Important Considerations When Selecting a SWIFT Service Bureau

SWIFT, or the Society for Worldwide Interbank Financial Telecommunications system, is a messaging network used by banks and other financial institutions to quickly and accurately send and receive information, including money transfer instructions, in a secure environment.

SWIFT has more than 11,000 member institutions and approximately 42 million messages were sent across the network per day in 2021.  SWIFT membership is open to supervised financial institutions such as banks, non-supervised financial institutions like broker-dealers, FX traders etc., and finally to non-financial corporations.

Anyone who wishes to join SWIFT must obtain a membership followed by selecting a method of connection to the SWIFT network for sending and receiving the financial transactions messages.

Different ways to connect to SWIFT

There are different ways in which an organization can connect to the SWIFT Network. The preferred mode of connection depends on several factors such as risk appetite, availability of knowledgeable technical resources within the organisation, costs etc.  Here are some of the most common methods of connectivity:

1. 1. 1. In-House Direct connectivity to the SWIFT network:
         In this scenario, all the necessary hardware, software, network links and encryption devices are installed within the organization and managed by the Information Technology (IT) department of the concerned organization directly. This makes it an expensive option as you need to have a full-fledged support team in-house with expertise in the SWIFT system to manage the direct SWIFT connectivity. As an alternative, the management of this SWIFT technical environment can be outsourced to qualified partners.
      2. Alliance Lite2 or Alliance Cloud:
         Fully managed and hosted by SWIFT, Alliance Cloud minimises the use of internal infrastructures and resources and is available to those institutions operating fully-automated messaging flows.
      3. Certified SWIFT Service Bureau:
         Connect via a Swift Service Bureau (SSB), which are third-party organizations certified by SWIFT, that offer SWIFT connectivity making the lives of the corporates or financial institutions easier. The benefits of using a SWIFT Service bureau are that apart from removing the need for in-house resources or expensive infrastructure, SSBs also provide additional value through complementary services such as data integration, business intelligence, etc.

Given the trend of rationalizing costs and focusing on core competencies, connecting to SWIFT via a SWIFT Service bureau is a popular and more cost-effective approach for many corporates and financial institutions. Let’s take a look at some of the important factors that you should keep in mind while choosing a SWIFT Service bureau for your needs.

Important Considerations When Selecting a SWIFT Service Bureau

1. 1. Ensure SWIFT’s Shared Infrastructure Programme (SIP) compliance
      SWIFT’s Shared Infrastructure Programme lays down a framework and guidelines for that third-party service bureaus offering SWIFT connectivity need to comply with to ensure security, and reliability. One of the first things you must do is to confirm the SIP status of the SWIFT Service Bureau you are considering.
      The SIP programme requires service bureaus to adhere to the SWIFT Customer Security Programme (CSP) and SWIFT’s Customer Security Controls Framework (CSCF). If you are unsure about the SIP status of a Service Bureau, then you can refer to SWIFT’s Service Bureau Directory for the same.
   2. Expertise in services beyond SWIFT
      When you are shortlisting a SWIFT Service Bureau, look for one that can also help you with other complementary methods of bank connectivity such as host-to-host, API etc. SSBs can also help you connect to banks in emerging markets that are not currently on the SWIFT network.
   3. Appropriate pricing
      The pricing for a contract with a swift service bureau is an important factor in negotiating the contract. Make sure that the pricing makes it more economical for you to work with a third party as compared to having your own in-house team. On the other hand, if the pricing is too low, it could be an indicator that they may not have the best-in-class support and staff required. Best way to know this is to ask to speak to their existing clients.

Axletree’s Uniqueness as a SWIFT Expertise Center

For the SWIFT members who chose to have an In-house direct connectivity to the SWIFT network, by choosing Axletree as your SWIFT Expertise Center, you get access to the necessary infrastructure, maintenance, and consulting services your organization requires for maintaining your SWIFT connectivity. This includes updating annual SWIFT Releases, Remote Monitoring Services and Infrastructure Maintenance.

With a track record of over two decades in the business, Axletree has been one of the pioneers in this area and was the first SWIFT Service Bureau for banks and corporates in North America, the first SWIFT Service Bureau audited by SWIFT in North America, the first swift service bureau to achieve SWIFT Ready Connectivity Best Practice label in the Americas and the first to receive the SWIFT Premier Operating Practice label

If you are looking for the best-in-class SWIFT Service Bureau or Expertise Center, visit our website at www.axletree.com or contact us at info@axletrees.com.

April 25, 2022