Australian fund managers are set to pilot an automated messaging system to slash costs and cut risk, according to the Society for Worldwide Interbank Financial Telecommunication (SWIFT).
"We believe automation will drive the cost [of fund transactions] from $22 down to 20 cents. That's realistic," SWIFT Australia securities commercial manager Adam Wilson said.
Eight financial services institutions will take part in a SWIFTNet Funds trial from August 27. They are ANZ Custodian Services, Ausmaq, Barclays Global Investors, BT Financial Group, HSBC Security Services, JP Morgan Chase Bank (WSS), National Custodian Services and Vanguard Investments.
"We're focusing our efforts where our heartland is, where our traditional customers are and where the wholesale pain is and where predominantly the risk lies," Wilson said.
In Australia, 15,000 wholesale fund application, redemption, confirmation and reporting faxes are sent each day.
"The research we've done with customers tells us that between 1 and 2 per cent of all orders go missing, if you apply that to the 4 million faxes, that's between 150 and 300 a day going missing," Wilson said.
SWIFTNet Funds uses a set of standardised XML messages, which SWIFT members can use at no charge.
Wilson said if the Australian pilot is successful it will be rolled out globally.
SWIFT has waived its EURO 5000 to 10,000 membership fee for fund managers.
SWIFT is an industry-owned co-operative supplying standardised messaging services and interface software to more than 8195 financial institutions worldwide.
"We are the postman for 2.8 billion messages annually or 13 million a day," Wilson said.
