Talking heads: Cross-border payments - Ushering in a new era

In part two of our series looking at the world of cross-border payments, Becky Clements from UK Finance and Vikesh Patel from SWIFT UK, Ireland and Nordics, discuss how SWIFT is leading the transformation happening in the global payments landscape. You can read part one, which looked at the drivers behind these changes, here.

Becky Clements: We talked previously about the challenges UK Finance members experience when it comes to international payments. SWIFT has invested a lot into making SWIFT gpi the new standard, with the ambitious goal to reach universal adoption. What is the current state of play?

Vikesh Patel: When we launched gpi back in 2017, our aim was to transform cross-border payments. So you?re right, universal adoption is ambitious, but we believe that it takes the whole community working together to truly transform cross-border payments on the global scale that is needed. SWIFT has a long history of rallying the industry around common solutions, and I?m pleased to say we?re well on our way to meet the goal we set ourselves with gpi. Today over 56 per cent of cross-border payments on SWIFT are sent via gpi. To put that into context, that equates to more than $300 billion in daily value, which amounted to $40 trillion in payments in 2018.

Over 3,500 banks are signed up to gpi, and hundreds are already live sending gpi payments. We?re already seeing the benefits of that for our community. Nearly 100 per cent of payments on SWIFT gpi are credited within 24 hours, 40 per cent within just five minutes, and many happen in a matter of seconds.

BC: You mentioned that 56 per cent of cross-border payments on SWIFT are now sent via gpi. That leads me nicely onto my next question: how is SWIFT planning to bring its entire community onboard?

VP: There are a couple of things we are doing. The first step happened at the end of last year when we introduced a unique end-to-end transaction reference (UETR) to all payments on the SWIFT network. Every payment can now be tracked, regardless of whether the bank handling it is on gpi or not.

The next step is to ensure that banks provide confirmation when a payment has reached the end beneficiary's account. Payment confirmation is imperative to ensuring a seamless experience for banks and their customers. You can compare this with your personal experience as well. In our day-to-day lives we have become accustomed to knowing when things have happened. We can check whether the parcel we ordered has arrived, whether someone has read our WhatsApp or text message, or whether our takeaway is on its way.

In the business world it's no different. Companies rely on knowing a payment has arrived as a key part of their supply chain. Without that, trade can stall and goods and services end up delayed.

Payment tracking and confirmations are all about enabling banks to provide an excellent customer experience and build new value-added services. This is why we are making payment confirmations mandatory by the end of 2020.

BC: Banks are engaging in a lot of different projects these days, whether they be around compliance, innovation or replacing legacy technologies. What do financial institutions need to do to confirm payments? What support is available?

VP: We are making it as easy as possible for financial institutions to confirm payments by introducing a number of automated and manual tools.

SWIFT customers will be able to confirm payments through their existing interface using MT199 messages from November this year. For banks invested in API technology, you?ll be able to update the gpi tracker using API calls to confirm you?ve received a payment.

We are also building out an ISO-20022 compatible solution to ensure maximum interoperability and future-proofing.

At the same time, we?re reaching out to the vendor community to help as many application vendors as possible bring gpi into their offerings, which will also help ease the transition to payment confirmations.

We know that financial institutions have a lot of plates to juggle, that's why we?re doing everything we can to support our community.

BC: UK banks are among the most active participants in the correspondent banking network, but there are many UK Finance members who do not necessarily handle large volumes of cross-border payments traffic. Why should they also think about adopting gpi?  

That is a good question. The first thing I?d say is that we have solutions for customers who handle very low cross-border volumes. Our Basic Tracker, rolling out later this year, will grant access to basic search, tracking and confirmation features, and provide an easy upgrade path to the full version of gpi if required.

The main incentive though is about enhancing your customers? experience and boosting relationships with your correspondents. As gpi adoption grows, all banks will be under more and more pressure, either from their customers or other banks in their network, to provide tracking information and payment confirmations. Banks who can't do this will instantly put themselves at a disadvantage. 

Again, gpi is about offering a better service for banks? customers. If you handle any cross-border payments, gpi will allow you to meet their expectations and drive new business opportunities. It also allows you to handle the cross-border payments you have more efficiently, reducing time and costs, for example when managing payment investigations and enquiries.

Finally, we have a very vibrant roadmap of new service evolutions coming to gpi. Customers can already offer the ability to stop and recall a payment in flight in case an error is made or there is suspicion of fraud, and you can provide direct integration of gpi data into your customer-facing portals. There are plenty of reasons to sign up.

In part three, Becky and Vikesh will discuss how cross-border payments are becoming as seamless as domestic. For more information about gpi adoption, visit www.swift.com/our-solutions/swift-gpi/moving-towards-global-adoption-of-gpi

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