How SWIFT gpi is harnessing the power of collaboration to transform cross-border payments

Wim Raymaekers, Global Head of Banking Market, SWIFT and Anders Olofsson, Global Head of Payments, Finastra

In recent years, the idea that the world has advanced from “ego-system” to “eco-system” economics has been made famous by the renowned business academic Otto Scharmer of the MIT Sloan School of Management. And it’s certainly a concept that springs to mind for me, when I’m asked how SWIFT’s gpi cross-border payments service has managed to grow its take-up and usage so rapidly across the world.

The driving force behind eco-system economics is collaboration. Why? Because success is no longer about pushing your own product in isolation. Instead, what really matters is how your product integrates with the other companies’ offerings that your customers are already using. Get that integration right, and you’re well on your way to a winning product.

It’s this insight that has powered the success of gpi since its launch in early 2017.  And it’s why we at SWIFT collaborate consciously and continuously with around 30 payments technology vendors—including Finastra—to enable banks to progress along their gpi-enabled journey to fast, seamless and easy cross-border payments.

Collaboration and integration

Around 70% of banks use third-party vendors’ products to provide payments services to their customers. So collaborating and integrating with these third-parties is imperative if we’re to ensure that our bank customers can embed the gpi experience into their own infrastructure. We want to present banks with a solution that’s not disruptive but positively collaborative—which is why we built gpi specifically to be able to reuse banks’ existing back office processes, sanctions screening, STP, currency applications and so on.

Similarly, in the interbank space we maximize the ease of integration by using the industry-standard MT 103 message type. And we cooperate with 55 different market infrastructures across the world that support gpi—including proprietary non-SWIFT platforms like TCH in the US and FXYCS in Japan. Banks will also be able to reuse the gpi business rules as the industry moves to ISO 20022.

All of this collaboration helps to ensure that any bank, anywhere in the world, can integrate gpi into its systems quickly and easily. And to make it even easier, we’ve built an additional information layer in the cloud on top of the gpi tracking database and above the whole chain of payments processing. This cloud database is updated continually as payments go from one bank to the next, and all banks using gpi can access it seamlessly via APIs.

Reaping the benefits of gpi

The resulting benefits for banks are substantial—and include reduced costs, improved customer experience, higher speed and greater transparency. SWIFT gpi enables banks to offer a better service to their customers because payments can be tracked in real time, with full visibility into key factors like routing, fees and time of credit. And in terms of speed, close to half of gpi payments are credited within five minutes, and many within seconds, adding further to the benefits for corporate treasurers.

What’s more, the greater visibility brought by the gpi Tracker feeds directly into lower costs, because banks have less need to contact each other to check where a payment is. This dramatic reduction in enquiries—especially from intermediary banks—represents a massive saving in administrative overheads, as well as enables banks to respond faster to customers’ questions.

It’s the combination of these transformational benefits with SWIFT’s collaborative approach that has enabled us to achieve such rapid adoption of gpi. Just over two years on from gpi’s full market launch, the figures tell their own story:

• US$40 trillion gpi payments sent in 2018
• 56%+ of all SWIFT payments are now sent on gpi
• 3,500+ financial institutions have committed to joining the service, representing 480+ banking groups (including 60 of the top 60 banking groups)
• All payments on SWIFT are tracked end-to-end, thanks to the unique end-to-end transaction reference
• On average, 40% of SWIFT gpi payments are credited to end beneficiaries within five minutes, 50% within 30 minutes, 75% within six hours, almost 100% within 24 hours
• More than US$300 billion is carried over gpi every day across 1,200+ country corridors, representing 80% of all SWIFT cross-border payments
• Payments are tracked across 55 networks and market infrastructures
• To date, 15 application providers are now gpi-ready in their applications, with more in the pipeline

Continuing to innovate

These statistics underline the extent to which SWIFT is answering the call among banks and their customers for greater speed, transparency and tracking of cross-border payments. And the reality is that gpi’s transformational impact has only just begun—because here at SWIFT we’re continuing to innovate and collaborate to drive the benefits ever further and faster.

To do this, we’ve planned out an exciting future roadmap for gpi, reflecting our commitment to ensuring it delivers more both for banks and their customers—with the ultimate aim of making cross-border payments as fast and seamless as domestic ones.

One key initiative is extending gpi’s support for corporate services, by enabling all banks to provide tracking information to their corporate treasurer clients—a capability that’s now live following a successful pilot programme last year. The new gpi functionality allows multi-banked corporates to initiate and track gpi payments across all their banking portals through a single window integrated into their treasury management and ERP systems.

What’s more, we’re extending this capability further by enabling corporates to have visibility of incoming as well as outgoing payments and payment initiation services. And we’re working to add Request-for-Payment capabilities so corporate sellers can trigger cross-border payments from buyers.

In parallel, we’re collaborating to enhance gpi’s support for e-commerce through a new proof of concept, which enables participants involved in trade transactions on distributed ledger technology (DLT) ecosystems to settle the payment leg of their trades using gpi, and benefit from fast, secure settlement using a fiat currency. The first DLT infrastructure software provider collaborating in the pilot is R3.

Another area of innovation around gpi is faster case resolution when payments get stuck, due to inaccurate beneficiary account information for instance. This ‘in-flight’ payment investigation and resolution service available in the cloud will expand our integrated validation toolkit. And we’re running a pre-validation pilot program to enable initiating banks to check, via a real-time API-based mechanism, the beneficiary account information seamlessly with the ultimate receiving banks—thus minimizing errors and maximizing STP.

Finally, through gpi we’re taking cross-border payments into the world of instant payments. Following a successful trial of cross-border instant payments last year in Australia, we’re now trialing it in Asia Pacific—with banks in Singapore using the FAST service to process cross-border payments. We’re also collaborating with the ECB to enable instant clearing of cross-border payments in Europe via TIPS.

More to come

Powered by innovation and collaboration in today’s eco-system driven world, SWIFT gpi has made fantastic progress in just two years—confirming its status as the biggest innovation our industry has seen in decades. But there are still many more benefits to come for banks and their customers. Stay tuned!