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
European Banks Have the Right Tools to Stay Ahead – But Will Big Tech Overtake?
Open banking and immediate payments have come a long way, according to the panellists who joined me during the ‘Open Banking in an Instant World’ session at EBAday in Stockholm recently. The building blocks are now falling into place through the introduction of national and regional schemes, open banking initiatives, regulations such as PSD2 and the acceptance and use of APIs.
Checkout Optimization Challenges: Top Tips for Online Merchants
As the current conference season draws to a close, it’s time to reflect on one of the key topics topping the agenda for many online merchants: checkout optimization.
How Banks and Acquirers Can Deliver on the Benefits of PSD2 SCA Exemptions and Differentiate Their Merchant Services
PSD2 is an opportunity for acquirers to differentiate themselves by delivering improved services to their merchants, if they implement modern solutions to manage SCA exemptions. This will drive the best customer experience in combination with regulatory compliance.
How UPI is Driving India's Shift from Cash to Digital Payments
The Indian economy has traditionally been heavily dominated by cash, while experiencing low adoption of various online payment systems including National Electronic Funds Transfer (NEFT), Real Time Gross Settlement (RTGS) and inter-bank mobile payments. The dominance of cash is evidenced by the ratio of cash withdrawals at ATMs vs debit card usage at Point of Sale (POS)—ATM transaction volume is more than 2x greater than POS.
Cooperation, Consultation and Collaboration Are the Keys to Countering CNP Fraud in Australia
As Europe, and other parts of the world ramp up for regulatory changes around PSD2, Australia is about to launch its own strategy to combat Card Not Present (CNP) fraud.
PSD2 and Strong Customer Authentication – What's in Store for Merchants?
With the final pieces of the Payment Services Directive (PSD2) puzzle coming together, payments businesses are highly focused on meeting their compliance obligations. But the forthcoming changes will affect everyone in the payments chain – and it’s important for merchants and PSPs to understand the practical implications for their businesses and customer relationships.
Transforming Telecom Companies in a Retail World
The recent MVNO World Congress in Amsterdam brought fascinating insights into the changing telecom industry, particularly around the opportunities that lie ahead for Mobile Virtual Network Operators (MVNOs) and how they can they can cement their position in today’s fast-paced climate.
Success Speaks: Surprising New Ways Students Want to Pay
Colleges and universities are facing the dual tasks of accommodating not only new payment methods, but also a new generation of students, Gen Z, whose expectations differ greatly from even millennials. How can higher education institutions meet these demands?
In our latest Success Speaks webinar, experts from Temple University, FutureCast, ACI and MTFX Group of Companies explored today’s payments landscape for colleges and universities, payment desires of Gen Z, innovations the higher education sector is already implementing and how schools can better assist with international payments.
Women Must Choose to Rise Up Despite Past, Current and Future Circumstances
Money20/20, Europe’s biggest payments and fintech event, was recently held in Amsterdam and featured Rise Up Money20/20, a global program designed to address the gender imbalance in leadership positions within the financial services and fintech industries. A cohort of 30 female professionals was selected to take part in an exclusive curated agenda, complete with a series of bespoke content sessions, one-to-one mentoring and unique networking opportunities.
Beyond Borders: Navigating the Challenges of eCommerce Expansion
eCommerce continues to flourish, with impressive growth figures year after year. In 2018, global online sales reached almost $3 trillion, and are expected to hit $4 trillion by the end of 2020.
Despite eCommerce taking an increasing slice of the retail pie (which could now be as high as 15 percent according to recent figures), it is increasingly challenging, with competition and cost pressures creating significant issues for merchants of all sizes.