And when that money moves, it almost certainly travels using services and infrastructure provided by the Society for Worldwide Interbank Financial Telecommunication, commonly known as SWIFT. Formed in 1973 by a group of 239 banks in 15 nations that were tired of processing international currency transfers by a combination of manual data entry and telex messages, SWIFT has since become a colossus carrying billions of dollars around the globe each day. Over 7,500 financial institutions in more than 200 countries are now SWIFT participants, and the company processes over nine million messages each day.
SWIFT's importance to the international financial service industry is now inestimable, as globalization demands easy movement of funds across borders. The result is climbing message volumes for SWIFT's services : in 2004 the number of messages transmitted over SWIFT's networks rose by over 12 percent, while in 2003 the network carried two billion messages for the first time, doubling volumes in just four years.
This growth has meant that the company has enthusiastically introduced new technology as and when needed. In 1997, the technology the caught the company's eye was Internet Protocol (IP). SWIFT announced its intention to IP-enable its products and services, delivered in 2002 with SWIFTNet and announced it would switch its operations from its previous X.25 network to IP at the end of 2004.
Yet the advent of SWIFTNet has many others in the financial services community interested in using SWIFT, as while previous versions exchanged proprietary messages, the new IP-enabled version of the network can handle any XML-formatted traffic.
SWIFT intends to take advantage of its newly open architecture to develop and encourage new services. -One of the challenges SWIFT faces is that the company's origins are in international transactions and the banking environment," says Ian Johnston, Regional Director of the company's Banking Industry Division for the Asia-Pacific. -In the last 12 years or so we have been very successful at broadening the uptake of SWIFT into the securities market. We have also expanded into foreign exchange and currency trading," and the company is now looking at other services such as file transfers describing bulk quantities of low value payments.
Johnston hopes other SWIFT users will do likewise. -Banks have already made the technology investment to use SWIFT," he says, and SWIFTNet's new architecture should allow them to -... leverage into new offerings."
Johnston says the key to any upgrade or migration is the company's own software. Dubbed SWIFTNet Link, the package - ... handles everything with reference to IP."
Making the move is not quite so simple, however, according to Vivienne Cummings, Westpac's Project Manager for its SWIFTNet upgrade.
Cummings says that while SWIFT's software and support have been of very high quality, there are significant integration challenges involved in a successful upgrade.
-The biggest challenge is selecting the software vendor to make it hang together," she says, as existing applications that generate SWIFT's old -FIN" format messages need to work alongside new applications that translate them into IP-ready formats.
The choice is made complicated by the fact that IBM's MERVA family of products, a favourite SWIFT message-generating tool for many financial institutions, does not have a direct upgrade path to generate SWIFTNet messages. Several alternatives are available, most holding either SWIFT's Gold award certifying compliance with its next-generation software or the Silver accreditation indicating compliance with current specifications.
Yet Westpac found picking a winner was difficult.
-We wanted to make a strategic investment," Cummings says. -Some of the solutions we looked at were not mature. Others did not have a presence in Australia. Scalability was an issue, and we wanted to make sure that whatever we bought could be used for future applications." The Bank eventually settled on Sungard's MINT solution, software it felt was sufficiently robust to power its systems and, perhaps more importantly, do so with such reliability that its reputation would not be jeopardised by the move.