SWIFT Still Struggling to Attract Fund Managers

Despite having almost half of its business come from the securities industry, SWIFT is still having a difficult time getting fund managers to join the network, SWIFT CEO Lazaro Campos told Wall Street & Technology in an exclusive interview at SWIFT's annual conference in Boston. In order to attract fund managers, Campos says SWIFT will focus on ease of use and a better fee structure."The securities business is the fastest growing segment of our business," Campos said. "During the summer's credit crunch, we had a 50% increase in transactions because of the volatile market. The worst thing for SWIFT is a flat market. Crisis is good for us."

Still, out of approximately 8,000 financial institutions globally that are SWIFT members, only 600 fund managers (7.5%) are on board -- a number that has remained relatively flat over recent years despite SWIFT efforts to increase membership from the investment management community. "We may not be as easy to use as the fund managers want us to be," Campos added. "Fund managers want to use paper and fax and let someone else (i.e. broker dealers) clean up the mess. Unless we get the fund managers on board, we will never have an end-to-end solution." As Campos said in his opening address to the conference: "We might have more corporates than fund managers here! Have fund managers given up on us? If they have, that's not surprising. It's not surprising because, although fund managers are essential players in the securities transaction chain, in many cases they have yet to see the relevance of SWIFT to their business. We are too expensive. It is too complicated to sign up and connect. Running SWIFT in the back office doesn't factor into their plans. So, they use paper and faxes with all the associated risks in terms of misunderstandings ... Unless we offer them something different, that's easy to install and use ... they may well stay at the margins."

And the attendance at SWIFT's annual conference, SIBOS 2007, reflects SWIFT's difficulties in attracting asset managers to the its network. Despite having the annual conference in Boston, a city that is chock full of fund managers, only 3% of the pre-registered 7,500 SIBOS attendees are from asset management firms, although Campos speculates that many fund managers in the local area will walk-up and buy one-day passes ($920 each) to the conference, rather than buy a weekly pass ($2,831) for the entire conference. "We have to find a simpler and more cost effective way to attract the fund managers to the network. And we are doing that. We need to create something of value for the fund managers or they will not find a reason to connect"

Next year, SWIFT will launch a new, simpler user interface that may attract more fund managers, Campos said, adding that the new interface will be almost as easy to use as email or Outlook. Campos also says SWIFT is closely examining its fee structure so "it can get the pricing right in the first place." By that, Campos means that SWIFT is looking at lowering its initial fees so it doesn't need to give rebates back to its members at the end of every year. This year, SWIFT is giving a 15% rebate to its members, amounting to more than $77.5 million. "If we get the pricing correct up front, we will be much better off. While the rebates are nice, members would much prefer to pay a lower initial fee for a service they are using."

Editor's note: Penny Crosman, Senior Editor, contributed to this blog entry.SWIFT is still having a difficult time attracting asset and fund managers to its financial messaging network, despite a drive to increase membership, says Lazaro Campos, CEO of SWIFT in an exclusive interview with Wall Street & Technology. Campos outlines the way SWIFT plans to attract more asset managers with simplicity and price reductions. Greg MacSweeney is editorial director of InformationWeek Financial Services, whose brands include Wall Street & Technology, Bank Systems & Technology, Advanced Trading, and Insurance & Technology. View Full Bio