1. Worker’s Remittances Conference September 24 th, 2008 CEMLA - Banco Central de Bolivia La Paz - Bolivia José Gambini Sales & Education

2. 2 Agenda SWIFT is...... Remittances Market Issues for banks SWIFT and remittances Workers’ remittances 1.0 – features and benefits Getting involved

3. 3

4. SWIFT HEAD OFFICE – LA HULPE (BE)

5. Market players Fund Administrators MA-CUGs Banks founded SWIFT Money Brokers Trading Institutions - Registrars Transfer Agents - Custody Providers Investment Managers Central Depositories & Clearing Institutions Exchanges Broker/Dealers - Payments MIs - Proxy Voting Agencies - Non-Shareholding Financial Institutions Treasury Counterparties & Service Providers … Securities MIs Securities Market Data Providers 1987 1989 1990 1973 1992 1995 1998 1999 2000 2001 2002 2004 …

6. 6 SWIFT in figures Total number of messages (year to date)2,529,575,207 Message growth (total traffic year to date) 10,66% Average daily traffic (year to date) 15,101,942 Message growth (average daily) 11,45% Latest peak day (January 25th 2008) 16,550,075 SWIFTNet FIN systems (availability)100% Live countries 209 Live members2,269 Live sub-members3,275 Live Participants3,068

7. Markets Payments Trade Securities Treasury

8. MA-CUGs Customer solutions SWIFTNet F IN More than 8,000 FIN correspondents in more than 200 countries Accessing the community SWIFTNet environment – single window SWIFTSolutions Accord Exceptions and Investigations Cash Reporting Investment Funds TS U Remittances … Using business solutions Reaching your customers Market infrastructures RTGS CLS TARGET 2 … Accessing MI’s SWIFTNet single window SWIFTNet messaging services SECURITYSECURITY STANDARDSSTANDARDS Interfaces

9. 9 Remittances Market

10. 10 Market overview Market: International migrants  200 million Financial flows  USD 400 billion Industry revenue  USD 15 billion Annual transactions  1 to 1.5 billion Providers’ Shares: Money Transfer Operators  20% + Banks  20 to 30% SWIFT  <10% A remittance is a cross-border, person-to-person payment of relatively low value.

11. 11 Putting it in context Cross-border remittances market touches, directly and indirectly, 650 to 800 million consumers If migrant workers incorporated as a company, their multinational would rank No. 3 on the Fortune 500 list, trailing only Wal-Mart and Exxon Mobil in annual revenue. Remittances inflows are larger than (*) –direct foreign investment in Mexico –tea exports in Sri Lanka –tourism revenue in Morocco –revenue from the Suez Canal in Egypt (*) Source: Worldbank

12. 12 Strategic importance for banks The remittance transaction is: –a turnkey product to build relationships with migrant communities in order to cross-sell other products Positive externalities of greater involvement of the financial community: –leveraging economic development potential of remittances –Promoting financial inclusion

13. 13 Issues for banks

14. 14 Bank options for service delivery Outside of becoming a franchisee of a money transfer operator, banks have the following alternatives: 1.Build a proprietary network 2.Build a bilateral service with a correspondent 3.Use open correspondent banking arrangements Cost Scalability Service Option:Issue:

15. 15 SWIFT and remittances

16. 16 Background 2005: proposed as SWIFT 2010 initiative 2006: objective to “explore” 2007: Advisory Group composed 2008: Workers’ Remittances 1.0 completed –Pilot service October 2008 to March 2009 2009: Live service –Release 2.0 specifications

17. 17 Advisory Group: mission, vision and scope that: –accommodates “and-to-any” retail payment media; –delivers global scale and reach; –delivers high STP rates; –enables high speed end-to-end transactions and track and trace but: –remains in the interbank, collaborative space; –doesn’t extend to bilateral commercial arrangements; –doesn’t restrict choice of settlement providers or currencies; –enables highly distributed processing Drive the definition, testing and live usage of…an interbank platform comprising the market practices and architecture for the authorisation, clearing and settlement of cross-border, consumer-to-consumer payments…

18. 18 Workers’ Remittances Advisory group (WRAG) Banco do BrasilBrazil Bank of New YorkUnited States BBVASpain CitigroupUnited States Deutsche BankGermany Equitable PCI BankPhilippines ICICI Bank LtdIndia INTESA SANPAOLO S.P.A.Italy La CaixaSpain Société GénéraleFrance Standard Bank of South AfricaSouth Africa Standard CharteredSingapore SwisspostSwitzerland

19. 19 Workers’ Remittances 1.0

20. 20 Workers’ Remittances 1.0 – what is it? An interbank platform for the bilateral clearing and settlement of cross-border, person-to-person, payments Market Practice Rulebook Messaging Standards Reference Data Messaging Services Business and Operational Rules and Guidelines ISO 20022 XML payments clearing & settlement messages, specified for P2P payments Counterparty data: central repository of participant, agent, and point-of-service in a common format FileAct 6.1 Store & Forward Business terms and conditions remains bilaterally agreed between counterparties

21. 21 Workers’ Remittances 1.0 – benefits Efficiency : –Tight market practices and rulebook for all participants –ISO20022 offering information granularity and extended service options –All participants with capabilities and point of services are identified by the Reference Data directory –increased STP for cash and account based remittances via various media Scalability : –2 tier participation model for federating small FI and retail networks –harmonized clearing & settlement practices facilitating bilateral business development Predicatibility & speed : –3 service levels definition for facilitating bilateral agreement on timeline Cost effectiveness and transparency : –OUR pricing model –All-in per transaction pricing positioned between Generic FileAct for lvp transfers and FIN MT Cat.1

22. 22 Market Practice Rulebook - Participants - Participants’ Agents - Service levels (instant, urgent, non-urgent) - Two product groups (account & cash disbursement) - Transaction ID specification (sender defined) - OUR (DEBT) charging default - FX guidelines - Reject/returns charging practices - Definition of sorting, transmission etc. - Transmission timing relative to service level - Gross bilateral settlement - Serial method recommended, but guidelines for Cover incl. - No restrictions on provider or currency choice Participation Products Charging practice Clearing Settlement

23. 23 Messageing standards Message Usage Guidelines include: ISO 20022 pacs messages MT Cat. 2 and Cat. 9 FileHeader XML message New specifications New guidelines over existing standards Mapping rules Message standards for Workers’ Remittances are being developed in consultation with a sub-group of the Workers’ Remittances Advisory Group

24. 24 Reference Data Directory Reference Data Directory includes: –Registered participants and agents participants –Participants’ service capabilities –List of Point of Service (POS) Management of the Directory –Data collection –Data management –Data distribution with access control

25. 25 Ref. data FileAct S&F ISO UNIFI 20022 Architecture Rules + Guidelines Settlement Sender Beneficiary Agents Distribution network sending country Distribution network Receiving country participants CB MT cover payment WR 1.0: architecture of the service framework for clearing and settlement of remittances participantsAgents

26. 26 SWIFT partner with Remittances specific offerings

27. 27 Where are we to date ? OctNovDecMayJunJulAugJanFebMarAprSepOct 20072008 Implementation - WRAG members & Forum - 35 SWIFT Partners Live services phase 1 NovDec 2009 JanFebMar go-live Product Definition - Architecture &standard - SWIFTNet WR phase 1 Pack SIBOS demo with partners Test and Pilot phase 1 - Pilot preparation - Pilot testing Specifications open for review to FORUM and SWIFT partners Pilots start

28. 28 Getting involved

29. 29 Current status – 24 pilots signed CPDInstitutionCountry POSOIT22Banca Popolare di SondrioIT BCBHDOSDBanco BHD S.A.DO BBOLECEGBanco Bolivariano S.A.EC CAFECOBBBanco Davivienda ( Bancafé )CO GUAYECEGBanco de GuayaquilEC AUSTECEQBanco del Austro S.A.EC BRASBRRJBanco do BrasilBR BNFEECEQBanco Nacional de FomentoEC BSGEECEQBanco SolidarioEC BCPOMAMCBanque Centrale Populaire - MarocMA CITIUS33CitigroupUS CODSECEQCooperativa de Ahorro y Credito (Codesarrollo)EC FIBFCOBBFinanciera CambiamosCO FIRNZAJJFirstRand Bank LimitedZA GYDVCOBCGiro y FinanzasCO HABBPKKAHabib BankPK ICICINBBICICI Bank LtdIN CAIXESBBLa CaixaES MCTBCOBBMacrofinancieraCO BCOMPTPLMillennium BCPPT RSLBRUMMRusslavbankRU SBZAZAJJStandard Bank of South AfricaZA SCBLGB2LStandard CharteredHK WSEEAEADWall Street Exchange Centre LLCAE total :24

30. 30 What you need to get started? Business: –Business Agreement with counterparties Application: –Capability to process ISO 20022 (XML) SWIFT: –FileAct processing capabilities –Alliance Gateway release 6.1 or higher –SWIFTNet Link release 6.1 or higher

31. 31 ¿Preguntas?

32. ¡Gracias por la amabilidad de su atención!