Swift, or the Society for Worldwide Interbank Financial Telecommunications, 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 45 million messages were sent across the network per day in 2022. Swift membership is open to supervised financial institutions such as banks, non-supervised financial institutions like broker-dealers, FX traders and non-financial corporations.
Anyone who wishes to join Swift must first obtain membership, which is followed by selecting a method of connection to the network for sending and receiving financial transactions.
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 organization, costs of setup and maintenance, and so on. Here are some of the most common methods of connectivity:
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 are directly managed by the internal Information Technology (IT) department. While this option allows for internal control and operation, it is an expensive option as the organization needs to have a full-fledged support team in-house, with expertise in Swift protocols and requirements, to manage the direct connection to Swift.
As an alternative, the management of this Swift technical environment can be outsourced to qualified partners (see point 3: “Certified Swift Service Bureau”).
Alliance Cloud
Fully managed and hosted by Swift, Alliance Cloud minimizes the use of internal infrastructures and resources and is available to those institutions operating fully automated messaging flows.
Certified Swift Service Bureau
A Swift Service Bureau (SSB) is a third-party organization certified by Swift that offers Swift connectivity to organizations through their own established Swift infrastructure and connection. SSBs make the lives of Swift-member corporates and financial institutions easier by removing the need to build and maintain expensive in-house resources to manage their Swift connection. Instead, organizations can simply “plug-in” to the SSB Swift connection, and they can rest assured that their Swift connectivity will be up and running smoothly, 24/7/365, with no required intervention on their part. SSBs also provide additional value to their clients through complementary services such as data integration, business intelligence, compliance services, and more. These value-added solutions are specifically designed to assist Swift member institutions, because SSBs are dedicated to enhancing the financial connectivity experience for their clients.
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 look at some important factors organizations should keep in mind when choosing a Swift Service Bureau for their needs.
Important Considerations When Selecting a Swift Service Bureau
Ensure compliance with Swift’s Shared Infrastructure Programme (SIP)
Swift’s Shared Infrastructure Programme lays down a framework and guidelines that SSBs need to comply with to ensure the security and reliability of their connection to the Swift network. The SIP requires service bureaus to adhere to the Swift Customer Security Programme (CSP) and Swift’s Customer Security Controls Framework (CSCF). One of the first things an organization considering a Swift Service Bureau must do is confirm the SIP compliance status of the SSB. Organizations can refer to Swift’s Service Bureau Directory to locate the SIP Status of Swift Service Bureaus.
Core Competency
Any institution that connects multiple Swift entities to the network using a common single connection is treated as a Swift Service Bureau. However, not all SSBs listed on the Swift Service Bureau directory are alike. As an example, many SSBs are set up to service certain groups of related entities only, whereas others can provide Swift connectivity to any organization. Hence, it is important to evaluate and understand the competencies of the SSBs under consideration and ensure that the correct one is selected to provide for the organization’s various requirements.
Additional Swift Capabilities
A modern Swift Service Bureau should be able to provide additional value-added solutions beyond just Swift connectivity. As Swift launches new solutions such as the Global Payments Initiative (GPI) along with enhancements such as Account Pre-Validation, the shift to Swift’s central RMA portal, and the phased migration to the ISO 20022 messaging standard, it is critical to evaluate the SSB’s ability to adapt and deliver these new solutions so that an organization may keep up with the continual changes in the industry.
Expertise in Services Beyond Swift
When shortlisting a Swift Service Bureau, it is important to select one that can also provide other complementary methods of bank connectivity such as direct host-to-host, APIs, RTP, and FedNow. SSBs with these capabilities can also help organizations connect to banks in emerging markets that are not currently on the Swift network.
Appropriate Pricing
Connecting your financial systems to the Swift network is a critical service that requires a certain amount of technical know-how and Swift expertise. A failure of this service can cause a complete blockage of the critical financial transactions flowing between an organization and their banks. Thus, it is important to realize that Swift connectivity is not a commodity like an Internet service and requires careful consideration and execution to ensure stability. What you pay for this service can be the difference between a peaceful experience and a painful one.
Organizations should also ensure that the pricing they negotiate with their chosen SSB makes it a more economical choice for them than having their own in-house Swift team and infrastructure. On the other hand, if the pricing is too low, it could be an indicator that the SSB may not have the best-in-class support and infrastructure required to maintain the required stability of connection. The right SSB will provide the optimal balance of expertise and cost to correctly match with an organization’s requirements as a Swift member. It would be prudent for organizations considering a Swift Service Bureau to take reference from other Swift members using SSBs to get a sense for which would be the right fit for them.
Axletree’s Uniqueness as a Swift Expertise Center
With a track record of over two decades in the business, Axletree is one of the pioneers of the Swift Service Bureau concept. Here are a few examples of Axletree’s expertise and longevity as an SSB. Axletree 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 the Swift Ready Connectivity Best Practice label in the Americas
- The first Swift Service Bureau to receive the Swift Premier Operating Practice label
With our lengthy experience in the industry, Axletree has the infrastructure and expert teams available to handle the complex connectivity requirements our clients bring to us. We are well-known for the stability, resilience, and accessible support we provide, and we are dedicated to our brand promise of providing peace of mind to our clients.
Swift members who choose to house their connectivity to the Swift network in-house can still benefit from Axletree’s expertise. By choosing Axletree as their Swift expertise center, these organizations can gain access to any additional infrastructure, maintenance, and consulting services as required to bolster and maintain their own Swift connectivity. This includes updating annual Swift Releases, Remote Monitoring Services, Infrastructure Maintenance, migration assistance (such as the ISO 20022 migration), annual compliance audits (Swift CSP), and much more.
If you are looking for the best-in-class Swift Service Bureau or expertise center to enhance your Swift connectivity, get in touch with our expert team at info@axletrees.com.
This is a refurbishment of an article we originally published in 2022, with updated information to better reflect the requirements for Swift members in 2024. Read our original article here: https://axletrees.com/important-considerations-when-selecting-a-swift-service-bureau/
February 7, 2024
