A final note on remittances and I've already been taken to task by one reader, who points out that a 'migrant worker' in one country is another country's customer overseas.
This is a key point for some banks, as they enable their customers to migrate and have full financial services whilst working overseas. That's an opportunity for some …
However, as I responded, the point of workers' remittances in this migrant worker context is that they are either unbanked or underbanked. It's more about financial inclusion than banking, so it is a slightly different conversation.
And one solution for the underbanked discussed in some depth is SWIFT’s remittance services for banks. It is not surprising we discussed this in depth, as SWIFT are the premier conference sponsor.
The service focuses upon those banks that are trying to build bilateral services or using open correspondent banking services. The difficulties banks experience when dealing in such areas are all focused upon limitations in scalability, timing, price and service levels.
If you have a bilateral agreement, that’s great for the countries covered. But then, if you need to cover new country corridors, a new agreement with another bank is required. Equally, what happens if you’re only transacting four or five times a month?
A high cost for creating something that is basically unused.
On the other hand, if you use open correspondent banking relationships there is no guarantee of service levels, and therefore pricing and processing can vary.
Hence, SWIFT has focused upon creating a technical and commercial framework to solve these issues.
The framework covers everything from the terms and conditions of correspondent bank contracts to best practice rules and procedures to the messaging standards and services based around Fileact store and forward.
There’s a little bit more to it, and you can read all that stuff over here, but the bit that interested me is that the service already has 43 participants with 14 live users including certified payments services providers, such as Wall Street Exchange.
It was stressed that non-bank payments providers are welcome to join the system and so the question came up: “but why would we use SWIFT as you are very expensive?”
The SWIFT guys immediately responded by saying that the pricing is based upon a tiered system of usage volumes, with the most expensive items being priced at €0.08 per transaction down to €0.03 per transaction for the highest volume users.
“That’s reasonable”, came the reaction from the PSP, “is that all of the pricing?”
“Urm, there’s an annual fee of €1,000 to use the SWIFT directory of all participant’s reference data”, the SWIFT guys replied, “and, other than this, that’s about it.”
I think they won over a few more participants this week.