Is SWIFT Succumbing to the “Dinosaur” Syndrome?

By Stanley Epstein - Principal Associate at Citadel Advantage

The news item regarding impending staff a cut being ‘inevitable’ as SWIFT contends with declining volumes” (FINEXTRA News, 14 September 2009) triggered some wider thoughts that I would like to share.

SWIFT’s need to restructure and to contain operating costs is not in my view simply a result of the financial crisis and the downturn in message volumes. There is also a substantial element of the “dinosaur” syndrome in these events.

If SWIFT wants to succeed in the efficiencies that it seeks there are three basic issues that it needs to urgently address.

1. Speed up innovation – SWIFT is too slow to innovate. There are some great changes in the SWIFT pipeline but the problem is that they take forever to develop and implement. A competitive banking industry has rightfully not got the patience for this.
2. Get away from the technical focus - SWIFT messaging and its processing is a technical issue, but the market that it serves is driven by business requirements. From my own experience the business area is oft-times totally neglected. The business champions in the industry often do not really understand what SWIFT can do for them. Similarly the “translation” and melding of the technical and the business aspects is left to the banks to do. The banks are no good at this. If SWIFT wants banks to uses their solutions they need to actively show the banks how this can be done.
3. Temper the bureaucracy - SWIFT is run by (1) too many bureaucrats (who really don’t have an appreciation for the role that SWIFT ought to be playing) and (2) too many interbank bodies (who’s agenda’s are often shaped by the business interests of the financial institutions involved).

I am a great believer in and supporter of SWIFT – I have been since its birth way back in the 1970s – so please don’t take my thoughts amiss.