Swift, the global bank communications network holding its annual conference this week in Boston, is a very different organization from the one that last held the event on these shores 12 years ago, in Washington.

That would have been expected, given the growth and diversification of the international banking markets that Swift serves and the technological upgrades with which the net-work kept pace.

But the changes run much deeper -- to the core of the company, the people who run it, and the new culture and style that developed in the two years and three months since Leonard H. Schrank became chief executive officer.

Mr. Schrank and Swift's chairman, Eric C. Chilton of Barclays Bank in Britain, are being hailed for paying more attention to member banks' needs, responding to problems with more practical solutions, and paying more dividends in the form of rebates and lower prices than did Swift's previous generation of management, dating back to the formation of the multinational cooperative in 1973.

An indication of the sweeping change at Swift is that some of the highest praise is coming from the United States.

In past years, U.S. bankers were more likely to be complaining about operational deficiencies or about power grabs by executives at headquarters in Belgium, who seemed intent on competing against the banks in some areas.

"Swift today has no semblance of similarity to what it was before," said Colin J. Klipin, an executive vice president at Bank of America who became a Swift director at about the time Mr. Schrank came on board.

"Before Lenny," as Mr. Klipin put it in an interview last week, Swift "wasn't as focused on the needs of shareholders and didn't have the focus we have today on costs, the integrity of core systems, and meeting the needs of member banks."

Mr. Klipin views Swift as a model banking joint venture, driven by consensus and managed by executives who act in the best interests of the international membership.

This is not to say that one-time critics are finished holding Swift's feet to the fire. Along with his accolades quoted else-where on this page, First Chicago Corp. executive Donald Hollis said, "We believe there is an opportunity for additional significant cost reductions and we believe that management is working aggressively toward that."

Mr. Schrank can take the pressure, and even welcomes it. That's why he took the job.

"We have gone a long way to transforming the organization," he said. "I like to tell people that I got Swift back to zero.

"This company wired the world, and thus was very technology-driven," he said. "It did not spend much attention on costs and what the market wanted.

I had to spend my time and attention on what the members and the market wanted, and all that entails is what I have been up to for the last two years."

Mr. Schrank is Swift's third CEO, its first American -- he was born in Brooklyn and once worked in a Chase Manhattan Corp. data communications subsidiary -- and the first "outsider."

His predecessors, Bessel Kok and Carl Reuterskjold, were both out of the original, technologist mold that built Swift and its revolutionary standard message formats, took the system live in 1977, and managed the cooperative for almost 20 years.

"We have the most important financial messaging tool on the planet, but we have tended to be viewed as a utility," Mr. Schrank said.

"Now we are positioning Swift for the future -- not just as a messaging tool owned by banks, but as a strategic asset to this industry."

Ten years ago, such lofty words might have scared off, or turned off, U.S. bankers and other critics.

Mr. Schrank has communicated that "it's not our business to level the playing field" and threaten a given bank's competitive advantage.

Swift watches for when a "competitive advantage [becomes] a competitive necessity, enters a dialogue with members as to when that happens, and manages the handoff.

"Instead of building yesterday's utility, let's work with the board and our major constituencies to construct the future information highway," Mr. Schrank said, summing up his attitude on competition and cooperation.

Mr. Klipin of Bank of America is typical of those who have bought in: "Swift is an organization we fully support and we see it having a growing role as a value-added industry utility."

Mr. Schrank's U.S. origins may have helped the mending of fences with the vocal Swift minority from this country.

At the same time, Mr. Schrank, 47, has spent much of his career outside the United States -- sure to be an asset in a business jointly owned by more than 2,000 financial institutions and used by 4,500 in 115 countries.

At Swift, which he joined from a Boston-based medical software company he helped found, Mr. Schrank tackled several problems at once: the cost structure, core services and their reliability, and future strategy.

A series of financial rewards -- most recently a $22 million package consisting of a 5% rebate on 1994 message traffic and a free supply of smart card readers for an enhanced-security program, plus drastic cuts in the membership-joining fee -- both delighted the members and served notice that Swift wanted to get on with the business of being a true strategic partner.

One measure of cost control is that Swift employment fell 10% last year and now stands at about 1,200. About 700 are at Swift's headquarters near Brussels. After a hiring freeze, Mr. Schrank is restaffing with "a very different type" of marketoriented professional.

Mr. Schrank also took a broader view of system reliability, saying the true measure of uptime is not the 99.9+% measured at Swift's operating centers in Belgium, the Netherlands, and the U.S., but in banks' connect time. Recovery -- with a goal of four minutes' maximum time per outage -- is one of Swift's "four pillars" for systems over the next three years.

The others are capacity (doubling, if necessary, to four million messages a day), throughput (tripling, to 200 messages a second), and disaster recovery (reducing what used to take hours to 30 minutes or less).

The bottom line shows revenues were up 15% through three quarters this year; message traffic is up 14%, a bit ahead of 1993's 13%; and expenses are rising only 3% to 4%.

To Mr. Schrank, this all readies Swift to find its place in the future, in such areas as risk management, securities -- a small portion of message traffic but by far the fastest-growing -- and electronic data interchange. "It can take years to build some of these platforms, and Swift can help the industry get there," he said.

"That means anticipating change, and that is a new type of thinking for Swift."

Mr. Schrank said that in his speech today to the Boston conference, known as Sibos, he intends to mention that preparing for the 21st century may put Swift "ahead of the needs" of some members. But he also will pledge to stay in close touch and resolve conflicts by striking "the right balance."

[CHART OMITTED]

The View from the U.S. on Swift's Present and Future Value

Donald Hollis,

Executive vice president, First Chicago Corp.

Swift is a vital link between us and our worldwide correspondents, and essential to the services we provide to our corporate customers. We are pleased with the progress made by the new management team at Swift over the last couple of years. The focus on quality has been intensified and performance has improved.

Historically, Swift did not have a good track record in systems development because it took too long and cost too much, so we are delighted that they have hired an experienced systems professional [Kallash Khanna] to oversee technology activities. We're hopeful that's going to keep them more current and more cost-effective.

As cross-border electronic data interchange grows, we see Swift as an important communications carrier linking correspondent baks to their corporate customers. World trade is growing and, with it, cross-border financial transactions. Taht includes more foreign exchange transactions and more global securities activity. Swift is strategically important and growing in importance.

Yawar Shah

Senior vice president and CEO, Geoserve, Chemical Bank, New York

We use Swift for a range of our business and operating activities.

It supports a number of businesses for the bank and for customers, including U.S. dollar clearing, trade, and custody, as well as the exchange and derivatives operations of Chemical Bank.

Secondly, we are very involved in the management of the business enterprise.

We've committed resources at the national level as well as at the working group level to effectively direct this bankowned utility into areas that benefit the banking business and our customers -- like enhanced securities messages and EDI, but also in terms of cost effectiveness.

Swift has major market share in funds transfer messages.

But the greatest growth in message volume, which essentially drives a communications utility like this, is on the securities side.

In five years it could change the complexion of this organization from a largely cash and funds oriented type of support structure.

Michael Merony,

First vice president, NBD Bancorp, Detroit

Swift is our No. 1 carrier for international traffic and we do approximately 25,000 in and out messages a month.

We have all six of our foreign offices on Swift. With more of our customers going global, we have to be able to communicate to the banks they are dealing with in other countries. Swift is the ideal way to do it, and they are adding more countries all the time. Using Swift, we can do foreign exchange and letter-of-cred-it confirmations relatively cheaply. If we send letter-of-credit confirmations over telex, the cost is approximately $15,000 to $20,000 a month. Sending a Swift message is just so much cheaper.

It's a very structured, formatted, authenticated message type, and so there is a lot of risk reduction via the authentication. That makes it a very attractive way to send messages.

Its a very reliable system. NBD experiences a 99% or better uptime for Swift. As NBD expands in the global custody business, we will increase our use of Swift as our means of communicating with our European counterparts.

Colin J. Klipin,

Executive vice president, Bank of America, San Francisco

Swift is very important to BankAmerica and is an integral part of our funds transfer infrastructure. Its significance to the bank has grown as the message costs have decreased over the past couple of years. That's a result of excellent focus by the company on expense reductions and improved quality. Swift therefore becomes a more and more viable alternative to our own dedicated network.

In terms of the future, Swift represents an enormous potential to the industry as a whole to provide valueadded services, which levelrages Swift's investments in technology.

An example would be Swift's future role in EDI, which could significantly accelerate the development of cross-border transactions. This will result not only from the technology, but from the development of global standards.

Swift will also play a critical role in the securities area and in the growth from emerging markets, because these require infrastructures beyond the capabilities of any bank. And as payment systems become ever more significant, Swift can play a crucial role in helping to reduce risk on a global basis.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.