SWIFT facts for kids

Quick facts for kids
S.W.I.F.T. SC

Type	Cooperative society
Industry	Telecommunications
Founded	3 May 1973; 52 years ago (1973-05-03)
Headquarters	La Hulpe, Belgium 50°44′04″N 4°28′43″E / 50.73444°N 4.47861°E / 50.73444; 4.47861
Key people	Javier Perez-Tasso (CEO) Graeme Munro (Board Chair)
Products	Financial telecommunication
Number of employees	>3,000

Imagine a super-fast, super-secure messaging service that banks all over the world use to talk to each other. That's what SWIFT is! Its full name is the Society for Worldwide Interbank Financial Telecommunication.

SWIFT is like a special club for banks. It was started in 1973 in Belgium. Banks and other financial companies own it. They use SWIFT to send messages about international payments. It's how money moves safely from a bank in one country to a bank in another.

SWIFT also sells software and services to banks. It even gives out special codes called "Swift codes" (also known as BICs). These codes help identify banks around the world.

In 2018, about half of all big international payments used the SWIFT network. By 2015, over 11,000 banks and financial groups in more than 200 countries were connected. They were sending over 32 million messages every day!

SWIFT's main office is in La Hulpe, a town near Brussels, Belgium. Every year, SWIFT holds a big meeting called Sibos. It's a special conference just for people in the financial world.

How SWIFT Started

Before SWIFT, banks used something called Telex to send messages. Telex was a public system. It was slow and involved a lot of manual work. People had to write and read messages by hand.

Some banks worried that one big American bank, First National City Bank (now Citibank), might control all global money transfers. So, banks in Europe and the US decided to create a new, faster messaging system. This new system would replace the old public ones.

SWIFT was officially started in Brussels on May 3, 1973. Important people like Jan Kraa and François Dentz helped create it. At first, 239 banks from 15 countries joined.

SWIFT quickly started setting up common rules for financial messages. They also built a shared computer system and a worldwide communication network. The first message was sent on May 9, 1977, by Prince Albert of Belgium.

In 1979, SWIFT opened its first office outside Europe in Virginia, USA. Later, in 1989, SWIFT finished building its large new main office in La Hulpe.

Who Owns and Runs SWIFT?

SWIFT is owned by the banks that use its services. The more a bank uses SWIFT, the more say it gets in how SWIFT is run. This makes sure that the banks who use it most have a strong voice.

SWIFT has a board of 25 directors. These directors are chosen by the banks that own SWIFT. They serve for three years. The rules also make sure that directors come from different parts of the world.

Some of the big banks that have people on the board include JPMorgan Chase, Bank of China, BNP Paribas, Citi, Deutsche Bank, HSBC, and UBS.

How SWIFT Works

SWIFT logo before 2023

SWIFT acts like a messenger service. It carries messages that tell banks how to make payments. But SWIFT doesn't hold money itself. It doesn't have bank accounts for people or banks. It also doesn't actually move the money.

After a payment message is sent through SWIFT, the money still needs to be moved. This happens through other systems, like TARGET2 in Europe. For international payments, banks often use special accounts they have with each other.

SWIFT is important in the financial world for a few reasons:

• It's a secure network for sending messages between banks.
• It has standard rules for how financial messages should be written. This helps different banks understand each other.
• It provides software and services that help banks connect to its network and send messages.

SWIFT offers special software to its members. This software helps them connect to the SWIFT network. It also helps them manage the messages they send and receive. Some of these tools include:

• SWIFTNet Link (SNL): This software connects a bank's system to the SWIFT network.
• Alliance Gateway (SAG): This software helps other bank programs use the SNL to connect to SWIFTNet.
• Alliance Access (SAA) and Alliance Messaging Hub (AMH): These are the main programs banks use to create, send, and track messages.
• Alliance Lite2: This is a simpler, cloud-based way for smaller banks to connect to SWIFT.

What Services Does SWIFT Offer?

SWIFT offers services in four main areas for the financial world:

• Securities: This involves things like stocks and bonds.
• Treasury and derivatives: This deals with managing a company's money and financial contracts.
• Cash management: This helps banks manage their money and payments.
• Trade services: This supports international trade transactions.

SWIFT also has a service called Swift Ref. This service provides important information about banks and codes. It helps make sure that payment details are correct.

SWIFT's Data Centres

The SWIFT messaging network runs from three main computer centres. These are located in the United States, the Netherlands, and Switzerland. These centres share information almost instantly. If one centre has a problem, another can take over to keep the network running. SWIFT uses special underwater cables to send its data around the world.

In 2009, SWIFT opened its third data centre in Switzerland. They then set up two main message zones: a European zone and a Trans-Atlantic zone. This means that messages from European banks are stored in the Netherlands and part of the Swiss centre. Messages from banks in the Americas and other regions are stored in the US and another part of the Swiss centre. This helps keep data organized and secure.

SWIFTNet Network

From 2001 to 2005, SWIFT updated its network to a new system called SWIFTNet. This new system uses modern internet technology. It allows for faster and more efficient messaging.

SWIFT provides a central system that stores messages and then forwards them. For example, if Bank A wants to send a message to Bank B, it sends the message to SWIFT. SWIFT then makes sure the message is delivered securely and reliably to Bank B. SWIFT can do this because it has many backup systems and trained people.

Around 2007-2008, SWIFT updated its network again to SWIFTNet Phase 2. This update changed how banks connect to the network. Banks now use a system called Relationship Management Application (RMA). This new system is more secure and easier to update. RMA fully replaced the old system by January 1, 2009.

SWIFT Standards

SWIFT has created the main rules for how financial messages should be written. Messages that follow SWIFT's rules can be understood by many different financial systems. This is true even if the message wasn't sent through the SWIFT network itself.

SWIFT works with international groups to create these standards. SWIFT is also in charge of some important international standards (called ISO standards), such as:

• ISO 9362: This is the standard for Bank Identifier Codes (BICs), also known as Swift codes.
• ISO 10383: This standard gives codes for stock exchanges and markets.
• ISO 13616: This is for the International Bank Account Number (IBAN).
• ISO 15022: This is a standard for messages about securities (like stocks and bonds).
• ISO 20022: This is a newer, more general standard for financial messages.

How SWIFT is Watched Over

SWIFT is not a payment system itself, so it's not regulated like one. However, it's considered very important for the world's money system. So, public authorities, especially central banks, keep an eye on it.

Since 1998, a group of central banks from ten countries (called the Group of Ten) have overseen SWIFT. The National Bank of Belgium plays a leading role in this. They focus on making sure SWIFT is secure, private, and can always keep working.

In 2012, more central banks joined a "SWIFT Oversight Forum." This group includes central banks from countries like China, India, Brazil, and Australia. This forum allows more central banks to share information about how SWIFT is overseen.

Other Systems Like SWIFT

While SWIFT is the most widely used, some countries have developed their own systems:

• CIPS: This system is from China. It's mainly used for payments in Chinese currency (Renminbi).
• SFMS: This system is from India.
• SPFS: This system was developed by Russia.
• INSTEX: This system was created by the European Union. It was meant for trade with Iran without using US dollars, but it hasn't been used much.

SWIFT's Leaders

Chairs

• Johannes Kraa (Dutch), 1973-1974
• François Dentz (French), 1974-1976
• Helmer Hasselblad (Swedish), 1976-1984
• W. Robert Moore (American), 1984-1989
• Richard Fröhlich (Austrian), 1989-1992
• Eric C. Chilton (British), 1992-1996
• Jean-Marie Weydert (French), 1996-2000
• Jaap Kamp (Dutch), 2000-2006
• Yawar Shah (American), 2006-2022
• Mark Buitenhek (Dutch), acting 2022-2023
• Graeme Munro (British), since 2023

Chief Executive Officers

• Carl Reuterskiöld, 1973-1983
• Bessel Kok, 1983-1991
• Jacques Cerveau (interim CEO), 1991
• Leonard (Lennie) Schrank, 1992-2007
• Lazaro Campos, 2007-2012
• Gottfried Leibbrandt, 2012-2019
• Javier Pérez-Tasso, since 2019

See also

In Spanish: SWIFT para niños

• Electronic money
• Indian Financial System Code (IFSC)
• ISO 9362, the SWIFT/BIC code standard
• ISO 15022
• ISO 20022
• Single Euro Payments Area (SEPA)
• Sibos conference
• Value transfer system