The Next Milestone in Global Payment Transformation

Helen Sanders, Editor

We were delighted to recently have the opportunity to interview Wim Raymaekers, SWIFT’s Global Head of the Banking Market and project lead for the global payments innovation (gpi) initiative. During the interview, Wim explained that the results of the pilot project would be launched at Sibos, so we were keen to follow up. Not only have the pilot projects been a significant success, but as result, more banks are signing up: as of day 2 of Sibos, the number now stands at 87 banks, and this is likely to be higher by the time this is published.

During the pilot, 15 global banks representing more than 30% of cross-border payments successfully tested the design and core functions of the gpi, while in parallel, ten additional global banks started to prepare for the service launch. In addition to same-day value and transparent fees, one of the most compelling elements of the gpi demonstrated at Sibos was the payments tracker, which provides payment users with the status on cross-border payments. This will be released before the end of 2016, with the gpi service as a whole due to go live in early 2017. Furthermore, the payments tracker will be accessible via an open API (application programming interface) so banks can integrate it into their electronic banking solutions.

There are two things that make the gpi particularly noteworthy: first, that banks are more willing to collaborate than we have seen in the past, and second, that it has been delivered so quickly. Wim Raymaekers explains,

 “The timing of gpi has been a particular factor in its success. Corporate treasurers and finance managers are demanding more rapid payments, with better tracking and transparency of fees. Banks know that if they don’t respond, alternative providers will – and indeed already are – which creates motivation and momentum. Secondly, the solution itself is very strong: it uses existing infrastructure, so it can be implemented quickly, rather than waiting for new and as yet unproven technologies such as blockchain.”

While these technologies may well become part of gpi in the future, SWIFT’s phased approach has clearly proved attractive. Using existing infrastructure ensures that same-day cross-border payments, together with the traceability and auditability of fees that treasurers are seeking, can be delivered without jeopardising regulatory compliance or impacting on existing back-office processes. For example, in Japan and China, moving to same-day cross-border payments was potentially an obstacle, as trading partners need to provide documentation that cross-border flows relate to genuine trade transactions. This has been handled in the gpi with a code that shows that the cash has been received by the bank, and can be credited once the necessary paperwork has been presented.

As the gpi is close to launch, with the focus now on creating intersections between banks and integrating it into corporate solutions, the speed of adoption is now effectively in the hands of the banks. Corporate treasurers should therefore contact their banks now to encourage them to join the gpi if they have not already done so, and/or to integrate it into their solutions quickly, whether they are users of SWIFT or a bank’s proprietary electronic banking platforms. Banks are keen to involve their corporate and financial institution customers in this process as far as possible, so multinational corporations for whom cross-border payments and collections are important should not miss out on this window of opportunity.

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Furthermore, this is just the first generation of the gpi, and we can expect more to come. Wim Raymaekers concludes,

 “Banks are working together to create a vision of the gpi for the future, with a focus on rich remittance data, and new solutions such as a ‘pay me’ service and a ‘stop payment’ service. Most significant perhaps, is the crucial opportunity for digital transformation of cross-border payments, with a common version of the truth, and rich, transparent data across the financial supply chain.”