SWIFT will have 3,000 corporate participants by 2010. Or so says research firm Aite Group in a new report.
The Brussels-based messaging network, whose bank owners have traditionally resisted corporate membership for fear of disintermediation, have made corporate access to the SWIFT network easier, persuading banks the new business opportunities outweigh the risks. Corporates’ heightened awareness of the importance of privacy and security has led to demand for access to the established, open-standards-based SWIFT network.
In the new report, SWIFTNet: Can it Catch Corporates in its Net(work)?, Aite Group analyzes the market drivers and the actions taken by SWIFT and its member-owners to expand the value of the network to corporates.
SWIFT has expanded the reach of its network to allow corporates to have access through Member Administered-Closed User Groups (MA-CUGs). While adoption was slow in the early stages (1998-2002), the introduction of SWIFTNet, a virtual private network that uses Internet protocols, has greatly increased corporate use.
For some banks, corporate remains a cause for concern, as they fear it will weaken their ties to their corporate clients and lead to disintermediation of their role in facilitating payments between corporates. Aite Group reckons “more forward-looking banks” see the opportunity to reduce internal costs by replacing proprietary connections to corporates and to introduce value-added services for corporate clients.
“The opportunities for the financial services industry far outweigh the potential risks of allowing corporates to have broader access to SWIFT,” says Nancy Atkinson, a senior analyst with Aite Group and author of the report. “Being able to leverage existing SWIFT connections and evolving message types to interface with corporate clients allows banks to creatively offer value-added services. Market drivers will overcome resistance and make this channel a terrific advantage for those banks that embrace the corporate access.”