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Start-ups like Ripple are undercutting SWIFT with cheaper, faster services. Michael Moon, head of payments for the global payments network, tells finews.asia how he plans to respond.

 The global SWIFT network carries around 30 million messages everyday, and moves the annual value of global gdp (US$65.5 trillion in 2016) every 3 to 4 days.

But SWIFT is under threat from start-ups, which want to break the firm’s lock on global payments messaging. Firms like Ripple and Stellar are offering valuable features such as instant settlement, convertibility, and real-time traceability of funds, but at much lower costs. Can the 45-year-old Brussels-based network hold on?

 Size Matters

Michael Moon, SWIFT’s head of payments, says Brussels-based firm isn’t going without a fight: the firm is using technology as well as its large user base – more than 11,000 financial institutions across 200 countries – to lower costs.

«In the last seven to eight years, we have reduced the cost of messaging by 93 percent. We can only do that because of the scale we achieved,» Moon told finews.asia in an interview. 

Due to the massive flow of information on its network, SWIFT is able to produce industry reports on global transactions and currency movements. One example is a free monthly tracker culled with internal data to help clients understand how China's currency is being used across geographies and financial sectors. 

Attacking Secretive Fees

SWIFT is also attacking opaque fees, where a lack of transparency has led to delays in settlements and eventually lowers the efficiency of companies' cash management process. As blockchain-based firms like Ripple circle, SWIFT launched its own real-time payments push called gpi.

It recently asked banks on its gpi network to detail the fees charged to their customers, and how they share these fees with their customers. «Financial institutions are in the process of providing data to a central database,» said Moon. 

Real World vs Sandbox

Currently, banks arrange global payments by maintaining foreign accounts in a local currency (known as nostro accounts), and then debiting the accounts as required—a process that can tie up time and capital.