Institutions Seek To Leverage SWIFTNet
October 12, 2004

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Implemented in 1977 as a replacement for the unwieldy telex, SWIFT quickly became the preferred method for international interbank payment instructions. In 1997, SWIFT decided to move to a secure IP-based network (SIPN) and to develop a set of new SWIFTNet services to enhance its position as the major messaging provider to the financial services industry. TowerGroup has found that top US financial institutions are still evaluating - but are planning to adopt - new SWIFTNet services.

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SWIFTNet promises to be one of this decade's most important initiatives in the global financial services industry. While it cannot compare to Y2K as a global IT exercise, the migration to SWIFTNet has touched some 7,800 global banks and financial firms in 200 countries - and has had major impact on the SWIFT-related IT and business processes of its major users. 

As the migration nears completion in the US, banks and other financial institutions are examining SWIFTNet relative to their specific organizational needs. New research from TowerGroup analyzing interviews with some of the largest US financial institutions finds them seriously assessing how they can benefit competitively and gain operational/business advantage from SWIFTNet solution and service alternatives.

"Overall, top US institutions gave SWIFT high marks on the SWIFTNet migration process and the new platform's infrastructure," said Breffni McGuire, senior analyst in the Global Payments research service at TowerGroup and author of the research. "Perhaps most important from this perspective, some survey respondents have already seen performance throughput improvements on the new platform.

"Looking toward the future utilization of SWIFTNet, however, a key theme among all survey respondents was 'evaluation' - even from institutions that have made decisions on how to utilize SWIFTNet in a number of areas," McGuire noted. "TowerGroup found that these financial institutions are taking a pragmatic business case development approach toward adoption of the new SWIFTNet options."
 
Highlights of the research include:

* SWIFT is achieving its mission to migrate the leading members of its US financial community from the X.25 network to SWIFTNet - and the community, as well as SWIFT, has invested heavily to make this a reality. 

* The major factors identified by the financial institutions as being important to their decision to adopt SWIFTNet services and solutions fall into three broad areas: pricing; technology; and customer and environmental issues.

* SWIFT must continue to flesh out the user benefits underlying its marketing messages, as it competes for mind share and resources with internal projects ranging from mergers and acquisitions to technology renewal and other IT infrastructure initiatives.

"It's critical that SWIFT recognize where many US financial institutions are in the SWIFTNet process," said McGuire. "Many are just now settling in from the migration process and are beginning to turn attention to actual use of the new product suite. We expect 'settling in' to be the dominant mode for the immediate future."