Service Operations Article

Swift proposes identity management system to banks

SWIFT (Society for Worldwide Interbank Financial Telecommunication) The Society for Worldwide Interbank Financial Telecommunication ("SWIFT") operates a worldwide financial messaging network which exchanges messages between banks and other Financial Institutuons. SWIFT also markets software and services to financial institutions, much of it for use on the SWIFT Net Network. SWIFT does not facilitate funds transfer, rather, it sends payment orders, which must be settled via correspondent accounts that the institutions have with each other. Each financial institution, to exchange banking transactions, must have a banking relationship by either being a bank or affiliating itself with one (or more) so as to enjoy those particular business features.

Our role is two-fold. We provide the proprietary communications platform, products and services that allow our customers to connect and exchange financial information securely and reliably. SWIFT enables its customers to automate and standardize financial transactions, thereby lowering costs, reducing operational risk and eliminating inefficiencies from their operations

The basic premise is that shared IT services will cut costs through the process of putting servers from a group of organizations into the same building and then use fewer people to support it.

But Swift, which was originally a payments service by a community of banks is using its strengths to experiment way beyond transacting payments securely and reliable

Swift's head of innovation Kosta Peric, about another development in incubation. This one is all about identity management. More specifically the fact that Swift is developing a service where banks will be able to offer customers a way of securing their digital identities while making online activity easier.

But basically consumers might just have one digital identity that all the companies they have a relationship with, including government, can use as proof in a transaction. It will ensure that the consumer's ID does not fall into the wrong hands.

It is an interesting one. It shows that banks, who are about the most competitive beasts around, are willing to put down their weapons and share their toys when it is pointless competing and for the greater good.

Swift proposes identity management system to bank.

A group within Swift has already agreed the basic architecture and business model for a service that banks could offer customers that will protect their digital identities against fraudulent activity.

The service would be like a digital vault which the bank would sell to customers. Swift would host the services and be the gatekeeper. The service would mean that when a customer pays for something online using their bank card, for example, they would not have to enter their card number. Rather the merchant would be redirected to the digital vault where, after approval, it would receive confirmation that the payment will be made. No details change hands.

Authentication service pilot

Kosta Peric, head of innovation at Swift, said the society has already created a PKI-based authentication service for CFOs at its member institutions, which includes banks and large corporates. (Public Key Infrastructure (PKI) is a set of hardware, software, people, policies, and procedures needed to create, manage, distribute, use, store, and revoke digital certificates. It is an arrangement that binds public keys with respective user identities by means of a certificate authority (CA). The PKI role that assures this binding is called the Registration Authority (RA) )

If the concept becomes a service, it would make online activity easier and more secure for consumers. If a consumer has four bank accounts they will no longer have to adhere to four different security protocols. It will also ensure that personal information need not pass to companies that consumers buy from, but rather the bank will confirm the identity without passing on information.

Taking control of personal data

It provides a network that sends an average of 17 million financial transaction messages every day across 209 countries. About 8,000 financial services businesses use it. During 2010, it processed more than four billion financial transactions. As well as security, the idea that consumers have control of who sees their details is a critical feature. To this end Swift is working with IT industry experts such as Linux proponent Doc Searls, who is heavily involved with the concept of vendor relationship Management. (VRM or Vendor Relationship Management is a category of business activity made possible by software tools that provide customers with both independence from vendors and better means for engaging with vendors. VRM tools provide customers with the means to bear their share of the relationship burden with vendors and other organizations. With VRM operating on the customer's side, Customers are also involved as participants, rather than as followers).VRM gives the consumer control of their relationships with suppliers. Swift's proposed digital vault service is an example.

Peric said the consumer would have a choice of where to store the vault. It could, for example, be on a personal smart phone, hosted by the bank, or even held by Swift.

Swift also has a prototype of an I Phone app which will act as a security token for authenticating online activity. This would negate the need for multiple security tokens. But the company is currently testing the security of the service.

Swift told Computer Weekly it is incubating a project to provide Community-based cloud services for banks, including an app store for financial services organizations.

Wal-Mart Tests Service for Buying Food Online

Wal-Mart has begun testing an online grocery delivery service, called Wal-Mart to Go, in the San Jose, Calif., area.

The company has been expanding its online options, including a nationwide rollout of a service that lets customers order merchandise (not food) online and pick it up in the store the same day. While that program is aimed at getting shoppers into stores more frequently, this one creates a more convenient way to buy from Wal-Mart.

Wal-Mart declined to make executives available for interviews about the grocery test, which started Saturday. In early March, asked about the possibility of an online grocery ordering service, Steve Nave, senior vice president and general manager of Walmart.com, would not discuss specifics.

“One of the great things about Wal-Mart is we’ll put something out there, test and learn from it,” he said. “I would say nothing is off limits.” Other grocers, including Safeway and Peapod, which is affiliated with Giant Food, offer a similar service. Choose grocery items via a Web site, select a delivery time and the groceries are dropped off at your house. Fresh Direct and Amazon Fresh, neither of which is run by brick-and-mortar grocers, also offer a grocery delivery service. But some grocers have said it is not a good use of resources. Supervalu, for instance, ceased offering online grocery delivery in 2009, saying most of its customers would prefer to get groceries in a store. And one of the more notorious dot-com busts was Webvan, a grocery delivery service that went bankrupt in 2001.

Delivery charges for Wal-Mart to Go start at $5.

For the test, Wal-Mart is shipping groceries from a San Jose store, packing them in tote bags and delivering them in temperature-controlled trucks that the company owns. Deliveries can be scheduled for the next day. Currently, the groceries available lean toward prepackaged goods. Customers cannot order beef to specifications, for instance — they must buy precut meat in a range of packages; And in the produce category, while fresh mangoes and bananas are available, oranges and lemons come in bags of several pounds rather than individually.

Its prices are competitive. A 64-ounce carton of Horizon milk was $3.50 on Wal-Mart’s site, $3.99 from Peapod and $4.29 on Fresh Direct. Sixteen ounces of celery at Wal-Mart to Go was $1.98, where 16 ounces of celery at Peapod was $3.29 and at Fresh Direct $3.49. On shelf-stable food like crackers and candy, Wal-Mart had a broad selection — it sells 12 varieties of Triscuits, for instance, versus 10 at Peapod and two at Fresh Direct.

Wal-Mart is the biggest grocer in the country — according to estimates from Janney Capital Markets, it has about 33 percent market share in the United States. Kroger has 9 percent, Safeway 5 percent, Supervalu 4 percent and Target 3 percent, according to Janney. And groceries account for more than half of Wal-Mart’s American revenue, excluding figures from Sam’s Club.

Craig Johnson, president of the consulting firm Customer Growth Partners, said that the move made some sense. Wal-Mart’s big stores are patronized for large stock-up trips, not for on-the-go grocery shopping, he said, and the delivery could help address that issue. Yet Wal-Mart would need to tackle questions like how to deliver groceries on a wider scale (use its own trucks? rent a fleet? use U.P.S.?), and how to handle and keep safe prepared foods like sandwiches or ready-made dinners rather than just basic groceries, Mr. Johnson said.

“These are not simple operations to set up profitably, as Webvan and a host of others have found out over the years,” he said.