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The new payments landscape - Challenges and opportunities for the financial industry

The new payments landscape - Challenges and opportunities for the financial industry

12 February 2018 | 8 min read

On 16 January 2018, banks and corporates from across the Luxembourg financial industry gathered to discuss how Swift GPI and instant payments are transforming the customer experience

Lior Cohen

The EU payments landscape is transforming at a rapid pace and the payments industry face growing challenges and impacts. Changes in consumer behaviours, regulators pushing towards open banking models, compliance pressure and technology disruptions are shaking up the retail, corporate and correspondent banking businesses. Regulations such as PSD2 and GDPR are introducing serious challenges in terms of data management, competition with new entrants, security and responsibility but also a number of opportunities, such as new API-based services and new roles to play including for banks. Market Infrastructures are also embracing these changes, with Clearing and Settlement Mechanisms (CSMs) rolling out or developing Instant Payments solutions and the Eurosystem pursuing the TARGET Instant Payments Settlement (TIPS) initiative. 

The banking community is putting considerable effort into improving the customer experience for cross-border payments. In addition, cybersecurity and financial crime compliance remain high on everyone’s agenda, adding a layer of complexity. 

To discuss the challenges posed by the evolving payments landscape, and share information on solutions that are being built to help financial institutions tackle these, Swift, in cooperation with ALMUS (the Luxembourg Swift User and Member Group) and ATEL (the Luxembourg Association of Corporate Treasurers), organised an event at the Chambre de Commerce on 16 January 2018.

Disruptive times

Swift GPI event Luxembourg

Olivier Lens, Head of Benelux, Francois Masquelier, ATEL President and Serge Munten, president of ALMUS welcomed the 120 participants in attendance. In his welcome remarks, Munten highlighted that ALMUS was founded in 2003 and represents the local Swift community in Luxembourg. It acts as a voice for the community in communication with Swift and informs the community about changes in Swift standards and services.

Gregory Picavet, Commercial Director of Luxembourg, Swift introduced the first topic of the day, which looked at the changing payments landscape.

Swift GPI event Luxembourg

Swift payments market experts, Charifa El Otmani, Senior Business Manager, Swift and Lior Cohen, Global Payments Market Expert, Swift ran through the list of challenges that banks face, starting with changing consumer behaviours, which lead to requirements for 24/7 availability, the instant delivery of financial services, and highly customised and integrated services that connect individuals to all the people and businesses that they interact with on a daily basis.

They then went on to cover the regulatory landscape, with a focus on compliance, data privacy & management under GDPR, open banking with PSD2 and liquidity management obligations, before turning to new technologies, such as artificial intelligence (AI), distributed ledger technology (DLT), biometrics and numerous others, and lastly a number of industry trends, many of which are directly linked to the aforementioned challenges. “Change is definitely happening and we can’t ignore it,” stated Cohen.

Swift GPI event Luxembourg

Another driving force behind changes in the European payments space is the Eurosystem’s Vision 2020, which foresees the technical consolidation of the TARGET2 and TARGET2-Securities platforms, the use of TIPS as a pan-European solution for instant payments and the harmonisation of collateral management services with the Eurosystem Collateral Management System.

As a result of all the changes that are underway, industry players are faced with a myriad of challenges, to which they need to find solutions and out of which, they ideally need to create opportunities. Summing it up in three key points, Cohen stated that banks need to “Be ahead of the curve, to maintain and increase   the top line; be efficient, to reduce the bottom line; and be secure and compliant to guarantee survival.” All of this may come in different flavours for different sizes and types of player, he continued, but by delivering on customer needs, innovating, staying compliant, controlling regulatory costs and risks, improving operational efficiency and managing cyber threats, the financial industry will be able to weather the storm and seize a number of opportunities along the way.

Swift GPI – transforming cross-border payments

Swift global payments innovation (gpi)

Next on the agenda was a session dedicated to Swift GPI, the new standard for cross-border payments. To build the scope for Swift GPI, Swift interviewed corporate treasurers from around the world, including ATEL members, to ask what their main challenges were when making and receiving cross-border payments. The four main needs that they identified were speed, transparency, tracking and richer remittance information. As a consequence, the objectives for Swift GPI from the outset have been to deliver same day use of funds, transparency of fees, end-to-end payments tracking, and the unaltered transfer of remittance information.

Swift GPI event Luxembourg

Live since January 2017, over 145 transaction banks have now signed up to the service, with more than 35 actively using Swift GPI to exchange over 120,000 gpi payments per day. To date, more than eight million gpi payments have been sent over Swift, providing a better experience to corporate treasurers. Swift GPI empowers banks to relieve major pain points for corporate treasurers, such as the lack of transparency in cross-border payments. Using the innovative cloud-based gpi Tracker, banks can now track the status of their cross-border payments in real time, as well as review information about each bank in its path and any fees that have been deducted, giving clients an unprecedented level of visibility into each payment. The Tracker is an application also accessible via APIs. Banks are using these APIs to embed the gpi Tracker information into their payments flow applications and front-end platforms, allowing their customers to track gpi payments in real-time.

Commenting on gpi, François Masquelier, ATEL President said: “With all the benefits that Swift GPI delivers, no one could complain.”

With all the benefits that Swift GPI delivers, no one could complain.

François Masquelier, ATEL President

To give attendees further insights into the experience of banks that have already implemented Swift GPI and are live on the service, Koen Wittevrongel, Swift Coordinator KBC Group delivered a presentation in which he explained his banks’ rationale for being one of the gpi frontrunners, how KBC went about implementing the service and its experience using it. “We have had payments from Singapore to Belgium via New York in three minutes,” he said. “Our customers especially appreciate the transparency that gpi tracking provides.”

We have had payments from Singapore to Belgium via New York in three minutes.

Koen Wittevrongel, Swift Coordinator KBC Group

Swift is also working on the next phase of gpi, which includes additional digital services to further transform the cross-border payment experience, such as a stop and recall service to instantly stop a payment in case of   fraud or error.

Our customers especially appreciate the transparency that gpi tracking provides.

Koen Wittevrongel, Swift Coordinator KBC Group

Faster payments - the new normal

Instant payment services are being developed by Clearing and Settlement Mechanisms (CSMs) all over the world. The benefits these domestic instant payments platforms bring will also be felt in cross-border payments once the systems start to inter-operate. Payment Services Providers, whether they are banks or fintechs, see the move towards real-time services as an opportunity to develop new products. But the barriers to achieve this goal are not only technological. They also lie in the need to comply with Know Your Client (KYC), anti-money laundering (AML) and sanctions screening obligations, offer optimised liquidity management and settlement finality within an extremely limited timeslot, and respect local market practices and scheme implementation guidelines.

Swift explained that customers experience complexity when connecting to different CSMs and value the re-use of the contractual and service frameworks that Swift provides. By combining deep payment messaging expertise and the re-use of existing Swift footprint and services, Swift is able to reduce the cost of change for customers and help them rapidly introduce next-generation payment services. Swift's instant payments solution is designed to work anywhere in Europe and around the world, enabling its customers to connect seamlessly to multiple CSMs.

The result of this approach has been that since having been selected in 2015 to build the infrastructure of Australia’s new payments platform (NPP) that will go live early this year, Swift has also announced that it will provide a solution to connect to The Clearing House’s real-time payments platform in the U.S. and another to connect to the Hong Kong Faster Payments System.

For the Single Euro Payments Area (SEPA), Swift will offer connectivity to EBA CLEARING's RT1 system and to the TIPS platform. In addition, Swift is closely engaged with other major European or global CSMs, to ensure participants are given the choice of a Swift channel on the largest number of markets. The cooperative has also confirmed that it will support the delivery of the future European Single Market Infrastructure Gateway (ESMIG) as part of the Eurosystem Vision 2020 plan.

The session was closed by Lens, Masquelier and Munten, who thanked the audience for their high levels of engagement, interest and open dialogue throughout the event, all of which confirmed that the financial sector is addressing the challenges in the payments landscape and investing in solutions for the future. Swift reiterated its commitment to supporting the Luxembourgish financial community and values the constructive dialogue with ALMUS, ATEL and individual members.

For any question with regards to ALMUS or Swift in Luxembourg, please contact  or

All photos copyright ABBL 2018.