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In anticipation of Sibos 2023, the financial community is gearing up to convene under this year’s theme: ‘Collaborative Finance in a Fragmented World’. From 18 – 21 September 2023, the Metro Toronto Convention Centre will host expert leaders from around the world to share their insights into issues such as working together to create a sustainable financial ecosystem, risk management in times of uncertainty, and the latest technology trends evolving in the industry. 

With hundreds of stakeholders from financial institutions, multinational corporations, and technology partners, the conference offers myriad networking and business opportunities to shape the future of the global financial sector.

In this episode of Trade Finance Talks, TFG’s Deepesh Patel was joined by Shirish Wadivkar, Global Head – Wholesale Payments & Trade Strategy at Swift, to uncover the conference’s core themes, the latest Swift initiatives, and strategies to prepare for Sibos 2023.

Enabling Future-Ready Trade: Key themes and initiatives at Sibos 2023

The theme of Sibos 2023, “Collaborative Finance in a Fragmented World,” reflects the financial industry’s commitment to addressing its latest challenges. 

Underscoring active engagement and knowledge exchange, the conference brings to the forefront Swift’s strategic approach to trade: a future-ready trade ecosystem founded on standards. Wadivkar outlined the three core pillars that will shape the discourse at Sibos 2023:

• Standards: Standards play an integral role in establishing a solid foundation for the trade ecosystem. Wadivkar noted that “Under standards, we are looking at a session about our first ISO full cycle APIs for corporate-to-bank guarantees, and discuss what challenges we’ll face in adoption and how do we grow that particular set of APIs to do more than just guarantees.” 
• Interoperability and digitisation: Highlighting Swift’s dedication to collaboration, Wadivkar explained, “We work a lot with our partners, and we’ve done proof-of-concept (PoCs) on how electronic bills of lading can interoperate.” The ability to facilitate seamless transactions across various platforms enhances banks’ capacity to adopt a wide range of trade products. 
• Trade data harmonisation: “If we want to drive towards a full cycle of digitisation, completely paperless, it’s not just scanned documents flowing around. You need to start with trade data standardisation. That is what Swift is looking at to lift our game in trade as a community,” he stated. Harmonising trade data is a foundational step towards digitisation and creating a more streamlined trade ecosystem.

Elevating trade through evolving standards: ISO 20022 and beyond

While ISO 20022 is primarily associated with payments, it holds profound implications for trade finance. Its integration with payment systems and the interconnected nature of financial operations mean that developments made in the payments sector echo through trade processes. 

According to Wadivkar, over 50% of payments over Swift are associated with trade, illustrating the undeniable link between payments and trade. He added, “This is an integrated space. It’s impossible to make changes in the ISO for payments and not impact the world of trade.”

The International Chamber of Commerce (ICC) and Swift have jointly introduced the industry’s first API standards for bank guarantees. The initiative aims to refine the interaction between corporates and banks and optimise data standardisation practices, thus reducing friction and enhancing efficiency at the corporate-to-bank level. 

Moreover, the initiative goes beyond messaging standards to encompass data standardisation. Swift strives to leverage the benefits of the ISO data set elements by incorporating them into the API framework, as Wadivkar emphasised, “This is one way of bringing ISO to trade as well.” 

These enhancements are of particular significance for areas of documented trade characterised by complex and operationally intensive processes such as guarantee lifecycle management, issuance, amendments, and cancellations. 

Alongside elevating efficiency, the harmonisation of standards and processes also bridges the gap between payments and trade.

Yet, the impact of ISO 20022 on trade is not confined solely to payments. Wadivkar highlighted that the transition of payments to ISO standards has the potential to optimise the entire end-to-end data processing cycle. “Reconciliations and the ability to track the payments will improve. So there is a benefit for the entire payments and trade ecosystem,” he added. 

From law to action: Raising the bar for digital adoption

The evolution towards paperless trade transactions has taken a remarkable step forward with the adoption of electronic bills of lading (eBLs). Reinforcing this leap is the recent enactment of the Electronic Trade Documents Bill Act 2023. 

Wadivkar underlined the importance of having a legal framework, stating, “The biggest thing about having a law in place is that it allows a reassurance that there is a legal framework to proceed. The ubiquity of English law, as a genesis in many other markets, can facilitate replication in numerous jurisdictions.” 

Another milestone in this journey is the establishment of an eBL standard by the Future International Trade (FIT) Alliance. Spotlighting the power of collaboration, Wadivkar highlighted Swift’s achievement in integrating the eBL standards into its network. 

Collaborative partnerships with entities like edoxOnline and CargoX have empowered Swift to accommodate external eBL standards, hence enabling eBL exchange among the Swift network participants. He elaborated, “Swift ensures that its network is open to carry standards like eBL, which originate outside Swift but can run over its network.”

Nevertheless, while the legal framework provides the foundation, practical implementation challenges continue to persist. Wadivkar questioned, “Now that we have the standard in place, and we have Swift as a viable method of exchanging the eBLs, how much more adoption can we get from the issuers themselves and the people who use eBLs?” 

Currently, electronic bills of lading (eBLs) constitute less than 2% of the total global bills of lading exchanges, indicating the substantial untapped potential for its adoption. This underscores the need for collaborative industry efforts to raise this percentage and unlock the full benefits that eBLs offer. 

Trade data harmonisation: The gateway to comprehensive digitisation

In an increasingly complex global trade landscape, the need to standardise data points has never been more vital. “Collaboration is the key conversation here,” Wadivkar stated. 

As Swift continues to explore innovative ways to support its vision for a future-ready trade ecosystem, its engagement with ICC’s Digital Standards Initiative (DSI) is a testament to this collaborative spirit. 

Central to this initiative is the Key Documents & Data Elements in Trade scope, comprising seven essential trade documents for digitisation, such as bills of lading, certificates of origin, commercial invoices, and insurance certificates. 

The objective is to define an optimal data set for each document, laying the groundwork for standardised digital data sets. The approach is designed to eliminate potential friction across jurisdictions, ensuring comprehensive harmonisation. 

Furthermore, Wadivkar clarified the twofold objective of this initiative. 

• First, the effort seeks to achieve harmonisation by defining a standardised data set that accurately represents each trade document. This initial step is crucial to prevent any disruption arising from incomplete or non-standardised data sets. 
• Subsequently, the next phase involves identifying the most critical documents for digitisation and transmission—a step that can only be achieved through collaborative industry discussions. As he emphasised, “Our focus in this conversation is to continue engaging with the industry and determine which of these documents are the most important to digitise and transmit.”

However, as Wadivkar noted, demonstrating tangible benefits whether in terms of time savings, cost reduction, or revenue generation is imperative to drive adoption. “These are the hurdles that we have to cross as we go along. Unless it makes financial sense, these will remain in the space of standards. A standard is not a standard unless it’s adopted,” he noted. 

Empowering global commerce with Swift Go

As Swift forges ahead in its commitment to revolutionise cross-border payments, the organisation has recently launched a new standard for low-value international payments known as Swift Go. According to Wadivkar, “Swift Go is gaining momentum quite rapidly. We have over 600 banks and 130 countries connected over Swift Go right now.” 

At its core, Swift Go presents a simple yet transformative value proposition. It functions as a Service Level Agreement (SLA) that guarantees the seamless delivery of payments to the beneficiary bank in full value. 

This assurance holds exceptional significance, particularly for small and medium-sized enterprises (SMEs).

For SMEs, Swift Go offers a powerful tool for predictability. As Wadivkar pointed out, “Price guarantees or confidence that the money as invoiced will be received improves the way they can price it.” Such predictability allows SMEs to competitively set their prices while fostering stronger supplier relationships. 

Additionally, as the modern economy witnesses a surge in low-value, high-volume payments due to the rise of shared economy platforms, Swift Go’s predictability of delivery and cost of payment helps optimise supply chains, making it indispensable not only for SMEs but also for a wide range of corporates.

Another advantage alongside Swift Go is the Cross-Border Payment Pre-validation service, which tackles the issue of payment errors before they occur. Wadivkar explained, “Payment Pre-validation is an initiative at Swift that we are championing with our banks and market infrastructures to help solve payment errors before they happen.” 

Swift collaboratively works with banks to ensure that payments are valid, accurate, and aligned with the beneficiary’s account details. By identifying and rectifying errors before payment transmission, Swift’s Payment Pre-validation mitigates the need for costly revisions and reduces the time spent resolving payment-related issues. 

Maximising the Sibos experience

Drawing from his past experiences as a participant, Wadivkar shared a dual-pronged approach with the attendees. He recommended delving into the immediate benefits that the industry discussions at Sibos offer, saying, “See what you can take and do today and why we cannot take it into delivery. Like a network, everything in Swift is about adoption.” 

The event’s concentrated nature provides a unique opportunity to learn about a variety of topics, even those that may have been overlooked in the past year.

In addition, he advocated for challenging the status quo and examining the feasibility of converting insights into actionable outcomes, underlining, “This is the place where you can truly collaborate. You are talking to people who live and breathe these risks, opportunities, and new initiatives that will benefit the industry.”

The second aspect of Wadivkar’s advice revolved around embracing Sibos’ culture of collaboration. He encouraged attendees to engage in conversations with partners, peers, and industry experts, prompting discussions about forward-looking initiatives, innovative opportunities, and potential risks. 

“The time you get at Sibos is a very unique time to be able to push those conversations in a very different orbit,” he remarked.