Global Network, Under Price Pressure, Makes Move Retroactive for '92
BRUSSELS -- Acknowledging competitive pressures, the new leadership of Swift, the international bank messaging service, said it intends to cut prices retroactively for 1992.
Pending approval by the Swift board in November, Leonard H. Schrank, chief executive officer, said Swift would reduce prices by $13.1 million overall, or slightly more than three cents per transaction.
Currently Swift charges members approximately 52 cents per transaction, compared with 78 cents for nonmember participants.
A Call for Deeper Cuts
But actual per-transaction costs can be much higher. Banks frequently add charges for both sending and receiving Swift messages across national borders, raising the cost of a single transaction to as much as $5, bankers said.
"It's the first signal that Swift has made in years regarding the need for costs to come down," said Knut Grini, deputy general manager of payments and clearing for Den Norske Bank, based in Oslo, Norway. "But prices need to come down much more -- at least 30%."
Mr. Grini said his bank is looking for alternatives to Swift, such as links to individual institutions, or dial-up telephone lines to handle small-dollar payments for which "the need for security is not as high."
The pricing announcement was the first tangible evidence of a change in strategy at Swift -- shorthand for the Society of Worldwide Interbank Financial Telecommunication -- in the wake of the resignation last year of veteran chief executive Bessel Kok.
Mr. Schrank made the announcement at Sibos, Swift's annual conference. The Brussels-based bank consortium has come under pressure recently not only from newly established third-party networks including international telecommunications companies and a group of investment managers -- but from money-center banks as well.
Reliability Up
Last year, Swift went down several times during the changeover to Swift II, the long-delayed upgrade to the system that theoretically can handle unlimited volumes of messages.
Reliability, or the percentage of time the system is up and running, dipped to 99.34% between January and September 1991 from 99.62% in 1990. Jacques Cerveau, deputy chief executive officer of Swift, said that problems have since been ironed out, with the system operating at 99.88% reliability for the past year.
Swift expects to complete the conversion to Swift II by year-end "The September 1991 systems failure hurt our credibility," Mr. Cerveau said.
Mr. Schrank and Eric Chilton, the new chairman of the Swift board and an executive at Barclays Bank, stressed the need for Swift to be responsive to members.
