SWIFT Transaction Manager Platform to Accelerate Payments Industry

Vitthal Kulkarni, Senior Consultant

SWIFT Transaction Manager Platform (TMP) plays a vital role for banks and financial institutions operating in cross-border space. Financial institutions will have to prepare themselves for the most radical period of change the finance industry has witnessed over decades.

Over the next couple of years, the finance industry operating in cross-border payments will undergo the most far-reaching period of change like the ISO 20022 migration. SWIFT is introducing Transaction Management Platform as part of its new strategy to cater to ISO 20022 adoption. Transaction Management Platform will help institutes make faster, better, and more secure payments.

What is Transaction Management Platform?

SWIFT is developing an infrastructure called “Transaction Management Platform” to help cross-border payments migration by providing value-added services to convert MT messages to ISO compliant MX messages. Early adopters of this standard can immediately realize its benefits, while those that need to take more time to transition can go at their own pace.

SWIFT’s enhanced platform harnesses a transaction manager to put the business transaction at the centre. This will ensure that the participants get complete and updated data at any point in time, along with value-added services to enrich payment quality.

transaction management platform
Source: SWIFT

TMP Offerings

End-to-end transaction management:

TMP provides end-to-end orchestration of transactions and allows the industry to move away from point-to-point messaging and towards central transaction processing.

Instant and frictionless cross-border payments:

TMP makes international payments quite simple. Using ‘Unique-End-To-End-Transaction-Reference (UEUTR), payments travel from source to destination. It helps track the latest status, location, and all applicable charges in the chain for the payment. SWIFT gpi (Global Payments Innovation) service enables participants to track their payments.

Payment pre-validation:

Friction in the payments system costs the industry more than $2bn every year, affecting over 700 million transactions. And most of the time, friction happens because of avoidable errors like invalid input data. Payment Pre-validation solves this problem, utilizing API technology and harnessing best-in-class data sources to validate key information before payment is sent.

Data and financial crime services:

TMP prevents and detects fraud—helps banks monitor and protect their core payments by flagging and/or blocking fast-moving, suspect transactions efficiently in real-time. TMP provides data and analytical capabilities required to remove friction across the entire transaction life cycle.

Transaction management platform diagram
Source: SWIFT

Benefits of TMP

  • Reduce friction: TMP enables straight-through processing, providing certainty with real-time tracking and information.
  • Increase efficiency: Harnessing the power of richer, unalterable data enables institutions to streamline and automate processes, minimizing the risk of errors requiring manual workarounds.
  • Expand offerings: Common service levels across high growth segments such as consumer and SME payments unlock new opportunities.
  • Improve customer experience: By providing frictionless and instant payments, you can deliver a seamless customer experience for cross-border payments.
  • Ensure end-to-end data integrity: Access the best available data powered by ISO 20022 with the peace of mind that it is unaltered throughout the payments process, unlocking the potential for deep insights and analytics.
  • Move at your own pace: TMP model delivers value across the entire SWIFT community, regardless of messaging format or connectivity.

Timelines:

Transaction Manager Platform will be available in several iterative releases. Release 1 is planned for November 2022.

Key highlights of Release 1 include:

  • Instant and frictionless payment processing
  • Services including screening, fraud detection and pre-validation
  • Support for native API-based interactions.
  • Access to full, rich transaction data, with built-in integrity and security guarantees
  • Financial institutions can adopt at their own pace
  • Continued full support of existing gpi and community service levels
SWIFT’s TMP migration approach
Source: JDX

Next steps for Financial Institutions:

Financial institutions need to start assessing the new platform adoption on a priority basis if they have not started. They need to define a target operating model, consider a tactical plan B, reach out to the SWIFT account manager to understand the mandatory requirements, and comprehend their technical/infrastructural limitations. Organizations must assess how they want to interact with ISO 20022 messages, how they intend to implement a new platform, and what timelines are.

If you are thinking of adopting this new platform, start engaging with your technical partners shortly. In case you have more questions, we at Fulcrum Digital collaborate with financial institutions to analyze, solutionize, and optimize cross-border payments processes.

Want to learn how you can leverage the transaction manager to reap the benefits of ISO 20022? Reach out to our financial experts for more details.