The new offering, named Swift2Fed, is tentatively scheduled to begin testing in 2007. The Swift2Fed service will provide a valuable automated link between the Fedwire and Swift connections, which currently exist as two separate systems at many banks today.
This announcement comes more than two years after the Federal Reserve began a proof-of-concept pilot to demonstrate the use of SwiftNet as a contingency connectivity option for its members using Fedwire.
Under the architecture of many common banking infrastructures, a bank must carry out a Fedwire or FedACH transaction through a connection to the Federal Reserve Bank, then send a separate international SwiftNet message to the receiving bank in order to complete the payment.
With Swift2Fed, a bank will be able to send both messages at once over a single connection; the Swift message is routed directly to the receiving bank while BankServ communicates with the Federal Reserve Bank to fulfill the transaction.
The new software will "wrap" transactions into files that can be sent over Swift's FileAct or InterAct systems, then unwrapped at their destinations. The single-step approach is expected to reduce the time and expense associated with international payments for many banks - especially foreign banks with branches in the United States.
"We've found that a number of banks doing business in the United States rely on a two-step process for international payments, often involving a high level of manual data entry. Many of them could benefit from using a single, integrated method instead," says Mary Ellen Putnam, BankServ's vice president and international business unit manager.