Banks build IP migration momentum for SWIFT

The migration to IP-based networks is gaining momentum, as all banks using SWIFT have an obligation to migrate by specific dates as set out by the company.

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By  Anna Karhammar Published  January 29, 2004

|~|moneybox_m.jpg|~|BANKING ON IP: The IP upgrade is set to enable the much higher levels of security required by SWIFT than possible previously.|~|The migration to IP-based networks currently underway within the Middle East financial services community is gaining momentum, as all banks using SWIFT have an obligation to migrate by specific dates as set out by the company. The migration will allow the financial community to deliver services that are much broader in scope than was possible on previous networking infrastructures. Eastern Networks is a technology solutions provider that is helping to facilitate this move through the EN Service Bureau — a secure network and physical environment that adheres to SWIFT policies and guidelines. The bureau's purpose is to enable banks, fund managers and other financial institutions to successfully implement the migration to SWIFT's new IP-based messaging system. Eastern Networks' marketing manager, Zakia Demaghelatrous, explains the setup: "SWIFT sets the parameters for migrating to IP, we assess the network and then link directly or indirectly through the service bureau, or else we advise them what they require. The difference with the old system (the X25) on which most banks were or are on was that it needed an icon card. X25 has been used for the last 25 years, but only through the IP network can the security SWIFT requires be achieved. It is based on SWIFT's own encryption, firewall and IPSec based security, and it exceeds industry standards." It is important that banks realise the time is takes to prepare for, and carry out, migration. First off they have to do an audit of the existing networks. IP is often spoken of in terms of being future-proof, and there is hope within the financial industry that IP networks could potentially be around for the same amount of time as the X25. Demaghelatrous points out that the banks sometimes don't realise the additional benefits they can gain through IP migration, such as a huge capacity for real-time data transfer including audio and video applications, which is particularly beneficial for long term growth. The way the new system works is that the banks connect directly through a premise-based IP VPN box, which connects via a router to a local loop to access the SWIFT network. The box manages the secure tunnel between the banks site and the SWIFT-managed access points, with eight layers of security on top. The migration is said to be problem free as long as the audit is made and e-ordering done on time for the delivery of the box with the key. It's a staggered approach, with each country having its own migration window depending on the number of banks. The only real problem arising is if the network partner doesn't have a local POP, which is why Eastern Networks has become a certified service provider. The bank can then dial in and Eastern provides the POP through indirect connectivity. UAE banks are currently upgrading, with the due date for completion being the 29th March. Kuwait and Yemen are due on the 7th April, Oman the 23rd, and the rest around August this year. “Local-based banks may have 100 or so branches and regional connectivity, when it's very difficult to find SWIFT certified engineers although they may have SWIFT administrators. For them it may be easier to outsource to a service bureau,” says Demaghelatrous. The First Islamic Investment Bank (FIIB) in Bahrain migrated last year in accordance to the country-specific deadline of 30th of September 2003. “We started using SWIFT in December 2002, but since we are a small bank we do not have the in-house expertise to support the SWIFT,” explains Abdulhameed Juma, IT manager, FIIB. “We were sure that we would face many problems, such as software upgrade, VPN boxes installation and configuration, and routers configuration and so on, therefore we signed with a service partner,” he adds.||**||

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