SWIFT gpi: The future of cross-border payments
One year on from Sibos in Singapore and the progress of the global payments innovation (gpi) initiative can now be measured in a series of concrete steps
Sibos 2015 marked a watershed for the banking industry when it chose to take positive and immediate action to deliver a better payments experience for its corporate customers. By December 2015, SWIFT had launched its gpi initiative aimed at increasing the speed, transparency and end-to-end tracking of cross-border payments.
While serving as the answer to the challenge posed by the disruptive payments solutions of new digital entrants, the true genesis of the initiative has been the desire to enhance the quality of banks’ cross-border payments offering in the business-to-business area. Not only will the new service allow corporate end customers to better manage their cash positions, it also promises to improve supplier relationships and reduce the costs and resources necessary for payment investigations.
Rolled out on existing technology, and open to any supervised financial institution that is a member of SWIFT, the industry has been quick to grasp the opportunity addressed by the initiative. More than 80 banks (and counting) have signed up to the initiative, representing more than 71% of all SWIFT cross-border payments.
Participating banks sign up to an agreed set of business rules, captured in a multilateral service level agreement (SLA). “The rules are more than simply aspirational,” observes Wim Raymaekers, global head of banking market and programme manager of the gpi initiative at SWIFT. “They engender a clear commitment to define and execute on a tangible industry change strategy.”
The rules are more than simply aspirational. They engender a clear commitment to implement.
Wim Raymaekers, global head of banking market and programme manager gpi, SWIFT
The business rules that sit at the heart of the gpi initiative have four dimensions for participating banks’ corporate customers: same-day use of funds; transparency on fees; end-to-end payments tracking; and the certainty that remittance data gets transferred unaltered.
The ability to track payments in the B2B space is seen as a real game-changer. While the underlying payment already existed on SWIFT, the difference now is that each payment message contains a unique end-to-end reference that offers the capability for tracking the payment from start to finish. In addition, SWIFT will create and host a centralised database in the cloud using the type of innovative technology that is currently being utilised by numerous high-traffic consumer sites. The solution is easy to scale and is currently being showcased at Sibos.
The transparency that comes with tracking also sets the initiative apart. Governed by the prescribed business rules, banks participating in the initiative often need to pass on invoice reference numbers that their customers gave to them. This type of remittance data is key, explains Raymaekers. “This is very important for corporates that release the goods or start production only on receipt of payment. Accurate remittance data is key to identifying the invoice being paid which helps speed up the supply chain.”
With the live service planned to launch in Q1 2017, a subset of gpi initiative participating banks are implementing a pilot programme this year. The initial results of the pilot will be unveiled at Sibos.
SWIFT gpi initiative – the roadmap
The SWIFT gpi initiative represents more than an enhanced B2B cross-border payments service; it is a proactive response to the evolving needs of the banks’ corporate customers. SWIFT has worked with a number of participating banks across four regional workshops to shape a vision for the future of cross-border payments. Our strategic roadmap focuses on service enhancements and product releases beyond the existing technology.
A number of corporates were also approached for their opinion on the elements that were being planned. These range from real-time payment status tracking and the use of peer-to-peer messaging, through to the application of blockchain technology. “The vision and roadmap will cater, for example, for sending even richer remittance data,” says Raymaekers. In future the service will also extend beyond sending and tracking payments to generating a payment request; in effect, a capability to ‘ask to be paid’. This level of functionality already exists in the retail and SME space but is not as yet commonplace in the corporate cross-border B2B payments sphere. The feedback from the banks’ customers has been universally positive. At Sibos there will be a public workshop engaging corporates and banks in further defining this vision and roadmap.
For interested parties yet to join the initiative, Sibos will provide an opportunity to evaluate the concrete steps taken to date and weigh the merits of the vision and roadmap to come. With Monday’s Auditorium session on the status of the initiative, Tuesday’s update on the early results of the pilot programme, or a demonstration of the B2B payments tracker on the SWIFTLab stand, Sibos will offer a complete overview of the SWIFT gpi initiative for all to see.
To find out more about SWIFT gpi, download our SWIFT gpi App from the App Store and join us on the SWIFTLab stand for a preview of our new SWIFT gpi payments tracker.
* This article originally appeared in Monday edition of SWIFT at Sibos magazine. Download your copy of the complete Monday edition to read the latest news from the conference!