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How SWIFT gpi Will Change the Cross-Border Payments Market

SWIFT gpi implementation

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.

43% of SMEs globally say that being able to send and receive payments in real-time would be ‘essential’ to the success of their business.

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.

50% of SMEs globally would like their banking provider to offer more services that meet their unique needs.

 

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.