Engaging Corporate Perspectives in the Development of SWIFT gpi
Following a successful pilot in 2016, SWIFT’s global payments innovation (gpi) initiative is now live with 12 banks already exchanging gpi payments in over 60 corridors, an important milestone in the transformation of cross-border payments. As gpi continues to build momentum, corporate treasury and finance professionals have a critical role to play in determining its next priorities.
This was the background behind the corporate workshop hosted by SWIFT in which ten leading corporations participated. The workshop provided an opportunity for corporates to share with SWIFT the challenges they are currently experiencing in cross-border payments, to discuss the current and planned strategy for gpi, and establish a process of co-creation and engagement in the future.
Corporate cross-border payment challenges
Corporate participants outlined their key challenges/objectives in cross-border payments, which included:
- Predictability and timing. While treasurers and finance managers recognise the advantages of same-day (or quicker) payment, the bigger priority is predictability of the payment reaching the beneficiary account.
- Traceability of payment. The ability to track the progress and status of payments is a critical requirement for corporate payment users.
- STP and integration. Corporate participants agreed that the value of new solutions, such as a new payments tracker, is enhanced when delivered as an integral element of their existing treasury and payments infrastructure. One participant noted,
“For multi-banked corporations that have adopted a bank-neutral connectivity strategy, it is not feasible or desirable to access different electronic banking systems for each bank. Consequently, payment tracking and future capabilities need to be delivered through existing web-based and host-to-host connectivity channels.”
- Quality and completeness of remittance data. Truncated or missing remittance data create significant problems in reconciling flows, leading to high volumes of queries for both accounts payable (AP) and accounts receivable (AR).
- Fee transparency, including FX costs. Fees levied by correspondent banks are often unpredictable. This problem is exacerbated by FX conversions at an unknown rate.
- Deductions. Deductions of charges create reconciliation problems but also additional payment claims from the beneficiary when the full amount is not received. In some cases, penalty charges may also be payable if the beneficiary does not receive full payment.
- Rejections and investigations. Treasurers and finance managers have little visibility of when and why a payment has been rejected, and the investigation process can be time-consuming.
SWIFT introduced the background to gpi and explored how the first version, and future phases, would address these challenges. The growing number of national (domestic) real-time/faster payment schemes is creating an expectation of faster, transparent cross-border payments. In part, this demand is due to the effect of new market entrants who are challenging the existing cross-border payment model. In addition, more onerous requirements in areas such as KYC are prompting all market participants to evaluate how to increase cross-border payment efficiency whilst achieving compliance.
SWIFT gpi was conceived as a response to these changing demands, with the intention to deliver enhancements to the cross-border payment experience rapidly, initially by leveraging initial bank and market infrastructure, whilst establishing a roadmap for future digitisation and transformation of payments. The initial objectives of gpi are that payments should take place on same-day, be fully traceable, with transparent fees and full remittance data. SWIFT gpi delivers a global payments tracker, opening up a world of new experiences for corporates. This includes:
- Faster, same day use of funds within the time zone of the receiving gpi member;
- Remittance information transferred unaltered;
- Transparency of fees;
- End-to-end payments tracking.