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What's next for SWIFT gpi and cross-border real-time payments?

Firstly, define SWIFT.

If you’re a corporate or bank you’ve probably used SWIFT, or to use their far catchier name, the Society for Worldwide Interbank Financial Telecommunications. The SWIFT network is responsible for processing, transmitting and messaging secure information from one financial institution to another.

In many cases, this means that the coffee retailer in London can send money to the coffee vendor in Colombia by providing the right account number and corresponding bank SWIFT code. SWIFT sends a message code to release the funds from the retailer’s account in London and to be received in the vendor’s account. Simple, the postal service for digital payments.

SWIFT took over the mantle of international correspondent banking from Telex. This was largely due to the free format of messaging, where a central switchboard operator interpreted the request and executed the transaction. This was fraught with latency issues as well as human error. SWIFT’s standardised coding eliminates the middleman.

So what is SWIFT gpi?

Gpi, or Global Payments Innovation, looks to improve upon the SWIFT system. Indeed, SWIFT’s website promises it is “the biggest thing to happen to correspondent banking in 30 years”.

The first phase of gpi (currently live) promises to enable:

Faster transactionsMore transparent feesEnd-to-end payment tracking

In effect, the first phase seeks to provide faster payments by making transferred funds available providing they are transferred before SWIFT’s cut-off point. The cloud correspondent tool also seeks to address the pain point around payment visibility from corporate treasurers. SWIFT gpi uses real-time tracking, end-to-end view of payments thanks to the unique tracking codes which will enable a notification lifecycle of the settlement i.e. you will know when the payment has reached its destination. The ability to settle transactions in the same day optimises liquidity with improved cash forecasts.

The second phase (for 2018-2019) will feature:

The immediate stopping of a payment

The idea is to give banks more control over cases of fraud or duplicate payments by allowing building in the ability of cancelling a payment anywhere in the payment chain. This is made possible by the unique tracking code that also enables the payment tracking provided in the first phase. This greatly aids in fraud prevention, but also in operational cost and wasting time making administrative cancellation requests.

The additional transfer of rich payment data

The complex nature of many transactions requires more information to be sent along with the payments. Previously this was left to email liaising between corporate clients and their banks. Naturally, cutting this out makes the system quicker and more efficient.

The use of an international payment assistant

This essentially acts as an information source to speed up payments by providing the relevant information at the touch of a button, whilst also avoiding incorrect and bounced payments.

Further reading on SWIFT

SWIFT gpi poses many opportunities for banks. Like any technology, the rate of change is accelerating, making it critical that banks keep pace with the market and with their competition. In 2018, as domestic real-time payments schemes reach near-ubiquity thanks to a combination of regulatory and customer demand drivers, we have seen an accelerated parallel trajectory for cross-border real-time gross settlement (RTGS) payments.

SWIFT gpi has been gaining ground amongst the largest banks, for whom the added value lies in effectively leveraging the enriched data available as part of the new format, and proactively making that information available to customers.

Corporate customers, in particular, are underserved by current cross-border payments, which have historically been shrouded in mystery when it comes to payment status, delivery dates and final settlement value – thanks to FX fluctuations and the fees chain in the correspondent banking model. All of this has added up to a lack of certainty in cross-border payments, preventing corporates from making informed business decisions.

Evolving SWIFT gpi to 2.0

To turn speed into customer value, banks are looking at how they can take the next step – beyond what the SWIFT product set provides. This is centred around creating more channels for data delivery and aggregation, which deliver clarity and certainty to the end customer. This is similar to real-time payment schemes in that the value is in the overlay services, such as Request to Pay in UK Faster Payments. This certainty drives customer experience and in turn creates increased customer stickiness.

The ability to create high value for customers (and by extension revenues) is more obvious in corporate banking, where certainty in payments supports logistics and liquidity. Certainty in funds received allows corporates to release goods and transact more quickly with their distributors. Certainty in payments made allows corporates to receive operational resources quickly and keep their business profitable. It always has huge benefits in relation to liquidity, and the informed investment decisions corporates can make with that liquidity.

These overlay services – centred on certainty – will help the industry move into the ‘SWIFT gpi 2.0’ era. What the industry will see next, and I believe we’ll see it in the near future, are the first movers identifying real use cases for this evolution of SWIFT gpi. Up until now, the industry has focused on the power of the product rules, but the 2.0-era use cases are now emerging.

In-Flight Tracking

There’s a strong use case to be developed around reducing the number of inbound queries received by the bank in relation to in-flight information for cross-border payments, which would improve efficiency and margins. But more importantly, there’s an even stronger case to be made for proactively providing that information to customers to improve their experience. That may be in the form of a portal, but augmented with real-time push notifications and alerts to the customer regarding approvals, successful payments, fraud queries, etc. All with the goal of ensuring the customer is equipped with the right information, at the right time, to be able to make the right business decision.

Correspondent Banking

Direct participation in SWIFT gpi isn’t a priority for some banks because of their customer demographic. However, this does provide an interesting opportunity for those who have invested in their overlay services for cross-border real-time, to package and sell them to their affiliate or correspondent banks. Leveraging the open APIs to extend the enriched data and the value-added services to these banks too is a potential future model.

These future use cases – amongst others – are being actively discussed within our industry, as banking moves toward open payments. We should see viable use cases emerge soon, as the leading banks race to be first to market with new customer propositions based on real-time payments.

Question : What is the meaning of Swift GPI ?
Answer : SWIFT global payments innovation (gpi)
Question : Is there any LIMIT of Transfer ?
Answer : Yes , 500k USD per day.(NON GPI Members).
Question : Will Aura be active as they are for huge transfer?
Answer : Yes, It was invested by JP Morgan & Kasikorn Bank successfully tests instant cross-border payments with SWIFT gpi.     KASIKORNBANK (KBank) teamed up with SWIFT and a group of banks from Asia Pacific, to carry out the trial of SWIFT’s new instant cross-border payments proof of concept. This trial successfully demonstrated that by enabling gpi in real-time domestic systems, payments can be effected in seconds, even when they involve domestic settlement and non-gpi banks.
Website Link :
Question : Is there any link to understand & watch the videos?
Answer: Yes .

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