On 6 March, 2018, representatives from more than 150 financial institutions and corporates from across the Middle East gathered in Dubai to discuss how SWIFT’s global payment innovation (gpi) service is transforming the world of cross-border payments.
Astrid Coppens, head of SWIFT gpi, EMEA, noted that SWIFT gpi was born out of corporate treasury needs for a better cross-border payments service, combined with the global shift towards real time payments. “Treasurers want a better service,” said Coppens; “real-time, straight –through and transparency and traceability every step of the way.”
Coppens highlighted that SWIFT gpi has already been adopted by more than 150 financial institutions around the world. Hundreds of thousands of payments, representing nearly 10% of SWIFT’s cross-border payments traffic, are being sent daily across 220 international payment corridors.
SWIFT gpi – the future of cross border payments
Our first panel brought together three banks at different stages in the SWIFT gpi implementation process to discuss the key challenges that banks are facing when it comes to dealing with cross-border payments, and the main drivers behind joining SWIFT gpi.
Ahmed Al Sayed Al Refaei, Chief Operating Officer at Al Masraf, noted that trust is a key component in cross-border payments especially when it comes to trade. “There are pain points and friction in the current system especially around the visibility of payments,” he said. “In trade finance, you need trust. Otherwise trade wouldn’t exist. If a corporate is able to see where a payment is, it makes a big difference.”
Mohammad M. Burjak, Chief Operations Officer, Al Etihad, agreed that transparency and traceability are critical and provide an important value-add for their customers. “The best thing SWIFT gpi brings is assurance that, when a payment is sent, it is done within one day, according to the rulebook, and can be tracked,” said Burjak.
The best thing SWIFT gpi brings is assurance that, when a payment is sent, it is done within one day, according to the rulebook, and can be tracked.
Société Générale was part of the initial groups of banks pushing for the launch of SWIFT gpi back in 2015. SWIFT and the banks were convinced that something had to change in order to provide a better service for customers. “Today it is obvious that a payment must be done quickly and with full transparency,” said Olivier Miet, Global head of sales network management, Clearing Services for Banks & FI at Société Générale. “Considering initial discussions took place in 2015, the time to market has not been too long. We are already providing something faster and more transparent to our customers and handling the needs of the market.”
Miet stressed the competitive advantage that SWIFT gpi provides Société Générale. He noted that corporate clients will demand this new level of service, and the pressure will only increase in the coming years. “SWIFT gpi is definitely the new norm,” he said. “It is a must-have today if you want to remain in the transaction banking business.”
Burjak agreed that banks should sign up to SWIFT gpi as soon as they can. “It is a matter of time before all the banks in the world are engaged in gpi,” he said. “We are happy to be one of the first banks implementing the service and providing the benefits to our customers.”
SWIFT gpi is definitely the new norm.
SWIFT gpi – from days to minutes
Our first information session explored the SWIFT gpi on-boarding experience and the impact SWIFT gpi can have on payments operations.
Citi was one of the first banks to join the initial working group that went live in January 2017. They choose to first go live with the most important BICS – Citi London and New York. They are now in the process of rolling it out in other regions.
“We saw an important trend emerging in payments – the increasing need to be available 24/7 and the shift towards real-time,” said Jagadeshwaran KothandaPani, Managing Director of Treasury & Trade Solutions, MENAPT Transaction Services, Citi.
KothandaPani noted that Citi’s biggest gpi corridor is the US to China; 90% of this traffic is already on gpi. Citi’s customers are already enjoying the benefits of the service. “On average, Citi US is able to deliver the payment to the beneficiary in an average of 18 minutes,” said KothandaPani. “In China, we’ve even had payments that took as little as 9 seconds. We are now live in over 40 markets including the Middle East.”
Rahul Jayakar, Head of Global Transaction Services, Products & Trade at Mashreq Bank, explained that the bank joined SWIFT gpi since it felt pressure from customers to enhance its current platforms to make payments faster, more secure and transparent.
Mashreq is the first Middle East bank to go live on SWIFT gpi. Jayakar explained that, as a SWIFT gpi bank, it is able to offer clients a cross-border payments service that is second to none. “Not only are nearly 50% of our SWIFT gpi payments credited within 30 minutes, and almost 100% of payments within 24 hours,” he said, “we have also had numerous payments credited within a minute and some in as little as 12 seconds. As SWIFT gpi continues to establish itself as the new standard for cross-border payments, we anticipate that corporate customers will choose to have cross-border payments processed only by gpi banks.”
Not only are nearly 50% of our SWIFT gpi payments credited within 30 minutes, and almost 100% of payments within 24 hours. We have also had numerous payments credited within a minute and some in as little as 12 seconds. As SWIFT gpi continues to establish itself as the new standard for cross-border payments, we anticipate that corporate customers will choose to have cross-border payments processed only by gpi banks.
For National Commercial Bank, customer expectations were the main driver for joining SWIFT gpi. “Customers need an end-to-end status for the payment,” said Hamman Samman, Head of Payments at NCB. “SWIFT gpi provides this. It gave us an opportunity to capitalise on the current model, close the gap in the market and respond to customer expectations.”
NCB will go live with SWIFT gpi in the coming weeks. “The on-boarding experience has been good for us,” Samman said. “While SWIFT gpi is new to us, SWIFT is not. We have handled many SWIFT releases in the past, so for our technical team it was like business as usual.”
SWIFT gpi’s innovative features
Our second information session highlighted the innovative features of SWIFT gpi. Jamy Maigre, a SWIFT payment innovation expert, introduced delegates to the SWIFT gpi Tracker, an end-to-end payments tracking database that allows customers to monitoring the progress of a gpi payment. He also illustrated the value of the SWIFT gpi Observer, a business intelligence dashboard that shows which banks are complying with the gpi service level agreement. Lastly, Maigre presented the SWIFT gpi Directory which provides operational information on gpi members, BICS, currencies and cut-off times. This reference data will be essential in helping banks calculate the best gpi payment route.
Looking to the future, Maigre highlighted some upcoming services that will be added to gpi in 2018, including an extended payments tracker, a cover service to process gpi payments when there is no direct account relationship between the sender and receiver, and the Stop and Recall service, which allows banks to immediately stop payment messages in the case of fraud or error.
A corporate perspective
Our final session was an interview with Chris Van Dijl, Managing Director of Cugavadi, a corporate treasury consultancy that assists many corporates in the Middle East.
Van Dijl stressed that corporates want transparency on all sides and most importantly, control. “Bank statements are fine for accountants that want to know what happened yesterday,” he said. “But a treasurer wants to know what will happen in the future. We want to know when a payment will hit the beneficiary account and how much it will cost. We need to make sure that a payment arrives before the ship enters the dock”.
He added that another big headache is bank fee analysis. While bank fees are not a decisive factor in choosing a bank, he wants the information.
Control over payments is particularly important when it comes to fraud prevention and compliance, Van Dijl continued. It is critical that the company is making payments to parties that they are allowed to pay. Having a red button to stop any payment at any time is invaluable. He noted that SWIFT gpi could also allow control over and a view on subsidiaries’ activities by giving a view on payments, where they are and where they are going. “Information is power”, he said.
“We need the bankers in the room to push central banks to make SWIFT gpi available,” concluded Van Dijl. “In this day and age, everything is about data and speed. The transparency and speed that SWIFT gpi offers is very welcome.”
We need the bankers in the room to push central banks to make SWIFT gpi available. In this day and age, everything is about data and speed. The transparency and speed that SWIFT gpi offers is very welcome.