Digitisation, standardisation and gpi under the microscope in Sydney
The impact of new technology and the increasingly global nature of business has dramatically altered the expectations of corporate treasurers. Speed, transparency and standardisation are now all a must. This year’s Sibos facilitated discussions tackling the issues head on, providing a pulse check of how the industry is responding.
Here are five key takeaways from the corporate treasury and trade finance sessions.
1. More corporates are engaging with gpi
SWIFT gpi has set a new standard in cross-border payments for banks, providing greater speed, transparency and end-to-end tracking. For corporate treasurers, however, frustrations remain about the opaqueness in fees, lack of payment confirmations and payments stuck in transit.
The launch of gpi for Corporates (g4C), announced at Sibos, however, promises to change the landscape for multi-banked corporates and has increased the onus on the community to adopt and implement gpi, or risk being left behind.
Peter Claus-Landi, Senior Director at GE and one of the g4C pilot participants told delegates during a panel session discussing g4C: “It’s all about scalability. We do have some of the big banks that are part of the initial g4C corporate pilot, but to truly scale, especially as a large multinational corporation with hundreds of banking partners, we need all of our banks to sign up for gpi for it to be beneficial for us.”
Watch g4C pilot participants discuss how gpi is benefitting their business.
2. Account opening and on-boarding needs to be made easier
One of the key pain points reiterated by corporates throughout the conference was the time and effort required to open new accounts in new territories. Delays of up to six months to complete KYC and on-boarding processes are still common, but no longer acceptable for treasurers, presenting a significant barrier to the flow of business.
Standardisation was highlighted as an effective way for tackling these pain points, with corporates demanding greater adoption of utility tools, such as SWIFT’s KYC Registry, by both banks and corporates. APIs were also cited as a way to solve the problem; using the technology to facilitate a standard, repeatable protocol for treasurers to call information from multiple banks.
Because one bank can’t share its KYC information with another bank, we get different questions from banks in different jurisdictions during account openings, which is a challenge and a big pain point.
George Zinn, Corporate Vice President and Treasurer, Microsoft
3. Open banking is not just a technology project; it’s a new way of working
“Open banking is not a compliance project, it’s not a technology project, it’s a new way the industry has to work from a business model perspective to enable initiators to access their assets wherever they are,” said Mark McNulty, Managing Director, Global Clearing and FI Payments Head at Citi.
Many corporates are engaged in open banking and digitisation initiatives, but these are primarily focused around standardisation and automation; trying to find a common way to access their information wherever they are and whoever they deal with. Added services around open banking are still just on the horizon, but the primary focus is on using data to drive decision making and garner insights.
Whilst fintech players are aiming to replicate the successful innovation built around APIs seen in the consumer space, this did not necessarily match up with the demands of corporate treasurers. Security and reliability requirements and the general risk-aversion of large corporates moving funds around in the hundreds of millions means that baby steps are needed.
4. Trade wars could result in a shift of global supply chains
Trade wars are not a new phenomenon but the current one is happening after years of progress on globalisation and trade growth across corridors.
In a panel debate on the subject, panellists agreed that current trade wars are not healthy for the global economy and job creation. However, while it presents a threat to some economies or industries, these trade tussles leading to higher tariffs can present new opportunities to some other markets.
Banks on the panel agreed that rapid changes in technology will also play a part in mitigating some of the risks arising out of trade wars. For example, better use of data for improved compliance and risk management will offset lack of funding available to SMEs and improve competitiveness of more emerging markets that will benefit from trade wars.
5. Lack of standardisation is holding back the digitisation of trade
Despite a healthy appetite for digital investment in trade finance, the highly fragmented ecosystem and the difficulty in getting the various players on-board is preventing the adoption of new technology.
In the session ‘The trade finance drive towards digitisation,’ delegates heard about the state of the current level of digitisation and the demand for more digitisation from corporates. It was agreed that whilst there is a lot of hype about new technology such as blockchain, existing digital solutions are under-utilised and a digital first approach will be needed to get rid of heavy use of paper. Rather than adding complex new products and services, corporates are demanding standardisation and consistency across legal jurisdictions before widespread digitisation of trade can be a reality.
You can read more about the digitisation of trade finance in a report by Boston Consultancy Group, co-authored with SWIFT.