Swift, together with 45 member banks, launched the global payments innovation (gpi) initiative in early 2016, to increase the speed, transparency and predictability of cross-border payments. More than 180 banks have signed up to the service, with over 60 banks now live. As of May 24, 25% of all Swift cross-border payments traffic is now being sent as gpi. Joy Macknight talks to Wim Raymaekers, Swift’s gpi programme director, about the latest developments. 

Wim Raymaekers

Wim Raymaekers 

Q: What major milestones has Swift gpi achieved to date?

A: Following a general agreement around gpi’s basic business rules, we launched a pilot in February 2016 and the first live messages were exchanged at the end of that year. The speed of action is testament to the urgency [felt by the banking industry], but also that we got the architecture right. We developed gpi on the current rails because we couldn’t wait until new technologies became bank-grade ready.

Another highlight was the launch of the [real-time] Tracker in May 2017. From the outset, we had an agile release plan. We first went live with basic features and then extended the Tracker’s functionality in November 2017, and again twice this year so far. Last year banks could send gpi payments to all Swift users, and now even non-Swift flows can be monitored by the Tracker, such as payments over The Clearing House Interbank Payments System and Fedwire.

Achieving these major milestones has driven the adoption of gpi to such an extent that our member banks expect gpi to be the new norm within the next two years.

Q: Why is it proving so popular for banks and corporates alike?

A: Swift gpi is solving a real problem in a real way. Banks are reporting a 50% to 60% reduction in the number of enquiries coming from other gpi banks because they are using the Tracker. In addition, banks were able to go live within three to six months because gpi relies on the existing rails, as well as the banks’ current back office, foreign exchange, compliance, etc.

Importantly, Swift gpi is independent of the underlying technology. We can go live with what we have today or with new technologies that are deployed tomorrow. It is even independent of the MT103 [Swift message for making payments], so we could move to ISO 20022 XML standard tomorrow.

 Banks are reporting a 50% to 60% reduction in the number of enquiries coming from other gpi banks 

The tracking information is proving popular with corporates, as well as the confirmation when the payment reaches its destination. A major bank in Canada reported that its corporates want the Tracker information all in one screen, so they can print the screen and send it to their trade counterpart as proof the money has been credited. Previously, they didn’t have the certainty of a payment.

More than 40 banks are integrating the gpi experience into their banking portals – and 15 already have – so that corporates can access the gpi Tracker results directly. Corporates like the ability to self serve, as well as the predictability and transparency of gpi. We are currently doing a pilot with corporates, including GE, Microsoft and Booking.com, so that they can receive the gpi information from their banks directly into their treasury management and enterprise resource planning systems. These large corporates want a standardised experience across their banks, for many have up to 50 or more banking relationships.

Q: What new gpi elements are coming live this year?

A: First, the gpi UETR [unique end-to-end transaction reference] will be put on all Swift payments by November. All 11,000 institutions on the Swift network must be ready to use UETRs in their payment messages, including non-gpi banks. This is an important change because it then becomes possible to launch new services based on the UETR.

Next, we’ll launch three new services. The first is called extended tracking. When the UETR is added to every payment there will be 100% tracking of 100% of payments on Swift, end to end throughout the whole chain.

The second service is the ability to stop and recall a payment. Today, a corporate must ask its bank to chase a payment from bank to bank. But with the Tracker, they will know exactly where the payment is stopped, if need be. In addition, Swift gpi will put a stop on the network so it cannot be forwarded inadvertently.

The third is gCOV service, which will encompass MT202 cover messages [which order the movement of funds to the beneficiary institution via an intermediary bank].

Q: How is Swift engaging with the fintech community to develop the gpi platform?

A: In June 2017, Swift launched its global gpi industry challenge and three months later choose two winners [AccessPay and Assembly Payments]. We are now doing a proof of value with these fintechs, a group of banks and corporates. We are exploring opportunities and, if there are some, then we will move forward with a proof of concept [PoC]. Our methodology is to co-create with banks, fintechs and corporates.

In addition, we have extended a broad invitation to fintechs to exhibit in the Discover Zone and Fintech Marketplace at Sibos 2018 in Sydney, Australia. We will pitch gpi to them and they will pitch their ideas to us, and we will see if there are opportunities to explore.

Q: Is real-time cross-border payment capability the direction of travel for Swift gpi?

A: On my recent trip to Asia, we conducted a workshop on real-time payments. One of the main benefits of Swift gpi is faster cross-border payments – many are happening in seconds and nearly 50% are credited within 30 minutes. And if there is a domestic real-time system behind it, then it is also 24/7.

This is important as it allows the receiving bank to expand the operational window and credit a payment that day. The average real-time gross settlement system has a cut-off time of 4pm to 5pm. Previously, if a bank in China sent a payment to Australia after 5pm, it would be credited the next day. But with a 24/7 system, such as the New Payments Platform in Australia, a Chinese corporate can ask its bank to send a payment much later in the day and still have the same day value.

That is where Swift gpi is heading. We are working with banks in Australia, China, Singapore and Thailand to create a real-time cross-border service across Asia-Pacific. Connecting the cross-border gpi to domestic New Payments Platforms is a good first step, especially with Sibos being in Australia this year.

This provides a richer, more valuable story than just sending a payment in a few seconds. It is about being able to send payments longer throughout the day and not having to consider cut-off times in other countries. So, yes, we are travelling in the direction of real time, combined with extended opening hours.

Q: How does Swift gpi fit into the context of the move to Open Banking and open application programming interfaces [APIs]?

A: APIs are a cornerstone in the gpi technology strategy. Banks are adopting the gpi Connector, enabling API integration. We are also exploring how to add more services at the edges so that corporates can, for example, perform a request for payment using an API. Or if there is an important payment on the way that corporate is waiting for, it can use an API call for information from its bank, or the bank could send an API alert.

We will move towards a more open API model in the future, but we aren’t quite there yet. While Europe is pushing in that direction with the Payment Services Directive 2 [PSD2] and we see developments towards Open Banking in other parts of the world, there is not yet a global PSD3. But APIs are something we have already embedded in gpi for the portal integration and banks are looking to expose the API experience to their corporates.

Swift is embracing API technology and sees its potential in unlocking the financial services industry, more so than blockchain for wholesale cross-border payments, for example.

Q: But does blockchain, or distributed ledger technology [DLT], have the potential to replace the correspondent banking network?

A: When we performed a DLT PoC a year ago, we found that to have intraday liquidity, a bank’s back office must generate liquidity reports, or updates, on an intraday basis. So, banks must change their back office to generate and process debits and credits on a transactional basis. If they don’t, then using DLT is not going to make a difference.

That was one key conclusion. At the same time, we decided to continue to explore the applicability of DLT from a technology maturity point of view. So, it is too early to make a definitive comment on DLT.

Nevertheless, the beauty of gpi is that it is technology- and format-agnostic. And it adds real value to the end customer, which is what both banks and corporates are looking for. Together with the industry, we can figure out the best technology and standards to suit cross-border payments in future.

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