The SWIFT Global Payments Innovation Initiative

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The SWIFT global paymentsinnovation initiativeOctober, 2016

The journey so farDecember 2015January 2016April 2016June 2016SWIFT gpi overview - October 2016-confidential not to be disclosed

The correspondent banking model is under pressureCustomers andregulators push forbetter payments serviceEnd customers increasingly demandingBanks rationalize theircorrespondent bankingnetworksRegulatory intensity and increasing costsDigital innovators offernew disruptivesolutionsDisintermediationSWIFT gpi overview - October 2016-confidential not to be disclosedDomestic payments going real-timeNetwork rationalizationEnhanced value proposition

Objective: deliver a better customer payment experience“Before”“After”Traditional correspondent bankingThe SWIFT global payments innovation (gpi) initiative1. Slow, can take multiple days1. Fast(er) (start with “same day”)2. Expensive, multiple deducts2. Higher efficiency & less intermediaries3. Secure and compliant3. Secure and compliant4. No transparency on cost and time4. Transparent, with payments tracking5. Convenient and ubiquitous5. Convenient and ubiquitous6. Open and inclusive (global reach)6. Open and inclusive (global reach)The objective is to first fix these key pain pointsNote regarding prices: it will be at the discretion of each SWIFT gpimember to decide the pricing strategy vis-à-vis its customers,including other financial institutionsSWIFT gpi overview - October 2016-confidential not to be disclosed

The SWIFT global payments innovation (gpi) initiativeDelivering the future of cross-border payments̶Proactively respond to evolving customer needs for more speed, transparency and traceabilityin cross-border payments̶New multilateral rulebook, initially focused on business-to-business payments̶Building on the foundation that banks provide in security, resiliency and compliance̶Delivering real-world innovation: building on existing platform, embrace new technologies along astrategic roadmap̶Global reach, collaborative industry-wide initiative, organised by SWIFT̶Open model, participation based on operational quality Fast Secure Real-world innovation Transparent Resilient Global reach Traceable Compliant Open modelSWIFT gpi overview - October 2016-confidential not to be disclosed

SWIFT gpi conceptMessaging technologiesAccessibleby any bankSLA rulebookStill reachnon-initiativebanksCore transaction banksReachingany bankTrackerDirectoryObserverSWIFT gpi overview - October 2016-confidential not to be disclosedValue-added product suite

SWIFT gpi product suiteDirectory Providing operational info on gpimembers, BICs, currencies, cut-off timesEssential reference data to calculate bestgpi payment routeTracker End-to-end payments tracking database tomonitor progress of a gpi payment Allows to track a payment’s path in realtime, obtain transparency on deducts andconfirmation that payment was creditedAvailabilityDecember 2016 via SWIFTRefSWIFT gpi overview - October 2016-confidential not to be disclosedAvailability Demo: Sibos GUI: November 2016 MT 199 / API: Q1 2017Observer Business Intelligence dashboard showingbank compliance with gpi SLA. Ensure control, monitoring andenforcement of SLA, and, consequently,service qualityAvailability Approach to be finalised: Q4 2016 Basic version: April 2017 Advanced version: Q4 2017

SWIFT gpi customer credit transfer – Value proposition for corporatesKey featuresFaster, same day use of funds*Benefits for a corporateGrow international businessTransparency of feesEnhance supplier relationshipsEnd-to-end payments trackingRemittance information transferred unaltered(*) within the timezone of the receiving gpi memberSWIFT gpi overview - October 2016-confidential not to be disclosedIncrease treasury efficiencies

SWIFT gpi customer credit transfer - Value proposition for banksGrow volumes Offer distinctive payments service Retain and attract new customers Protect and grow transactionvolumes Comply with regulation(Dodd-Frank, PSD2, ) Sell payments services to thirdpartiesSWIFT gpi overview - October 2016-confidential not to be disclosedReduce cost Lower network management cost,avoid proprietary connections innon-strategic countries, accessglobal quality network Enhanced compliance practices Optimised intraday liquidity flows Increased straight throughprocessingLead innovation Reputational benefitLeader in global paymentsinnovation

SWIFT gpi initiative AMRO BankABSA BankAlfa-BankAustralia and New ZealandBanking Group*Axis BankBanco Bilbao Vizcaya ArgentariaBangkok BankBank of America Merrill Lynch*Bank of China*Bank of New York Mellon*Bank of Nova ScotiaBank of the Philippine IslandsBank of Tokyo-Mitsubishi UFJ*Banco SantanderBanco de Crédito del PeruBanco do BrasilBanque Européenne d’InvestissementBarclays*Bidvest BankBNP Paribas*Budapest BankCaixaBankCanadian Imperial Bank of CommerceChina Construction BankChina Merchants BankCitibank*Commonwealth Bank of Australia85 50%Europe,Middle East,Africa30%Asia Pacificinitiative banksChannelling paymentsinto 224 countriesRepresenting 71% of allSWIFT cross-borderpayments20%AmericasRegional representation ofSWIFT gpi 43.CommerzbankCrédit AgricoleCrédit Mutuel-CIC BanquesCredit SuisseCTBC BankDanske Bank*DBS Bank*Deutsche BankDNB BankEcobankE.Sun Commercial BankErste Group BankFifth Third BankFirstRand BankHandelsbankenHelaba Landesbank HessenThüringen44. HSBC BankSWIFT gpi overview - October 2016-confidential not to be disclosed45. ICICI Bank46. IndusInd Bank47. Industrial and CommercialBank of China*48. ING Bank*49. Intesa Sanpaolo*50. Investec51. Itaù Unibanco52. JPMorgan Chase Bank*53. Kasikornbank54. KBC Bank55. KEB Hana Bank56. Lloyds Bank57. Mashreq Bank58. Maybank59. Mizuho Bank*60. National Australia Bank61. Bank*Oversea-Chinese Banking CorporationPKO Bank PolskiPromsvyazbankRabobankRaiffeisen Bank InternationalResona BankRoyal Bank of Canada*Royal Bank of ScotlandSberbankSiam Commercial BankSilicon Valley BankSkandinaviska Enskilda BankenSociété GénéraleSpareBank 1Standard Bank of South AfricaStandard Chartered Bank*Sumitomo Mitsui Banking Corporation*SwedbankTadhamon International Islamic BankTMB BankToronto-Dominion BankUBSU.S. BankUniCredit*United Overseas BankWells Fargo*(*) Pilot bank

SWIFT gpi roadmap – Draft proposal Focus In pilot. Final specs. with live service. Optional Build/Test – timeframe tbc Set of additional optionalservices Each with their own timeline High-level info sent end July More details after Sibos Approach tbdSWIFT gpi overview - October 2016-confidential not to be disclosed

Interested?www.swift.comContact [email protected]/gpiSWIFT gpi overview - October 2016-confidential not to be disclosedDownloadSWIFTgpi App on your iPad

Context: gpi create new enablersgpi business rules andtechnical specificationsIntroduction of 3 new featuresin correspondent bankingSLA identification Ability to relate messages to their underlyingscheme rulesSLA identifier in the header in filed 111UETR Unique end-to-end transaction reference: oneidentifier, many messages.In block 3 of all gpi related messagesUnique with a universally known algorithm,anyone can generateStatus confirmations SWIFT gpi overview - October 2016-confidential not to be disclosedAcknowledgment of payments and statusreportingMT199 with settlement completed/in progress/rejected; Reason codes for pending settlementsAbility to trace charges

Tracker features overviewEnd-to-endtransparency Routing: allows to seewhere the payment is Transparency ofcharges and feesdeducted and finalcredited amount Shows processing timein each node in the chainand total time ofpayments execution Based on gpi businessrulesBenefits forbanksBenefits forcustomersAccess Reduce operation costsand time spent oninvestigations Track importantpayments, also bybeneficiary Secured and resilientcloud databasemanaged by SWIFT Reduce front office coston customercalls/complaints Easy reconciliation ofpayments and invoices FIN store & forward:easy data feeding andpush/alerts from tracker Faster investigation ofclaims non-receipt Offer new innovativeservices to theircustomersSWIFT gpi overview - October 2016-confidential not to be disclosed Speed up supply chainand reduce risk; releasegoods as soon aspayment is sent API calls to tracker pullstransaction data intobanks’ payments datawarehouse GUI for browse mode

Payments and inquiry journey today Each participant in thepayments chain is limited toits own data environmentwhich result in bad customerexperience, delays andinefficiencies1Non receipt of fundsOperations and investigationcost for banks are high andcan be avoided3Non receipt of fundsSeller need to send good dueto buyer’s demand, but hasno clue what is going with thepayment and when is it goingto arriveBuyers have bad reputationwith seller as it take a lot oftime to answer the claims nonreceipt and what happened tothe payment.101 GPI bank 1Buyer2Non receipt of funds SWIFT gpi overview - October 2016-confidential not to be disclosed 103 103 GPI bank 2 103 GPI bank 34Non receipt of funds 910 GPI bank 4Seller

Payments and inquiry journey tomorrow GPI payments tracker isupdated as payment ismoving along the chainInformation is coming fromextracting the necessaryfields from MT103 and frombanks reporting status andcharges with MT199 or API Banks are able to inquiry thedatabase via API andintegrate information into theirown payments datawarehouse Banks customer seepayments status informationvia banks customer channels,no need to invest in anexception and investigationsolutions2What’s the status of mypayment?3API call tocheckpaymentsstatus andlocation 101 BuyerPayments tracker103 103 GPI bank 1GPI bank 21Non receipt of fundsSWIFT gpi overview - October 2016-confidential not to be disclosed103 GPI bank 3 910 GPI bank 4Seller

Tracker database is accessible via 3 channels: each bank can choose itspreferred ways to connectGUIHow toreportstatus?How to getstatusupdates?MT199API N/A Send 199 to SWIFT’s trackerBIC Same format as per businessrules and tech specs Intermediary banks don’t needto relay back 199s Using the same format as 199per business rules Update tracker over securedSWIFTNet Overview of own transactions:dashboard style Advanced search oftransactions Detailed view per transaction Export reports in .csv format. Push of 199 from tracker BICwith the same format as perbusiness rules Pull information from the trackerusing secured SWIFTNet Periodical pull of information(delta) Inquiry/response on specifictransactionsSWIFT gpi overview - October 2016-confidential not to be disclosed

SWIFT gpi tracker “in the cloud”101 Originator103 103 910 103 Bank ABank BBank CBank ”status overviewBeneficiaryTransparency of total fees and timeUnique, end-end tracking numberTrack path,in real timeCentral payments database,hosted at SWIFTDetails of banks alongthe chainSWIFT gpi overview - October 2016-confidential not to be disclosedUpdated via MT199 or APIData consumption via GUI, viaMT199 (push) or via API (pull)

Payments Tracker mock-up home screenSWIFT gpi overview - October 2016-confidential not to be disclosed

Payments Tracker – detailed search resultsMore targetedsearch capability,combination of fieldsOverview of alltransactions,filteringcapabilitySWIFT gpi overview - October 2016-confidential not to be disclosed

gpi Tracker – in progress (1)SWIFT gpi overview - October 2016-confidential not to be disclosed

gpi Tracker – in progress (2)SWIFT gpi overview - October 2016-confidential not to be disclosed

gpi Tracker – in progress (3)SWIFT gpi overview - October 2016-confidential not to be disclosed

gpi Tracker – in progress (4)SWIFT gpi overview - October 2016-confidential not to be disclosed

gpi Tracker – completedSWIFT gpi overview - October 2016-confidential not to be disclosed

Deutsche Bank 36. DNB Bank 37. Ecobank 38. E.Sun Commercial Bank 39. Erste Group Bank 40. Fifth Third Bank 41. FirstRand Bank 42. Handelsbanken 43. Helaba Landesbank Hessen-Thüringen 44. HSBC Bank . Bank D 103 MT199/API. SWIFT gpi overview - October 2016-confidential_not to be disclosed