Schrank retools Swift
Leonard Schrank, chief executive of the Society for Worldwide Interbank Financial Telecommunications , better known as Swift , would be the first to admit that the 7,000-member cooperative doesn,t always live up to its nickname.
Swift’s decision last month to subcontract its network operations to Bermuda-based telecom Global Crossing probably “raised an eyebrow or two,” Schrank says. Founded in 1973, Swift is the financial world,s electronic utility, responsible for safely transporting payment messages for $5 trillion in cash and securities every day. So changes to the way Swift does business are made with caution.
Schrank is confident that subcontracting the network is the right decision. “It will give our customers the same security and reliability at lower costs with enhanced services,” he says. Fund managers, broker-dealers and global custodians have been pushing for such improvements since they gained access to the system in the early 1990s.
With the subcontracting arrangement in place, Schrank says, Swift can move on to other concerns, such as developing standards for lowering costs for cross-border securities transactions. “I,m told that it costs ten times more to settle and clear a trade cross-border in Europe than it does in the U.S.,” he says. “That is a big issue for our broker-dealer and fund manager users. I think we can help make the industry more efficient.”