Swift expansion into Latin American markets

By:
Kimberley Long
Published on:

Financial messaging service provider Swift sees plenty of opportunity for growth in Latin American markets, particularly around regulatory advisory and working with bank clients on deep-dive data analysis, says the group’s regional manager.

Swift recently announced it had opened an office in Mexico – its second in Latin America after Brazil – to capture rising demand among banks and other financial institutions for its services in the country and broader region.

Helping advise its financial institution and corporate customers on regulatory changes and compliance is a priority, but Swift is also looking into how it can support its bank customers unlock greater value in the data used by banks across the Swift messaging network.

"[Mexico] is second-largest economy in the region and a key country for us, [so] it is imperative that we help the wider community of the banks, the brokers and the corporates to deal with the regulatory changes that are coming," says Jairo Namur, regional manager of Swift’s operation in Latin America.

"We’re looking at how we can do more for the banks and serve their data needs. Business intelligence is a very big product and something that our clients are asking for more and more. In the larger regional deals, there is increased interest on the security side, and we are looking at what we can do for the regional integration efforts in the Latin American market."

Swift’s Mexico City office has two staff members. Ruben Galindo has been appointed as director, sales services for Mexico, will run the office and reports to Namur. Galindo was previously at HSBC. He is joined by Ricardo Vigueras, who moves from Banamex to take the role as director of corporate sales for Mexico.

The plan is to increase the size of the office, although Namur says this will be as a result of demand from the client base.

He adds that being on the ground will enable Swift to better understand the needs and challenges that are causing the most disruption. And across Mexico, there has been a number of changes to the transaction-banking landscape in response to increased trade flows and the pressures of regulation and compliance, both local and international.


Strict regulations

As well as the challenges from global regulation such as Basel III, there are strict regulations from its central bank Banco de México, the Mexican department of the Treasury, and the National Banking and Securities Commission relating to money laundering and anti-terrorism measures.

The Mexican market has been growing substantially in recent years, which has resulted in increased activity and demand for financing from its corporates looking to tap the growing trade flows. However, there has been difficulty in accessing the required level of liquidity to keep trade moving.

In response to this, Namur points to the growing trend for new banks to be established to keep up with the demands of the growing economy, such as Corporación Financiera de Occidente, which was established in Mexico in 2012 to provide niche financing to the country’s SMEs in the agriculture and manufacturing sectors.

At present, international banks hold a dominant position in the market, as five of the largest six banks in the country are foreign owned. With so many international institutions present, the idea of global institutions coming in to plug the gaps, as has been seen elsewhere, was not really an option.

Due to this, there has been a trend for the local financiers to change their position and become banks, such as Compartamos Banco, which started as an NGO before receiving a banking licence in 2006. Compartamos is the largest of more than 600 microfinance institutions.

Compliance has also been causing headaches for corporates and banks alike, and Namur says it is something Swift’s clients cannot ignore, especially as it continues to evolve to keep up with the changing environment.

"Compliance is a mandate," says Namur. "Part of the regulation has come out, but there are secondary decrees that are still to come out. The aim is to build strategic relationships with the financial community and help them meet the demands of the new regulatory framework. As in most Latin American markets, this is one of the most pressing issues."