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 Evolution
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.
Data Certainty
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.
ACI High Value Real-Time Payments 
