Worker

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Workers Remittances Conference

• CEMLA - Banco Central de Bolivia
• La Paz - Bolivia

September 24th, 2008
José Gambini Sales Education
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Agenda

• SWIFT is......
• Remittances Market
• Issues for banks
• SWIFT and remittances
• Workers remittances 1.0 features and benefits
• Getting involved

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(No Transcript)
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SWIFT HEAD OFFICE LA HULPE (BE)
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Market players
Banks founded SWIFT
Central Depositories Clearing
Institutions Exchanges Broker/Dealers
Securities Market Data Providers

Fund Administrators
Money Brokers
MA-CUGs
- Registrars Transfer Agents - Custody
Providers
Securities MIs
Treasury Counterparties Service Providers
Investment Managers

• - Payments MIs
• Proxy Voting Agencies
• Non-Shareholding Financial Institutions

Trading Institutions
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SWIFT in figures

• Total number of messages (year to
  date) 2,529,575,207
• Message growth (total traffic year to date)
  10,66
• Average daily traffic (year to date)
  15,101,942
• Message growth (average daily)
  11,45
• Latest peak day (January 25th 2008)
  16,550,075
• SWIFTNet FIN systems (availability) 100
• Live countries 209
• Live members 2,269
• Live sub-members 3,275
• Live Participants 3,068

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Markets
Trade
Treasury
Payments
Securities
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SWIFTNet environment single window
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Remittances Market
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Market overview
A remittance is a cross-border, person-to-person
payment of relatively low value.

• Market
• International migrants ? 200 million
• Financial flows ? USD 400 billion
• Industry revenue ? USD 15 billion
• Annual transactions ? 1 to 1.5 billion
• Providers Shares
• Money Transfer Operators ? 20
• Banks ? 20 to 30
• SWIFT ? lt10

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Putting it in context

• Cross-border remittances market touches, directly
  and indirectly, 650 to 800 million consumers
• If migrant workers incorporated as a company,
  their multinational would rank No. 3 on the
  Fortune 500 list, trailing only Wal-Mart and
  Exxon Mobil in annual revenue.
• Remittances inflows are larger than ()
• direct foreign investment in Mexico
• tea exports in Sri Lanka
• tourism revenue in Morocco
• revenue from the Suez Canal in Egypt
• () Source Worldbank

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Strategic importance for banks

• The remittance transaction is
• a turnkey product to build relationships with
  migrant communities in order to cross-sell other
  products
• Positive externalities of greater involvement of
  the financial community
• leveraging economic development potential of
  remittances
• Promoting financial inclusion

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Issues for banks
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Bank options for service delivery
Outside of becoming a franchisee of a money
transfer operator, banks have the following
alternatives
Option
Issue

1. Build a proprietary network

Cost
Scalability

1. Build a bilateral service with a correspondent

Service

1. Use open correspondent banking arrangements

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SWIFT and remittances
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Background

• 2005 proposed as SWIFT 2010 initiative
• 2006 objective to explore
• 2007 Advisory Group composed
• 2008 Workers Remittances 1.0 completed
• Pilot service October 2008 to March 2009
• 2009 Live service
• Release 2.0 specifications

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Advisory Group mission, vision and scope
Drive the definition, testing and live usage
ofan interbank platform comprising the market
practices and architecture for the authorisation,
clearing and settlement of cross-border,
consumer-to-consumer payments

• that
• accommodates and-to-any retail payment media
• delivers global scale and reach
• delivers high STP rates
• enables high speed end-to-end transactions and
  track and trace
• but
• remains in the interbank, collaborative space
• doesnt extend to bilateral commercial
  arrangements
• doesnt restrict choice of settlement providers
  or currencies
• enables highly distributed processing

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Workers Remittances Advisory group (WRAG)
Banco do Brasil Brazil Bank of New
York United States BBVA Spain Citigroup U
nited States Deutsche Bank Germany Equitable
PCI Bank Philippines ICICI Bank
Ltd India INTESA SANPAOLO S.P.A. Italy La
Caixa Spain Société Générale France Standar
d Bank of South Africa South Africa Standard
Chartered Singapore Swisspost Switzerland
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Workers Remittances 1.0
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Workers Remittances 1.0 what is it?
An interbank platform for the bilateral clearing
and settlement of cross-border, person-to-person,
payments
Business and Operational Rules and Guidelines
Market Practice Rulebook
ISO 20022 XML payments clearing settlement
messages, specified for P2P payments
Messaging Standards
Reference Data
Counterparty data central repository of
participant, agent, and point-of-service in a
common format
Messaging Services
FileAct 6.1 Store Forward
Business terms and conditions remains bilaterally
agreed between counterparties
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Workers Remittances 1.0 benefits

• Efficiency
• Tight market practices and rulebook for all
  participants
• ISO20022 offering information granularity and
  extended service options
• All participants with capabilities and point of
  services are identified by the Reference Data
  directory
• increased STP for cash and account based
  remittances via various media
• Scalability
• 2 tier participation model for federating small
  FI and retail networks
• harmonized clearing settlement practices
  facilitating bilateral business development
• Predicatibility speed
• 3 service levels definition for facilitating
  bilateral agreement on timeline
• Cost effectiveness and transparency
• OUR pricing model
• All-in per transaction pricing positioned between
  Generic FileAct for lvp transfers and FIN MT
  Cat.1

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Market Practice Rulebook

• Participants
• Participants Agents

Participation

• Service levels (instant, urgent, non-urgent)
• Two product groups (account cash disbursement)
• Transaction ID specification (sender defined)

Products

• OUR (DEBT) charging default
• FX guidelines
• Reject/returns charging practices

Charging practice

• Definition of sorting, transmission etc.
• Transmission timing relative to service level

Clearing

• Gross bilateral settlement
• Serial method recommended, but guidelines for
  Cover incl.
• No restrictions on provider or currency choice

Settlement
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Messageing standards
Message standards for Workers Remittances are
being developed in consultation with a sub-group
of the Workers Remittances Advisory Group

• Message Usage Guidelines include
• ISO 20022 pacs messages
• MT Cat. 2 and Cat. 9
• FileHeader XML message

New guidelines over existing standards
Mapping rules
New specifications
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Reference Data Directory

• Reference Data Directory includes
• Registered participants and agents participants
• Participants service capabilities
• List of Point of Service (POS)
• Management of the Directory
• Data collection
• Data management
• Data distribution with access control

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WR 1.0 architecture of the service framework for
clearing and settlement of remittances
Rules Guidelines
Architecture
Ref. data
participants
Beneficiary
participants
Agents
Sender
Agents
FileAct SF ISO UNIFI 20022
Distribution network sending country
Distribution network Receiving country
MT cover payment
CB
Settlement
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SWIFT partner with Remittances specific offerings
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Where are we to date ?

• Product Definition
• Architecture standard
• SWIFTNet WR phase 1 Pack

Specifications open for review to FORUM and SWIFT
partners

• Implementation
• WRAG members Forum
• 35 SWIFT Partners

SIBOS demo with partners
Pilots start

• Test and Pilot phase 1
• Pilot preparation
• Pilot testing

go-live
Live services phase 1
Oct
Nov
Dec
May
Jun
Jul
Aug
Jan
Feb
Mar
Apr
Sep
Oct
Nov
Dec
Jan
Feb
Mar
2007
2008
2009
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Getting involved
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Current status 24 pilots signed
CPD Institution Country
POSOIT22 Banca Popolare di Sondrio IT
BCBHDOSD Banco BHD S.A. DO
BBOLECEG Banco Bolivariano S.A. EC
CAFECOBB Banco Davivienda ( Bancafé ) CO
GUAYECEG Banco de Guayaquil EC
AUSTECEQ Banco del Austro S.A. EC
BRASBRRJ Banco do Brasil BR
BNFEECEQ Banco Nacional de Fomento EC
BSGEECEQ Banco Solidario EC
BCPOMAMC Banque Centrale Populaire - Maroc MA
CITIUS33 Citigroup US
CODSECEQ Cooperativa de Ahorro y Credito (Codesarrollo) EC
FIBFCOBB Financiera Cambiamos CO
FIRNZAJJ FirstRand Bank Limited ZA
GYDVCOBC Giro y Finanzas CO
HABBPKKA Habib Bank PK
ICICINBB ICICI Bank Ltd IN
CAIXESBB La Caixa ES
MCTBCOBB Macrofinanciera CO
BCOMPTPL Millennium BCP PT
RSLBRUMM Russlavbank RU
SBZAZAJJ Standard Bank of South Africa ZA
SCBLGB2L Standard Chartered HK
WSEEAEAD Wall Street Exchange Centre LLC AE
total 24
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What you need to get started?

• Business
• Business Agreement with counterparties
• Application
• Capability to process ISO 20022 (XML)
• SWIFT
• FileAct processing capabilities
• Alliance Gateway release 6.1 or higher
• SWIFTNet Link release 6.1 or higher

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Preguntas?
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Gracias por la amabilidad de su atención!