- January 19, 2021
- 2140 Views
Future-proofing Asia Pacific’s financial services
Lisa O’Connor, Head of Capital Markets Strategy at SWIFT discusses how the global provider of secure financial messaging services is delivering infrastructure that will help the world of payments and securities adapt, thrive and grow in a competitive landscape
Imagine a world of payments and securities transactions that are instant, frictionless and transparent, with end-to-end integrity, data-driven innovation, and global reach.
This is our vision at SWIFT. Over the next two years, we are transforming the SWIFT platform, to enable seamless, frictionless and instant payments from one account to another, anywhere in the world. We will also redouble our focus on securities to help processes like reconciliation and reporting become more efficient and less complex, while working to support all asset types, including tokenised assets.
Asia Pacific, with its keen adoption of technology, rapidly-growing but ever-diverse consumer blocs, and preeminence in manufacturing, stands to gain from this across a number of areas.
Collaboration and innovation drives payments and trade
Trade remains an important driver for Asia Pacific. It is also at the forefront of mobile adoption and cashless payments, which in turn supports the region’s homegrown e-commerce businesses.
Governments in Asia Pacific have started to formalise a regional identity around these developments. In November 2020, fifteen countries signed the Regional Comprehensive Economic Partnership (RCEP). What is significant is the timing of the trade deal, which signifies a commitment by members to rules-based trade and investment, even as Asia Pacific continues to experience digitalisation, regionalisation, and the re-basing of manufacturing hubs.
Asia Pacific has seen a rise in both fintech companies and traditional players experimenting on new payment innovations. But in some cases, individual members have pursued bilateral projects in payments and settlement, which may be beneficial for learning but do not always scale to other members. The question is - how can this innovative spirit be better applied across such a diverse set of trade partners?
SWIFT has brought the community together over the last forty years – at global, regional and local levels – to shape market practices, define standards and debate issues of mutual interest of concerns, and it continues to do so today.
Our new platform prioritises interoperability, standards that all players can meet, and a rigorous approach to cybersecurity. It will enable straightforward, simple, fast and secure payments, and SWIFT users will be able to use it to obtain quality data, conduct advanced analytics, and co-create or benefit from value-added services, as they continue to explore innovations and roll out new technologies.
Building on the diversity of Asia Pacific’s capital markets
Capital markets is another area of growth across the region. Amidst an incredible diversity of maturity, regulation, and investor dynamics, tech-based platforms are creating new opportunities in supply-chain finance, financial inclusion, virtual assets, and tokenisation. Other important drivers are the opening of China’s capital-markets and moves in Southeast Asia and India to develop homegrown alternatives to London interbank offered rate (LIBOR).
As with payments, however, the flip side to diversity is fragmentation, with a lack of harmonised regulations, clashing tax codes, duplicative efforts, and growing gaps in cybersecurity protocols and capabilities. There is a clear need for standards to underpin Asia’s growing connectivity, especially around data and financial messaging.
SWIFT’s new platform, supported by payments messaging standard ISO 20022, offers end-to-end transaction monitoring and a consolidated view of assets, while being compatible with existing infrastructure. This will simplify and make processes like reconciliation and reporting more efficient, while working to support all asset types, including tokenised assets.
Riding the coattails of innovation
Asia is a leader in digital transformation. This is exciting but it also brings with it increased risks of fraud, money laundering, and cybercrime. Trust is the capstone to sustainable growth, which means updating risk management processes to handle new cybersecurity threats and a more collaborative regulatory approach is crucial.
SWIFT currently provides universal guidelines to match the needs of Asia’s diverse participants. Most of all, we work with banks and other partners to promote a risk-aware culture, so that innovation occurs responsibly and that financial institutions can collaborate with fintechs and other partners in an open and safe environment.
Tech companies and banks that build on SWIFT’s infrastructure are able to scale immediately, both throughout Asia Pacific and worldwide. They enjoy mutualised costs of development or consumption of services, and find new ways to deliver fast and frictionless, end-to-end transactions.
The future presents a number of exciting opportunities for payments and securities in Asia Pacific, as its economies find new and more efficient ways to transact. As the region continues to navigate its recovery from the global pandemic, the ability to move money instantly becomes increasingly important. But connectivity is more than just speed. It is about doing so with precision, transparency and end-to-end reach, and in a manner that is both scalable and neutral.