Worker s Remittances Conference CEMLA

Worker’s Remittances Conference CEMLA - Banco Central de Bolivia La Paz - Bolivia September 24 th, 2008 José Gambini Sales & Education

Agenda • • • SWIFT is. . . Remittances Market Issues for banks SWIFT and remittances Workers’ remittances 1. 0 – features and benefits • Getting involved 2

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SWIFT HEAD OFFICE – LA HULPE (BE)

Market players Banks founded SWIFT Securities Market Data Providers 87 … 19 04 20 02 9 198 2001 MA-CUGs Securities MIs 1973 20 Fund Administrators Central Depositories & Clearing Institutions Exchanges Broker/Dealers 1990 2000 19 92 9 8 19 95 19 9 Treasury Counterparties & Service Providers 199 - Payments MIs - Proxy Voting Agencies - Non-Shareholding Financial Institutions Money Brokers - Registrars Transfer Agents - Custody Providers Investment Managers Trading Institutions …

SWIFT in figures • Total number of messages (year to date) • Message growth (total traffic year to date) • Average daily traffic (year to date) • Message growth (average daily) • Latest peak day (January 25 th 2008) • SWIFTNet FIN systems (availability) • Live countries • Live members • Live sub-members • Live Participants 2, 529, 575, 207 10, 66% 15, 101, 942 11, 45% 16, 550, 075 100% 209 2, 269 3, 275 3, 068 6

Markets Treasury Securities Trade Payments

SWIFTNet environment – single window Market infrastructures RTGS CLS TARGET 2 … SWIFTNet FIN Accessing MI’s Accessing the community Interfaces Customer solutions MA-CUGs S E C U R I T Y SWIFTNet single window S T A N D A R D S SWIFTNet messaging services Reaching your customers Using business solutions More than 8, 000 FIN correspondents in more than 200 countries SWIFTSolutions Accord Exceptions and Investigations Cash Reporting Investment Funds TSU Remittances …

Remittances Market 9

Market overview A remittance is a cross-border, person-to-person payment of relatively low value. Market: • • International migrants Financial flows Industry revenue Annual transactions 200 million USD 400 billion USD 15 billion 1 to 1. 5 billion 20% + 20 to 30% <10% Providers’ Shares: • Money Transfer Operators • Banks • SWIFT 10

Putting it in context • Cross-border remittances market touches, directly and indirectly, 650 to 800 million consumers • If migrant workers incorporated as a company, their multinational would rank No. 3 on the Fortune 500 list, trailing only Wal-Mart and Exxon Mobil in annual revenue. • Remittances inflows are larger than (*) – – direct foreign investment in Mexico tea exports in Sri Lanka tourism revenue in Morocco revenue from the Suez Canal in Egypt (*) Source: Worldbank 11

Strategic importance for banks • The remittance transaction is: – a turnkey product to build relationships with migrant communities in order to cross-sell other products • Positive externalities of greater involvement of the financial community: – leveraging economic development potential of remittances – Promoting financial inclusion 12

Issues for banks 13

Bank options for service delivery Outside of becoming a franchisee of a money transfer operator, banks have the following alternatives: Option: Issue: 1. Build a proprietary network Cost 2. Build a bilateral service with a correspondent Scalability 3. Use open correspondent banking arrangements Service 14

SWIFT and remittances 15

Background • 2005: proposed as SWIFT 2010 initiative • 2006: objective to “explore” • 2007: Advisory Group composed • 2008: Workers’ Remittances 1. 0 completed – Pilot service October 2008 to March 2009 • 2009: Live service – Release 2. 0 specifications 16

Advisory Group: mission, vision and scope Drive the definition, testing and live usage of…an interbank platform comprising the market practices and architecture for the authorisation, clearing and settlement of cross-border, consumer-to-consumer payments… • that: – – accommodates “and-to-any” retail payment media; delivers global scale and reach; delivers high STP rates; enables high speed end-to-end transactions and track and trace • but: – – remains in the interbank, collaborative space; doesn’t extend to bilateral commercial arrangements; doesn’t restrict choice of settlement providers or currencies; enables highly distributed processing 17

Workers’ Remittances Advisory group (WRAG) Banco do Brasil Bank of New York BBVA Citigroup Deutsche Bank Equitable PCI Bank ICICI Bank Ltd INTESA SANPAOLO S. P. A. La Caixa Société Générale Standard Bank of South Africa Standard Chartered Swisspost Brazil United States Spain United States Germany Philippines India Italy Spain France South Africa Singapore Switzerland 18

Workers’ Remittances 1. 0 19

Workers’ Remittances 1. 0 – what is it? An interbank platform for the bilateral clearing and settlement of cross-border, person-to-person, payments Market Practice Rulebook Business and Operational Rules and Guidelines Messaging Standards ISO 20022 XML payments clearing & settlement messages, specified for P 2 P payments Reference Data Counterparty data: central repository of participant, agent, and point-of-service in a common format Messaging Services File. Act 6. 1 Store & Forward Business terms and conditions remains bilaterally agreed between counterparties 20

Workers’ Remittances 1. 0 – benefits • Efficiency : – Tight market practices and rulebook for all participants – ISO 20022 offering information granularity and extended service options – All participants with capabilities and point of services are identified by the Reference Data directory – increased STP for cash and account based remittances via various media • Scalability : – 2 tier participation model for federating small FI and retail networks – harmonized clearing & settlement practices facilitating bilateral business development • Predicatibility & speed : – 3 service levels definition for facilitating bilateral agreement on timeline • Cost effectiveness and transparency : – OUR pricing model – All-in per transaction pricing positioned between Generic File. Act for lvp transfers and FIN MT Cat. 1 21

Market Practice Rulebook Participation - Participants’ Agents Products - Service levels (instant, urgent, non-urgent) - Two product groups (account & cash disbursement) - Transaction ID specification (sender defined) Charging practice - OUR (DEBT) charging default - FX guidelines - Reject/returns charging practices Clearing - Definition of sorting, transmission etc. - Transmission timing relative to service level Settlement - Gross bilateral settlement - Serial method recommended, but guidelines for Cover incl. - No restrictions on provider or currency choice 22

Messageing standards Message standards for Workers’ Remittances are being developed in consultation with a sub-group of the Workers’ Remittances Advisory Group Message Usage Guidelines include: • ISO 20022 pacs messages New guidelines over existing standards • MT Cat. 2 and Cat. 9 Mapping rules • File. Header XML message New specifications 23

Reference Data Directory • Reference Data Directory includes: – Registered participants and agents participants – Participants’ service capabilities – List of Point of Service (POS) • Management of the Directory – Data collection – Data management – Data distribution with access control 24

WR 1. 0: architecture of the service framework for clearing and settlement of remittances Rules + Guidelines Architecture Sender Agents participants Ref. data participants Agents Beneficiary File. Act S&F ISO UNIFI 20022 Distribution network sending country Distribution network MT cover payment Receiving country CB Settlement 25

SWIFT partner with Remittances specific offerings 26

Where are we to date ? Product Definition - Architecture &standard Specifications open for review to FORUM and SWIFT partners - SWIFTNet WR phase 1 Pack Implementation - WRAG members & Forum - 35 SWIFT Partners SIBOS demo with partners Test and Pilot phase 1 - Pilot preparation - Pilot testing Pilots start go-live Live services phase 1 Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar 2007 2008 2009 27

Getting involved 28

Current status – 24 pilots signed CPD POSOIT 22 Institution Country Banca Popolare di Sondrio IT BCBHDOSD Banco BHD S. A. DO BBOLECEG Banco Bolivariano S. A. EC CAFECOBB Banco Davivienda ( Bancafé ) CO GUAYECEG Banco de Guayaquil EC AUSTECEQ Banco del Austro S. A. EC BRASBRRJ Banco do Brasil BR BNFEECEQ Banco Nacional de Fomento EC BSGEECEQ Banco Solidario EC BCPOMAMC Banque Centrale Populaire - Maroc MA Citigroup US Cooperativa de Ahorro y Credito (Codesarrollo) EC FIBFCOBB Financiera Cambiamos CO FIRNZAJJ First. Rand Bank Limited ZA GYDVCOBC Giro y Finanzas CO HABBPKKA Habib Bank PK ICICI Bank Ltd IN La Caixa ES MCTBCOBB Macrofinanciera CO BCOMPTPL Millennium BCP PT RSLBRUMM Russlavbank RU SBZAZAJJ Standard Bank of South Africa ZA SCBLGB 2 L Standard Chartered HK WSEEAEAD Wall Street Exchange Centre LLC AE CITIUS 33 CODSECEQ ICICINBB CAIXESBB 29 total : 24

What you need to get started? • Business: – Business Agreement with counterparties • Application: – Capability to process ISO 20022 (XML) • SWIFT: – File. Act processing capabilities – Alliance Gateway release 6. 1 or higher – SWIFTNet Link release 6. 1 or higher 30

¿Preguntas? 31

¡Gracias por la amabilidad de su atención!

Worker s Remittances Conference CEMLA — Banco Central de