Modernizing Cross-Border Transfers with SWIFT gpi
The customer experience for domestic payments – retail and corporate – has recently undergone a complete transformation. There’s still plenty more that could be achieved, but the advent of real-time payments in combination with open APIs has seen the launch of Request for Payment services and direct eCommerce instant payments in the UK and Europe. And it’s not just the PSD2 push in Europe that’s driving change – in the U.S., Zelle is moving beyond standalone P2P payments to become an integrated part of the retail banking app experience, as well as being included in new kinds of corporate disbursements.
But the historical complexity of cross-border payments has inhibited similar progress in this area. Cross-border transfers are subject to checks and regulations for every country they enter and exit, alongside FX processes and a multi-party payment chain. Some of this complexity is for good reason; it’s a significant investment to create, maintain and fund an international correspondent network, and all participants assume risk in a world of globalized crime. For these reasons, SWIFT remains the solution that most banks use for connecting internationally.
SWIFT messaging is now being further enhanced by its SWIFT global payments innovation (gpi) service, removing some of the traditional challenges around tracking payments and the associated customer experience. The ultimate goal is transparency in the transaction journey, as SWIFT gpi improves transparency in the correspondent banking chain.
More than 160 banks have now signed up to take advantage of the increasing data transparency, helping corporate customers of banks to better plan and manage their cash, which in turn contributes to an improved overall customer experience (CX). But it’s not as simple as ‘switching on gpi’ to begin offering this CX uplift to your customers.
As a recipient of a gpi payment request, you need to have services connected into your back office, so that you can provide the payment details and results to the sender of the gpi message. As an intermediary bank, you need services to update and forward the gpi message to the next party in the chain. And as a sender of a gpi message, you not only need to initiate a gpi message, but also enable your customer channels (including mobile and online banking) to read and report on gpi tracking data.
This is a significant investment, but a worthwhile one, with customers across both the consumer and corporate space more demanding than ever. Fintechs are currently competing primarily on speed and cost, but banks can now leverage the increased speed of remittance with gpi. Elevating the customer experience for cross-border payments is crucial for banks to compete with new fintech services.
SWIFT gpi can also support the bank in providing elevated service levels with improved data – gpi includes in-flight tracking written to a centralized database, so all participants in the payment chain can be certain on status, ETA and final values after FX and fees. The way for banks to leverage this as a differentiator will be to create certainty for customers, with information available in real-time via self-service portals such as online banking, and even creating push notification services to proactively update customers.
In corporate banking we often hear that it’s no longer about the payment, and that the new competitive space is centred around payment data. With modern payments, there’s more data that can be leveraged to improve the customer experience. New SWIFT messaging types and new standards such as ISO 20022 both increase the quantity and quality of data that can accompany a payment. Leveraged in combination with the use of APIs, banks can expose that data to internal systems for an enterprise view of payments end-to-end, and to preferred fintech partners in a controlled way to augment the CX offered to their customers. Through collaborative models, fintechs can enhance the experience, not take the customer away.
SWIFT gpi is absolutely a step in the right direction for cross-border transactions that require the higher service levels needed for certain payment types, particularly in the corporate banking space. Better gpi services are needed to prevent further disintermediation to global fintechs and major technology companies in the cross-border space. Corporates are looking at the digital-first experiences offered by fintechs, often at a lower price point. Real-time cross-border, and the digital improvements possible via gpi, are critical services to offer customers to prevent them from transferring their business. Typically, a corporate doesn’t want to move their services away from trusted banks, but if pushed on service, data quality and cost, they will look elsewhere.
The upside is that the fintechs cannot afford to set up the network for international correspondent reach that the banks have already established, so there is an opportunity to expand your network to include co-innovation with trusted fintechs. Banks have the opportunity for a win-win by protecting their existing customer base and working with fintechs via APIs to improve the onboarding experience to gain new customers.
Overall, SWIFT gpi poses great opportunities for banks that fully enable their business for the new service, alongside a digital-first API-based data and partnership approach.
Join Craig Ramsey at SWIFT Business Forum New York 2018 on September 12th to discuss how you can leverage SWIFT gpi.
Related Blog Posts
Removing Gender Bias and Enabling Women to Succeed in Leadership Roles
The recent UK Women in Payments (WIP) Symposium 2019 took place in London, recognizing unique leaders who help uplift women in the payments industry. Among those recognized was ACI’s Melissa McKendry, vice president, Retail Banking Implementation Services, who was honored by WIP as the 2019 Advocate for Women.
Regulating for Real-Time: The Role of Government in Payments Modernization
Dr. Leo Lipis and Craig Ramsey, Head of Real-Time Payments for ACI Worldwide, continue their discussion on real-time payments and the findings of the new white paper, Get More from Real-Time.
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.
Open Payments Systems for Merchants: Don't Close Down Your Options
Remember “Open Systems”?
It was a big industry nom du jour in the 80s and 90s. Every IT system had to be open and therefore flexible and future-proof. Nobody can argue with the logic behind this; making systems easy to integrate with other systems, ensuring vendors could cooperate with one another; creating agility to improve time to market and drive down costs.
Issuing and Acquiring in a Real-Time and Open Payments Ecosystem – The Global Picture
Dr Leo Lipis and Craig Ramsey, Head of Real-Time Payments for ACI Worldwide, continue their discussion on real-time payments, stemming from the findings of the new white paper, Get More from Real-Time. See part one.
Why It’s Time for Women to Rise UP
As a senior software engineer at ACI Worldwide, Rawan Shawar helps to guide her team’s priorities and enhance processes at both the team and organizational level. Recently, Rawan was selected by the organizers of Money20/20 Asia to be part the Rise Up Class of 2019.
Can Digital Payments Be Kind?
There is no doubt that the era of less (or minimal) cash is truly upon us. According to the Access to Cash Review, cash could fall to just 10 percent of all payments in the UK within the next 15 years.
Other countries, such as Sweden, have already seen significant changes – cashless payments have grown so quickly that only 10 percent of the 20 SEB banks in Stockholm now hold cash. Beyond Europe, China is leading the way with USD$12.8 trillion in mobile payment transactions in 2018.
Keeping Up With Fraudsters: A Month Isn’t Enough
As the Government of Canada campaigns for improved fraud prevention and awareness this month, I’d like to do my part as a fellow Canadian, and shed some light on why payments need to stay a step (or more) ahead of fraudsters, today more than ever.
Local Perspectives: Real-Time Realities Across Asia-Pacific in 2019
Money20/20 Asia returns to Singapore this week, attracting payments professionals from around the vast APAC region – and beyond. The real-time and open imperative is one of the reasons why all eyes are on Asia-Pacific when it comes to payments, so I caught up with ACI payments experts representing three of the key countries within the region, to take the pulse of real-time schemes that are in varying stages of maturity.
What it Takes to be an ‘Influential Woman in Payments’ [Q&A]
Coming off the back of International Women’s Day this past weekend, PaymentsSource has recognized the Most Influential Women in Payments, spanning multiple industries including financial services, retail, investment and technology. Among the honorees is ACI’s very own Carolyn Homberger, group president, global sales. Part of the executive leadership team at ACI, Carolyn leads a team of payments professionals operating across all global regions, and plays a critical role in setting business strategy. As an advocate for the leadership and growth of women in the payments industry, Carolyn is also responsible for launching ACI’s own Women’s Initiative.