High demand for intraday reporting within the financial services industry has created economies of scale for SWIFT (Society for Worldwide Interbank Funds Transfer), resulting in a price cut for reporting messages. The demand has been generated by increases in automation and straight through processing in the transaction chain.
SWIFT will reduce prices in proportion to the volume of reporting activity that SWIFT customers, some 7000 financial institutions around the world, undertake through SWIFT. The average reduction financial institutions can expect is 22.5% for reporting messages. The price for domestic and intra-institution traffic can fall as low as 7.5 euro cents ($0.07) per message.
"We've seen rapid growth in reporting messages over the past 12 months, which accounts for a third of all FIN traffic growth," says Andre Boico, director of product marketing at SWIFT. "The new pricing structure more accurately reflects the relative value of the various message types we offer." FIN is the store and forward messaging service that enables participants to exchange financial data.
The price cut couldn't come a better time, according to Abdul Raof Latiff, regional business manager for Citibank, global cash & trade, Asia Pacific. "SWIFT will be posing a lot of challenges to banks over the next few years," Latiff comments. "MT100, which is the payment messaging type, will be replaced by MT103. This should make communication easier but is also causing alot of confusion in the industry as to standards and what should be in the formats. Also, in order to make European payments easier, all bank account holders will have to standardize and be allocated international bank account numbers. Once again, a headache for banks, but to the benefit of SWIFT."
The decision was made by the SWIFT board of directors in December and came into effect on 1 January 2001.
