemes like One Leg out there is immense potential to uh impact the speed of payments. Um so 247 capabilities of these fast payment systems not only drive um faster credit but also it can open up um better capillarity into accounts, wallets in and unlock working capital. Um and there's this whole angle to economic growth that it can power. So that for me is a primary focus and need for alignment globally. And it's not about bilateral links or multilateral links. It is about having that freedom of choice and have all of those but also connect to um a cross border infrastructure like Swift, uh under the payment scheme and unlock over 45,000 payment routes that exist on it today. The second uh piece and this is a journey. Uh many think that in November 2025 when UM the Swift network moved to UM ISO 2.02 for payments initiation messages um it was the end of um a journey but really that is the start of, of a journey of richer structured data. And um, uh I think it's um. While you know the cross border infrastructure has adopted ISO 2022 it still remains um, um to be harmonized across different RTGSes. Different payment systems within the same country still have different um data uh standards that they follow. So it is about Alignment, domestic, uh, at the domestic level and then that cross border harmonization. And lastly I think um, if we were to sum up all of this in terms of uplifting data quality and uh, opening up fast payments, we need to basically accept the fact that real time, faster payments mean risks in real time. And with all of the nature of volatility that exists today across markets, geopolitics, risk compliance, resilience becomes a top focus. Um, for markets and it's across cyber security. It is about operational resilience and it is about um, the ability to drive that real time um, risk and compliance into every single transaction that flows into that country. So that for me is still top focus.

Speaker B: Yeah. Okay, now that again that makes sense. Now I think especially the ISO point also resonates with me because it's one thing to define the technology standard but then it's also the next step for people to use it consistently. Um, and I think that's where, and that's not a swift problem. Right. This is for the industry really to make sure that the data is being used in the right way, that the right data is being provided and that um, goes beyond the banking landscape as well. Uh, corporates, people that use those services, they need to make sure they provide the right uh, data to enable um, fast payments.

Speaker C: Absolutely. And you're spot on there Jens, because you know ISO 2022 is an open data standard. Right. So it is across business domains and as you mentioned, corporates need to make changes, banks need to make changes. It is about speaking that collective language into that future, um, that, that enables better automation, risk resilient. And you know we can build um, intelligent systems on top of this common um, data, that layer that we're designing today. Yeah, great.

Speaker B: All right, well let's, let's talk about something else that you've been working on. You released a ah, new index recently. Um, and uh, I think that, and I'll let you talk about what that index is and what the uh, purpose of that is. Um, but could you tell us a little bit more about that and what you've actually seen um, as a result of that piece of work that you've done.

Speaker C: So I think yes, uh, you know you've kind of sneakily looked at this new piece of exciting research which um, Swift has worked on with the industry. And um, um, you know it's, it's very critical because um, it addresses the last mile problem and the frictions that exist. Um, when we looked at um, why payments are slow and that's, this is A journey. Right. Like we've been coming up with the Spotlight on Speed series where we talk about what are the causes of friction and so on. But it was very difficult to benchmark it at some level. So the optimization index really is a ah benchmark um for measurable um frictions. So what it does is um a it can um not only identify which frictions are related to slower processing, it can also enable direct comparison. So for, for individual countries which is a better lever for optimization right across uh the levers which we've identified. And then it provides the empirical foundation for prioritized action at a domestic level and at a cross border level. So when we look at the top areas of optimization these have come up as um regulatory requirements, capital and fx, um environments and then you know of course we're speaking a lot about standards today then how risk and control is uh deployed. So when we talk about risk and controls this is essentially about the financial crime and security behind um the transaction inflows and finally domestic infrastructure. M So I mean it's going to be a very interesting piece uh of research and we're very excited to bring that to the conference in Istanbul um and do a deep dive in terms of workshop probably um Jens because it's, it's a massive piece of research and if I were to, to kind of just talk through it today I don't think I would be doing justice. Um and um. Yes and it you know it's the index basically builds on a number of measurable um um data points that exist today and we've curated that across uh the imf, the World bank, the bis, the fatf and we've built an economic statistical model that kind of uh correlates uh, and scores these frictions for each country against the credit time that we see on swift. Uh most importantly I um think we also have to understand that when you look at the G20 targets it is talking about uh speed as a singular benchmark. So 75% of payments have to be credited within one hour. But when you look at economies and where they are in terms of their economic uh structure, in terms of the depth of their FX markets and how the currencies are traded, um, local regulations that deploy. It's a very uneven field. And what we see here is that the topmost friction is probably um around capital and fx, uh controls that exist within emerging markets, advanced emerging to be very specific. And some of these delays uh cannot be you know bypassed. It's beyond a particular business model or uh the infrastructure that's used to bring payments in or um. Yeah, or the currency of choice and and so on. So it really requires a rethink at this point in terms of policy, in terms of how we are actually um, implementing or um, you know uh, how do I put it? How do we have reporting, how do we have um, some of the business rules and processes implemented within institutions that actually hand the payment. So that's a little bit um. Jens, I think I've given you a very long answer. Um, but it is really a huge piece of research and I think it deserves ah a um room full of intellectuals, um, practitioners, regulators, policymakers who really passionately believe in impacting change for the industry uh, to come together at a venue um, like the one that you're putting together. So tell me a little bit about this conference Jens. Um, when is it? Why should we be excited about it?

Speaker B: Great. Well thanks for setting that up so nicely. Uh, more than happy to uh, and maybe again for our listeners to understand some of the background here. Swift launched the Policy Lab at the Sibos conference in Frankfurt which was very happy to attend at the time. Srianka was there as well. I think you're one of the driving forces behind the Policy Lab. And um, we talked about maybe we could use um, our Central Bank Payment Conference, which is an annual conference to continue some of these conversations. So uh, we're very happy that we're working with Swift, uh at uh, the next Central Bank Payment Conference in Istanbul that's taking place 31st August to 2nd of September where we are going to run uh, like a mini version of the, well a reduced version of the, the Policy Lab uh, that started in Frankfurt and looking at uh, especially what we just talked about. So what are these frictions in payments? How can they be um, removed or at least reduced? Uh and also how does that hang together with the wider ecosystem? So we're not entirely looking only at cross border payments but we're also going to include the um, securities side of things as well because that's also a topic where I guess somewhat anachronistically you're still looking in many places at a uh, day plus two kind of uh, settlement cycle on security. So what can be done about that? Uh, and uh, as you said um, it needs some bright minds to be in the room and we're gathering people from the um, public sector so from central banks, regulators, uh, from securities side as well, but also from the private sector and get payment specialists, payment operators, etcetera, etcetera. Into the room. So I'M very much looking forward to that and uh, I'm grateful for the support we're uh, getting from Zwift in making this happen.

Speaker C: I think uh, we're equally excited Jens. And I think the Policy Lab collab idea, um, originally um, started with our discussion and now uh, we are doing multiple Policy Lab collabs from Zurich to Kuala Lumpur, um, to Istanbul, um, Hong Kong, uh, and we're very excited to bring it all back into Miami um, later in the year for Cybos, um, at the end of September. So Istanbul will really be that final pit stop, um, before uh, we bring all of these topical deep um, dives and regional deep dives back into the second annual Policy Lab at Sibos in Miami this year.

Speaker B: That's great. And since we talked about the index and uh, we will talk about that more in Istanbul, is it already available for um, public consumption or what's the plan around the index?

Speaker C: Yes, we took some time to make it public, um, but it is available on Swift.com um to download. We've also done a number of closed door um, bilateral readouts, um, as well as to a few uh, policy committees as early testing runs. Because um, we needed to understand is, is the data valuable, um, is the research going to drive action at a domestic and cross border level? And we've had very positive uh, feedback and confidence. So it is available um, on Swift.com and I'm also happy to share the link for our listeners to download it, um, so they come prepared to Istanbul.

Speaker B: Okay, great. Well then look for the uh, the description of this podcast episode in your podcast uh, app and that should include that link hopefully. Uh, if not check out swift.com um but maybe just jumping quickly back to the workshop. Um, I mean sometimes workshops can be talking shops. I don't think that's what we're going for here. Right. So what would be a good outcome from your perspective? What is it that you'd hope that the participants in that workshop can take away from the workshop and take back home with them?

Speaker C: So um, to be very frank, the Payments Optimization Index gives you evidence for action. Right? And then it is. This whole piece of research is also accompanied by a playbook. And this is where uh, we believe that when we convene we can prioritize action, collective action specifically. Um, and the idea is to examine and learn from each other in terms of strategies that are already being deployed in the market, which are the ones which are most effective and uh, to you know, have this collective insight from the group to drive collaboration, coordinated Action. And um, also maybe uh, create a little bit of impetus because if the index gets repeated, you want to look better on that. The index, um, and markets are already doing that. The G20 is a great, um, end goal. The G20 targets a great uh, end goal, um, for coordinated action. But this, um, index and the playbook and this workshop all bring data, insights, action, coordination and then um, you know, tie it up to real outcome and impact for the industry. So that's the real goal against.

Speaker B: Sounds great. Excellent. Good. Well, I'm conscious of time. Um, but before we wrap up, are there any other final thoughts you'd like to share with our audience? Um, any outlook, maybe on what's beyond, uh, this, this workshop? Uh, any. Yeah. Any final thoughts you'd like to share?

Speaker C: First and foremost, thank you for having me on the podcast, Jens. I look forward to being um, at the conference, um, and doing um, you know, and taking questions on, on the index, on the frictions that we see because it's been built, um, over the years, um, from, from tackling, uh, frictions, you know, making changes on the SWIFT network, but also trying to understand where we need collective action. Because at the end of the day, Payments is a team sport and swift's role is to convene, create frameworks of progress, scale innovation and you know, sustain that momentum. Um, so I look forward to ensuring that the index drives outcome, um, that the playbook becomes a true, um, piece of coordinated action, like a charter for coordinated action. And most importantly the networking, um, and the ideas and the exchanges at the workshop. Um, and with that, um, thank you once again to our listeners, um, for listening in and staying till the end.

Speaker B: Great. Thank you so much for that. Uh, Sri Lanka, thanks for joining the PIT Exchange and thanks to all our listeners for tuning in today. Please do follow, like, do what you need to do on your podcast platform, um, to stay in touch and don't miss any future episodes. Thank you and have a good one.

Speaker A: Thank you for listening to PID Exchange, a podcast by Currency Research. This episode is part of our CBPC Roadshow Series 4 conversations leading up to the Central Bank Payments Conference this August. Watch the full series at central bank payments conference.com, check out our upcoming events and publications at Currency Research and join us for the next stop on the CBPC Roadshow. We'll see you at the Central Bank Payments Conference this August.