60 second interview: Huny Garg

Face to face | 20 September 2017
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Huny Garg joined SWIFT as head of trade and supply chain finance in April. He talks to Katharine Morton about the role, the challenges and evolution of the organisation

How are you enjoying your new role, and what are your visions for it?

Huny Garg: It's been a good start and also quite a change for me. I joined SWIFT after 18 years of working in banking where the focus is very commercial, while at SWIFT the focus is on collaborating with a wide community and solving industry issues. The issues SWIFT deals with are largely global in nature, and impact the entire banking, finance and securities industries and beyond.

For me, it's a very exciting role. I've met a lot of new people across the industry and I learn a lot from them. I'm also contributing towards the discussions and developments around digitisation of trade finance and supply chains.

What do you think are the biggest challenges facing SWIFT and how are you set to resolve them?

Huny Garg: There are two aspects. SWIFT plays a central role in facilitating financial transactions globally, whether it's trade or cash. Some of the challenges are in ensuring that our industry is ready for all the challenges it is facing. This includes strong local and international correspondent banking networks, fast and secure payments, and robust cybersecurity protocols.

Those interests are common between thousands of organisations. For example, not every institution has the same standard of security, whether it is physical security, cybersecurity or the policies that run behind it. So, one of SWIFT's major goals is bringing all of these organisations up to a minimum standard.

The second aspect is making sure we're always attuned to what the industry is looking for in terms of the technological advancement it requires, and delivering to expectations.

On the trade finance side, my team and I are focusing on further boosting the banks and corporates' digitisation efforts.

Do you think the correspondent banking model is broken? And, if so, what are SWIFT's ideas of fixing it?

Huny Garg: I wouldn't say that the correspondent banking model is broken - it continues to play a fundamental role in supporting international trade, finance, commerce and the payments industry. However, it is also clear that a number of correspondent banks have chosen to restrict or terminate their relationships with local banks in a number of markets. This is driven by concerns around KYC, financial crime and regulatory compliance. If we can address these issues, we will see this trend reversing.

There is a clear need for dialogue between correspondents and respondents to increase transparency and awareness of both parties' practices, challenges and concerns. SWIFT is leading efforts in solving these underlying issues. We've already identified how there is room for more efficient, faster, transparent and traceable cross-border payments. The development of SWIFT gpi, designed in collaboration with a large group of banks, demonstrates the industry's willingness to work together to transform the way international payments are transferred and introduce greater efficiency in correspondent banking.

Also, regulations have evolved and are now fully part of the banking system and industry. Most of the compliance challenges for corporate banks are related to a lack of standardisation, lack of digitisation, and lack of technology usage, and a lot of compliance-related work is still managed manually. With the arrival of new technologies, this is changing. I believe that in the next few years, services such as the KYC Registry and Sanctions Screening will be used widely in the industry.

Just how much collaboration can happen between banks, and banks and fintechs, to fix these issues?

Huny Garg: There is substantial collaboration already taking place between banks, their end-users, fintechs, FMI [Financial Market Infrastructure], industry utilities, regulators and central banks. And SWIFT has always been encouraging and pushing the boundaries of collaboration as this is a tried-and-tested method of success.

The lack of standardisation introduces complexities and costs for all parties and there is scope for improvement. We have seen financial services institutions uniting in their efforts to tackle financial crime and compliance, and looking at ways to introduce efficiencies and technologies, such as blockchain.

This concept of using utilities to perform a critical industry function is not new. These centralised platforms are used in in a wide range of industries, and in some cases, have grown to become systemically important.

Collaboration is therefore key, and is more and more commonplace in the industry as banks embrace new ideas and invest in innovation. SWIFT has been encouraging collaboration with fintechs via its Innotribe initiative, which encourages new ideas and solutions that benefit the financial industry and our members.

How's it going with blockchain proof of concept (PoC), and how will that sit with the global payments innovation project (gpi), do you think?

Huny Garg: It's early days with the PoC but it is very encouraging to see so many banks joining the initiative. It also shows that the problem we are trying to solve through the PoC is a very relevant one for the correspondent banking industry and we are working together to address this issue and create a common solution.

Initially, there were six banks that joined the PoC. More recently, 22 more banks joined. They will be validating if the work carried out in the PoC can be used to further elevate some of the problems they're facing in the reconciliation of nostro and vostro accounts. It is a very exciting initiative and we intend to announce the results at Sibos.

When SWIFT started in 1973, it had four employees and 239 shareholder banks, and it went live in May 1977. As a former outsider looking in what's actually changed at SWIFT now and what's happened with its dynamic?

Huny Garg: If 'fintech' is about using technology to solve the problems of the financial industry on a wide scale, I would call SWIFT the largest and oldest fintech in the world, and a very successful one too.

SWIFT started with enabling secure and standardised communication between banks and has evolved into a modern and forward-thinking organisation with clients in almost every country in the world. Its client base now includes banks, market infrastructures, corporates, securities services firms, regulators and many more. Its products include messaging, compliance, consulting, connectivity, reference data and business intelligence.

You will generally associate the word 'fintech' with a small start-up and with an innovative approach to solving problems. However, I believe it is all about understanding the client's needs, being able to connect the dots in this complex financial ecosystem and create solutions that can be adopted by a broad range of institutions. I think the organisation has proven its ability to deliver on this, but there is so much more potential we can achieve, and I look forward to playing my part in this.

Huny Garg is head of trade and supply chain finance at SWIFT

"I would call SWIFT the largest and oldest fintech in the world, and a very successful one too"

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