In today’s fast-paced financial services landscape, instant payments have become a necessity, not a luxury. The latest generation of the Swiss Interbank Clearing (SIC) system, known as SIC5, developed by SIX and the Swiss National Bank, is revolutionising the way funds are transferred between banks in Switzerland. With a maximum execution time of 10 seconds, covering the transaction end-to-end, and 24/7/365 operation, SIC IP promises real-time payments that will significantly enhance customer experiences.

Phase 1 of instant payments in Switzerland was launched on August 20, 2024. Financial institutions with 500,000 or more incoming transactions in 2020 were required to become reachable for SIC IP by this date. For Phase 2, all remaining banks that receive retail payments must be able to process real-time transactions by their allotted go-live window.

Unpacking the requirements and challenges

For institutions to facilitate instant payments, their payment capabilities must be fast, highly available and include no downtime, which can pose significant operational challenges. For example, legacy or fragmented IT and payments infrastructure often lack the necessary processing speed and scalability to accommodate the expected growth in transactions, particularly as instant payments eventually become the dominant method. Additionally, legacy systems can prevent interoperability with newer technologies and platforms, which is required for futureproofing and to strengthen capabilities such as security and anti-fraud.

This is particularly important as the rapid processing times and high volume of transactions with instant payments mean that institutions have a very limited window to stop fraudulent transactions. Anti-fraud solutions, including sanctions screening, must therefore also be highly available to monitor transactions in real-time and flag suspicious activities. However, speed must not compromise accuracy, or institutions risk seeing an increase in false positives. Aside from the potential strain on a bank’s resources to investigate these transactions, high levels of false positives could decrease customer satisfaction and potentially result in non-compliance with the instant payments requirements.

Considerations to ensure readiness

Ensuring systems are ready for instant payments is critical for a successful implementation. Financial institutions should evaluate their current service providers to determine if they can support all instant payment needs or if additional partnerships are required. This includes evaluating the impact of instant payments on operations and systems, considering the types of services and experiences to offer customers, and ensuring that downstream applications can operate on a 24/7/365 basis.

The ideal technology partner should provide robust solutions for financial messaging and sanctions screening that support the requirements of SIC IP while accelerating time to market. They should also have a proven track record in financial market infrastructure and support connectivity to other infrastructures, such as Swift and RTGS.

GlobalData Strategic Intelligence

US Tariffs are shifting - will you react or anticipate?

Don’t let policy changes catch you off guard. Stay proactive with real-time data and expert analysis.

By GlobalData

Another consideration is the need to make contingency arrangements to mitigate service disruptions and ensure that funds are made available immediately. This involves aligning closely with service providers, sometimes multiple, to update digital and core banking platforms, bill payment systems, and other related infrastructure. Additionally, institutions must conduct extensive testing via test banks – provided by SIX as well as technology providers – covering various use cases, to ensure preparedness for the testing phase. It is then recommended to split the go-live into two parts: the technical go-live and the official market launch. The former involves ensuring all systems are ready for production, followed by the official market launch with SIX.

Alongside these considerations, every institution had to apply for a window to start production with SIX, which operated on a first-come, first-served basis. Later slots, the last one being in October 2026, were quickly booked by banks who started planning early. This has left many institutions with no choice but to launch much earlier than this and projects must begin, at the latest, 6 months before their allotted window. This doesn’t factor in vendor selection and sign-off processes, if a new partnership is required, or the extensive planning and preparation required before the project begins. With these timelines in mind, financial institutions need to start planning now.

Compliance and beyond

Looking ahead, the potential long-term benefits of SIC Instant Payments for the Swiss financial sector are immense. This includes enhancing customer experiences and business efficiency through seamless fund transfers, better cash flow management for businesses and consumers, and access to real-time payments data for better decision making.

However, while the go-live date may seem far away for some, there is a lot of work to be done. Preparation is key and financial institutions cannot start early enough. Institutions must act now to comply with the instant payments requirements and be well-positioned to take full advantage of the opportunities it can bring.