What's Next for SWIFT gpi and Cross-Border Real-Time Payments?
Recently, I wrote about the potential benefits of SWIFT gpi 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 centered 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 – centered 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.
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.
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.
Related Blog Posts
Why Banks Must Democratize Machine Learning for Fraud Prevention and Payments Intelligence
Banks are already actively on the path to digital transformation, considering new technologies, new customer experiences and new business models. A critical piece of this digital transformation centers on better understanding the wealth of data within the banks’ systems and mining it for improved customer insight. In the New Payments Ecosystem, data is as valuable to the bank and its customers as the deposits held in their accounts, and it should be protected, and leveraged for the benefit of the customer.
Payments and Fraud: The Paradox Twins
Digital commerce through web and mobile is where merchants predominantly experience shopper growth today. This has become a hugely important domain for their focus. It offers a means for international growth, new market penetration and a way to engage with shopper-hungry Millennials in their culture. Merchants frequently adopt a Digital-First, eCommerce-First or Mobile-First strategy to ensure full corporate buy-in to this strategy.
Building Trust in Open Banking with Behavioral Biometrics and Machine Learning
Strategies for fraud prevention in payments are having to evolve quickly, as new technologies emerge and digitalization of the banking ecosystem continues at pace. I spoke with Giselle Lindley, Principal Financial Crime Consultant at ACI Worldwide and Tim Dalgleish, Head of Threat Analytics, Asia Pacific at BioCatch to understand how financial institutions can use payments intelligence to build trust in this challenging environment.
Knowing New Customers – And How Shared Data Helps in Fighting Fraud
As the eCommerce industry continues its rapid growth, the lines between physical and digital shopping are becoming increasingly blurred. These changes are creating a number of challenges for merchants, not least around customer visibility and fraud prevention.
Reducing Fraud and Improving Customer Experience with Machine Learning
Julie Conroy is research director for Aite Group’s Retail Banking practice and covers fraud, data security, anti-money laundering, and compliance issues. Recently, Julie teamed up with ACI’s Marc Trepanier for a webinar, Key Trends in Payments Intelligence – Machine Learning for Fraud Prevention. I sat down with Julie to get her take on the topic.
Account Takeover: The Burgeoning Fraud Profession
Data security features frequently in the news headlines these days, in some form or other. Today’s consumers are increasingly protective of their personal data and concerned about its use. Yet an increasing number of apps and websites allow new customers to use external logins (from social media accounts for instance) to set up new accounts.
Hitting Back Against Telco Fraud with Positive Profiling
Fraudulent activity costs telecommunications companies billions of dollars every year – and it hits these telcos in many different forms. According to reports from CFCA (Communications Fraud Control Association), over USD $12 billion is lost annually purely to consumer-based fraud attacks such as subscription fraud and account takeover. These are fast becoming the biggest growth areas for fraudsters in the telco industry.
How Fresh, First-Hand Research Leads to Interfaces That Make Users Feel Understood
In 1890, my great-great-grandfather fled Czarist Ukraine for a new home in London. Amongst the few possessions that he brought with him was a book that had been given to him in 1860 by his grandfather.
Cybersecurity: Risks, Controls and What to Expect in 2019
The world of Cybersecurity has brought about several subtle changes in 2018. For example, malware and targeted 'Spear Phishing' were on the rise, while the focus on protecting the perimeter has begun to take a back seat to hardening internal controls. As we enter 2019, the changing threat landscape is certain to result in a barrage of additional considerations in how we protect data and systems.
‘Soup To Nuts’ – A Multi-Layered Fraud Menu for the Holiday Season
The holiday shopping season is well underway, with Black Friday now behind us and many retailers around the world braced for higher levels of eCommerce fraud, from Cyber Monday all the way though until Christmas.