The wave of industry interest in the SWIFT global payments innovation (gpi) initiative grew every day of Sibos, as evidenced by a ‘standing-room’ only SWIFT Auditorium session.
“The process of getting the pilot up and running was not hard; nor is it a huge infrastructure cost to get involved”.————John Hunter, J.P. Morgan
The SWIFT Auditorium session – The global payments innovation initiative: A new
standard in cross-border payments – drew a capacity audience; even standing room
was in short supply.
At the heart of SWIFT gpi are four key improvements in the customer experience with cross-border payments: same-day use of funds; transparency of fees; end-to-end payments tracking; and remittance information transferred unaltered. In the Auditorium session, Stanley Wachs, head of bank engagement, gpi, SWIFT, introduced a panel of three bankers and a corporate treasurer to discuss the differences these advances will make to the business and operational environment for cross-border payments.
“From a corporate perspective, SWIFT gpi is a very good initiative,” commented Magnus Carlsson, treasury and payments manager, Association for Financial Professionals. He stressed the importance of payments predictability in a corporate context. “When you send a payment, you need to know that your counterparty has received it on time,” he said. The recipient’s treasury department meanwhile, is responsible for cash forecasting and working capital management. “When a payment does not arrive on time, that can create liquidity issues,” said Carlsson. In addition, he explains, when it does arrive, the exact amount of the payment may not be credited to the recipient account as a result of fees applied at the recipient bank. This may necessitate a further transaction for a small amount with all the attendant costs.
The ability to track payments during their lifecycle would be a welcome innovation, Carlsson suggested: “Any delay can be communicated to your business partner and you can both see why a payment has been held up. This allows you to adjust your treasury models.” T.S. Shankar, global head of clearing and liquidity products, Standard Chartered, agreed that tracking will be a particularly useful feature of SWIFT gpi along with transparency on fees. “You want to make sure that your recipients receive what they are expecting,” he said.
Christian Westerhaus, global head of product & strategy, institutional cash management, Deutsche Bank, confirmed that Deutsche Bank was attracted to the project from the outset as it promised to address real market problems around timing, tracking and fee transparency. “We received positive feedback from both corporate and financial institution clients,” he said. “The latter need to stay competitive in the international payments business in order to be able to serve their own corporate or SME clients with banking and account services.”
A simple use case for SWIFT gpi was provided by John Hunter, managing director, USD clearing, treasury services, J.P. Morgan. “Many of the new competitors in the payments space are closed network systems,” he pointed out. Since they own both ends of the transaction chain, they can track and report on the progress of a payment. “The ability for us, as a network, to agree on a standard SLA and methodology relating to payment status will allow us to compete directly in that space,” he said.
As a participant in the SWIFT gpi pilot along with a subset of the banks that have already signed up, Hunter confirmed that, “It works. We have seen that. The process of getting the pilot up and running was not hard; nor is it a huge infrastructure cost to get involved.”
Westerhaus noted that since its launch late last year, the SWIFT gpi initiative has advanced rapidly. By the end of 2016, the initiative will have delivered a set of business tools, including a payments tracker. “2017 will be about bringing more banks on-board and driving adoption,” he said.
Answering a question from the floor, Shankar discouraged potential participants from waiting for the next iteration of SWIFT gpi, given the potential impact of distributed ledger technologies (DLT). “This initiative is technology–agnostic,” he insisted. “At the end of the day, you are meeting a customer need. This is information that customers are asking for. Whether you use DLT or some other delivery mechanism is not the issue.” □
Customers looking to join the SWIFT gpi initiative should email swiftforbanks@ swift.com or speak to their SWIFT relationship manager. To learn more about the initiative, download the SWIFTgpi App or visit www.swift.com/gpi.（News source：SWIFT）
