SSIs are agreements between two financial institutions that fix the receiving agents of each counterparty. They help in speedy payment and settlement, but SSIs are frequently changed, which results in settlement errors and payment rejections.
Research conducted jointly by Swift and 12 of its customer banks suggests there are currently about 40m such payment errors every year, costing the financial industry an estimated $700m.
In order to address the issue, Swift has launched a global SSI repository, designed to be most accurate resource available to the financial industry.
The multiple sources and sophisticated selection strategies used will ensure that an institution’s SSIs are complete, accurate and able to be replicated with ease.
Swift said that an SSI directory for retail payments based on the repository will be updated and published on a monthly basis. At a later stage, it will also launch an SSI directory for treasury in the FX and money markets sectors.
The second initiative is the creation of a standard messaging format for distribution of cash SSI updates, available from November this year. The message format will be structured, validated and authenticated, and allow senders to either specify a list of recipients for the notification, or to inform the broader Swift community.
Third, Swift offers a diagnostics service that informs customers when counterparty SSIs held in their payment applications are incorrect and details corrective measures. The service validates a customer’s current list of counterparty SSIs against multiple information sources to provide a reliable picture of their accuracy.
Swift Head of Reference Data Patrik Neutjens said that the lack of a single source for SSI information has led to payment failures, costing banks considerable time and money. In the age of automation and real-time reporting, it is crucial that this situation improves.
"These three initiatives will provide a comprehensive solution to some of the problems with changing SSIs. Swift’s efforts will drastically improve the situation, culminating in a standard message format to allow banks and other financial institutions to efficiently update each other on changes to their SSI arrangements.
"This message format will ensure that only relevant parties are informed of the changes and prevent financial institutions being overwhelmed with irrelevant updates" Neutjens said.
