How SWIFT gpi Will Change the Cross-Border Payments Market
SWIFT global payments innovation (gpi) is ushering in a new dawn in international transfers which, quite frankly, has been a long time coming, especially when you consider the current race to real-time payments. The world is getting smaller and faster, and cross-border payments are about to catch up.
Customers are demanding not only faster settlement, but also improved customer service around their international transfers. Fintechs can succeed in many cases because of the transparency and usability they provide across a variety of financial services.
SWIFT gpi will not only deliver a much-needed improvement in the speed of transaction, but also improve overall customer experience by creating predictable settlement times and clear statuses, through additional information on remittances and transparency around the FX rates and fees applied throughout the payment cycle. The usability of this information and the overall customer experience is greatly enhanced through the cloud-based tracker.
The devil is in the detail
For banks, the most value lies in the tracking of this new, readily available data. Data is clearly the path to improved customer experience. Rich data allows banks to solve a significant number of customer issues, such as questions around the status of payments. In today’s world, customers hold their financial institutions more accountable, and they expect better service. They want to know why there is a delay with their payment, if there is an issue, and why the recipient received less than they sent. This expectation of clarity is forcing banks to adapt new business models. Increased transparency puts more power in the hands of banks and their customers, as they can compare rates, charges and conformity to Service Level Agreements (SLAs) amongst banks, and it puts the onus on the bank to improve their SLAs.
So what can banks do?
Banks need to take advantage of the opportunities that SWIFT gpi offers, and leverage the power of the data to create value added and high quality solutions. They can then create differentiation to retain customers and win new business. Through data analysis and business intelligence, banks can identify valuable market segments that are being neglected or positioned for growth, and channels that are not currently cost-effective. The right mix of pricing and services based on data intelligence will deliver value for both the customer and the bank, and ultimately generate new revenue.
Each to their own
Different banks have different strategies when it comes to the application of SWIFT gpi, and it will be interesting to see where they find success. The New Payments Ecosystem is increasingly unpredictable, so these use cases for SWIFT gpi will be broad, and we may see traction in unexpected areas. It will be critical for banks to be agile; able to adapt to emerging trends and launch new services quickly to retain their competitive edge.
Traditionally, large banks have opted for on-premise solutions, but the proliferation of cloud-based solutions as a mainstream alternative has changed this sentiment, as banks of all sizes can be quick to market with new offerings (such as SWIFT gpi), without having to reengineer their payment systems. In fact, cloud solutions are becoming more attractive to larger banks to help layer additional functionality onto legacy systems without over loading them, and with a quicker time to market.
We have lift off
We are starting to see the first steps toward the implementation of SWIFT gpi. More than one hundred banks worldwide have signed up to the initiative, with 20 percent of these in the U.S. These global institutions represent 75 percent of all SWIFT cross-border payments.
With wider adoption of SWIFT gpi, it may become the norm for international remittance, rather than the exception.
Wijay Asirwatham leads Product Strategy for Global Wholesale Payments, including SWIFT, at ACI Worldwide. If you want to learn more about SWIFT gpi, cross-border and real-time payments, he will be at SWIFT Business Forum New York, June 14, 2017.
Related blog posts
How 'Mega Trends' Are Shaping Payments in India
In a previous blog post, I wrote about the impact of demonetization in India and the staggering growth of new digital payment types. Building further on this, I want explore some of the “mega trends” in payments, and how India is embracing the opportunities presented by these trends.
One Year Later: How Demonetization Has Impacted India
This month marks the first anniversary of demonetization in India, and it has undoubtedly changed the country forever. When I visit India, I increasingly see micro-transactions conducted via mobile phones. Cash is still used, but I see less and less of it with each visit. We are in the middle of a true paradigm shift – and India is poised to become a global leader in new types of payment acceptance.
Security, the New Payments Ecosystem and the Need to Educate the Consumer (Or Ask Them to Unclog Your Sewer!)
When it comes to any payments ecosystem, you must remember that we are talking about MONEY. More importantly, people’s money (like yours and mine). In any conversation in this space, secure is something that is assumed. A consumer simply won’t use a new system if they don’t believe it is secure. Unless of course it’s free Wi-Fi. As we have seen, folks are willing to do almost anything to get free access on their devices, even agreeing to clean toilets! (This was a real thing… one hotspot operator added it to their Terms of Service fine print). When we talk secure, it’s important that we keep this in mind: secure is not just a piece of the Hierarchy of Payment Needs, it’s an integral part of it, which is why it sits directly on top of the foundations. Without this layer, the whole ecosystem collapses.
How to Deliver on Customer Experience
Don’t Break the Bank – Building for the New Payments Ecosystem.
How to Protect the Foundations of Transaction Banking
Scalable, Available, Reliable – #SleepAtNightability for Corporate Banking
Pairing Payments Innovation with Security Needs in Southeast Asia
Many Asian governments – most notably those of Singapore and Hong Kong – have launched well-received initiatives to encourage collaboration rather than competition between the fintech start-up world and banks. This has enabled traditional banks to tap into the innovative solutions that fintechs offer, while the banks themselves bring to the table considerable experience with data, resilience, reliability and customer protection.
What’s Your Small Business Banking Bacon?
Every hip recipe has bacon in it these days. So why shouldn’t your digital banking experience be the same? After all, it’s a yummy addition that gives a standard dish that extra flair.
Small business banking has been a prodigious untapped market for over a decade. Banks desperately strive to make revenue from this market, but in most cases, they have struggled to do so.
The Constant of Change and the Future of Commercial Banking
Let’s clarify this before I lose anyone; the self-proclaimed “pioneer of wisdom,” noted Greek philosopher Heraclitus, is credited with the saying Panta rhei, "everything flows." More commonly, you have probably heard this as “the only constant is change,” but either way, this teaching has withstood the test of time, as it is not only applicable, but feels like a worldly truth when I find myself talking about today’s transaction banking landscape. A robust time of change is upon us; one that has brought us to the precipice of a new era in banking. Understanding the driving forces behind this change as well as embracing new business models will be a key to success, or even to survival.
The Hidden Risk of Complacency
Available in Spanish and English
As a professional in Latin American electronic payments, I often forget how it is to live not knowing what’s going on backstage every time I use my cards. My specialization makes me aware of trends worldwide, so while traveling, I’m able to analyze different technologies in action. My consumer side, also known as my ‘shopaholic’ side, exposes me to multiple situations, since any trip—be it business or leisure—always provides a good opportunity to shop. On a recent trip, I had the chance to experiment with my Argentinian cards during a semi-long-term stay. While out of country for 40 days, I experienced first-hand the challenges that consumers encounter with the EMV payments barrier.
Driving Toward Innovation in Digital Banking User Experience
The need for delivering on a user experience strategy necessitates the use of common and sometimes confusing lingo like CX, UX, information architecture, UX design and UI design. It introduces ways to gain deeper understanding of customers through methods like personas, journey mapping and Kano analysis. It commands phrases like customer-centric, experience-driven, and ideation/visioning. In the past 4 months, I have interviewed more than half a dozen agencies to engage one that could go beyond the buzzwords and the methods described above. I want to be convinced that great and meaningful changes can happen to UI’s. After all, talk is cheap.