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How will SWIFT gpi Impact Latin America?

LATAM SWIFT gpi

As the world continues to transition toward real-time, and technology continues to evolve, new challengers are disrupting the market with value propositions including real-time cross- border payments. The competition has inspired SWIFT to work with the industry and challengers to create the Global Payments Innovation (GPI) program, which radically changes the way banks interact with their correspondents and offers improved transparency and customer service to their customers.

Are banks and financial institutions in Latin America ready to leverage the benefits of SWIFT gpi?

Banks in LATAM are certainly aware of SWIFT gpi and the fact that this is an evolving – not static – solution. The focus of the banks is in ensuring they maximize all the possible benefits for their customers and use the improved SLAs to boost their cross-border transactional efficiency. SWIFT itself has promoted this through various educational activities including their LATAM Regional Conference in Panama, and by working with software partners such as ACI in jointly hosting the #PaymentsforBreakfast series of events, as well as videos: The New Cross Border Reality and webinars: Drive Value for Your SWIFT gpi investment.

The top tier banks in LATAM currently have large teams supporting operations and customer service to ensure the success of their cross-border payments strategy. However, the efficiency of these resources can be improved through exposure to the added data that SWIFT gpi offers – transparency on fees, FX Rate and SWIFT data tracking on transactions.

This is evidenced by data from one international bank, which was able to reduce its overhead due to improved remittance data that increased the success of its payments completion (to the beneficiary) and removed the burden of having to re-send payments back to the originator.  

Another key advantage for banks is the opportunity to share this added data directly with their customers and allow them to ‘self-serve.’ Not only does this improve the customer experience, but according to SWIFT, it eliminates manual intervention and reduces customer investigations by 50 percent,[i] saving on resource costs. However, the perception is that this is a hard task for many banks in LATAM, due to them being heavily siloed. In fact, integration is not that complex and SWIFT, together with vendors such as ACI, already have use cases and solutions ‘live’ to support full functionality with minimum lead time. But it isn’t enough to just offer a basic SWIFT gpi solution, and this is where offerings like ACI’s Swift Data Service come into play by augmenting data from the Swift tracker with all the transaction data from across the business in one end-to-end view.

Early adoption can impact customer growth and retention?

The business case is both simple and universal – as a corporate customer’s business grows, operations become a bottleneck as they try to keep pace with higher transaction volumes, which then leads to potential increases in investigations and other use cases that impact the business and reputation. Therefore, the opportunity to gain full transparency on SWIFT transactions via the SWIFT tracker – but also augment data using API technology via solutions such as ACI’s SWIFT Data Service to gain a full end-to-end view of all transaction across their business – is extremely beneficial.

One originating bank in the LATAM region reports that most of the time they wait for their correspondent bank to reply to investigations via their established mechanism, despite the likely delays – because the moment they pick up the phone to make a query, the correspondent bank levies a charge of up to USD$75 for the investigation. For a bank with high volumes and impatient clients, which wants to provide a good customer experience, it makes sense to embrace the SWIFT gpi program and translate the benefits to customers. Another bank states that 100 percent of its RFIs for RFPs from corporates demand detailed information on their SWIFT gpi offering, and how this compares to competitors before selection; it would be foolish to risk being left behind by providing just a very basic offering.

Finding an efficient way for banks to accelerate speed to market

SWIFT gpi now accounts for more than 50 percent of SWIFT payments traffic, and cross-border messages using gpi soared from 15 percent at the start of 2018 to 56 percent by the end of the year. In addition to a year-on-year increase of 270 percent, more than $40 trillion was transferred over the service in 2018.

This proven success is down to SWIFT’s own education, as well as the way they collaborate with solution providers on the roll-out of their roadmap. The partnership between SWIFT and ACI offers efficient ways for banks to easily integrate with the tracker, store enriched data for an end-to-end transaction view and provide automated updates of solutions reliant on SWIFT’s roadmap and mandates to the market.

For instance, ACI, the first SWIFT gpi certified vendor on the market, has five offices across LATAM as well as key partners in the region that can help to deploy these solutions quickly and with good value pricing.

How will SWIFT gpi continue to change the cross-border payments market? 

As you would expect, there are plenty of new companies interested in tapping into and disrupting the cross-border payments market. However, SWIFT is a well-established network with a very solid customer base that is hard to replicate. It is the depth of this network that not only helps with the interoperability of cross-border payments, but also aids collaboration between banks to improve transaction efficiencies via agreed SLAs.

This has resulted in the best of both worlds where SWIFT is embracing new technologies and working with fintechs to develop new functionality for SWIFT gpi. For instance, SWIFT is integrating with market infrastructures where domestic payment schemes have moved to real-time, so in the immediate future cross-border payments sent to or from these schemes can be processed instantly. Additionally, they are coming up with new tools such as validating beneficiary information before sending the payment, request for payments, and more.

The rapid adoption of SWIFT gpi and the determination of SWIFT to constantly evolve and improve cross-border payments leaves no doubt about the positive impact it will have on payments in LATAM and beyond. Now banks and financial institutions in LATAM need to ‘bite the bullet’ and fully engage – or else risk being left behind the rest of the world.

 

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