SWIFT to intensify localization efforts in China

The Society for Worldwide Interbank Financial Telecommunication (SWIFT), a global financial messaging platform based in Belgium, is stepping up its localization strategy in China to meet domestic financial institutions' growing demand for cross-border financial transaction services, a senior executive said.

"SWIFT regards China as one of the most strategic markets and after 35 years of serving this market, we are becoming fully onshore now," said Eddie Haddad, managing director of SWIFT Asia-Pacific, referring to the new legal entity that the platform is planning to establish in China.

SWIFT had announced this plan in January in Beijing. "With this new entity, SWIFT will provide customized services to the Chinese financial community, such as services in local language, and we will also start using renminbi for its services and products in China, making renminbi the third billing currency after the US dollar and the euro," Eddie told China Daily in an exclusive interview.

"This is also a strong demonstration of SWIFT's support for renminbi internationalization."

On Jan 16, the Beijing municipal government and SWIFT signed a memorandum of understanding, under which the latter said it would establish a new onshore entity in the city. The new entity will join the Payment and Clearing Association of China, according to a statement on the People's Bank of China, the central bank, website.

Fan Yifei, deputy governor of the PBOC, said that the agreement was a significant step to improve the integrated management of financial infrastructure and bolster financial stability.

China is an increasingly important market for SWIFT due to the large number of transactions on the China-related corridors, said Haddad.

"The China-US corridor is now the largest on our network. According to SWIFT data, in the first three quarters of 2018, the US-China corridor conducted 4.5 million transactions. We are also seeing rapid growth in the China-Australia and China-Africa corridors," he said.

"We are confident that with the greater opening-up of the Chinese economy, more Chinese companies will go offshore, while foreign companies and investors will go onshore into China. SWIFT with its pervasive network globally is well positioned to serve as a connectivity option for China and the world, and this is also the core of SWIFT's China strategy. The other two pillars of SWIFT's China strategy are optimizing services, community engagement and standards."

Haddad, a payment expert following the APAC market for several years, said he was impressed with the strong enthusiasm and penchant for innovation among the China financial community.

China is a dynamic market and Chinese banks are highly efficient in embracing innovative solutions to remove frictions in the cross-border payments. This is clearly visible from the adoption rate of SWIFT's global payments innovation program, or gpi, in China, which is the highest among all countries on the SWIFT network, said Haddad.

So far, 145 banks in China have registered for the SWIFT gpi program, which was launched in 2017 and has already become the new global cross-border payment standard accounting for more than $300 billion a day in 148 currencies across more than 1,100 country corridors. Nearly 99 percent of China-US cross-border payments are conducted by gpi, according to data from the platform.

To further enrich the functionalities of gpi, SWIFT is working with the community in many pilot programs including gpi prevalidation which enable sending banks to make transactions and to check beneficiary account information from the recipient banks seamlessly.

"This will allow banks to remedy any inaccurate or missing information instantly, reducing delays and costs, and some of the Chinese banks also joined in this pilot program," Haddad added.

SWIFT is a global member owned cooperative and the world's leading provider of secure financial messaging services. After years of development, SWIFT's services for the global financial community have extended beyond as a platform of messaging and standards for communicating to include products and services to facilitate access and integration, identification, analysis and regulatory compliance.