In creating the Global Payments Innovation service just more than a year ago, the Society for Worldwide Interbank Financial Telecommunication (Swift) had faster cross-border payments in mind, while not stressing a payment rail technology overhaul.
Swift has been able to initiate a faster payments process of its own, one that over time will complement and integrate with domestic faster payments initiatives. The global messaging network is seeing the results of its efforts to simply improve payment communication between banks, establish tighter deadlines and upgrade processing conditions.
Swift says that more than $100 billion in Swift GPI payment messages are sent daily, enabling payments to be credited to the end beneficiaries within minutes, and some within seconds.
The customer credit transfer represents the first value-add service created out of the GPI, as it is of vital importance for the bank to alert a beneficiary that the money has been credited to his account, said Wim Raymaekers, global head of banking market and head of Swift GPI.
Overall, nearly 50% of Swift GPI payments are credited within 30 minutes and almost 100% are done so with 24 hours.
Such a track record has banks using the Swift messaging standards seeking to become part of the GPI process, as more than 150 financial institutions have adopted the system for cross-border payments. “Isn’t it amazing?” Raymaekers asks of the GPI progress. “We said all along in creating GPI that we had to go very fast in delivering the concrete improvements in the way corporates experienced these payments.”
It was the impetus for how and why Swift designed GPI in using banks’ existing platforms and processes – but making sure all banks were using them in the same manner and under the same time expectations, Raymaekers added.
It has helped tremendously that Swift created a cloud-based payment tracker “on top of the process” in giving banks a real-time view of cross-border payments status for the first time, Raymaekers said.
“It is easily accessible in using APIs and that is why we were able to go so fast moving this initiative,” he added. “But you can also see the speed by which banks are processing payments is very fast.”
By streamlining cross-border payments through GPI, it will also be far easier for banks to expand the service into domestic faster payments networks over time. If Swift has cross-border payments moving at a faster clip, there should no discernable snags as the network operates with domestic networks in the U.K., Australia, the U.S., China and other markets, Raymaekers said.
Swift reported good momentum in its GPI service late last year, saying it had surpassed two million cross-border payments during September.
That number is only rising now, and the service will experience future enhancements that continue to address the needs of banks handling cross-border payments, Raymaekers said.
By the end of the year, banks can expect Swift to add a “cover payments” service in which banks need a bank to cover for them if needed on ongoing, or serial payments. In addition, a stop-and-recall payment service is being developed in case a bank makes a mistake like sending a same payment twice.
And an upgraded version of the payment tracker system is likely to come about from feedback from GIP member banks.
“Banks are keen to join now,” Raymaekers said. “They see this as a way to be in the GPI community, in like a co-creation where we look at new value creation, and they want to be at the table and want to join in.”
That wasn’t always the case. For many years, even decades, banks held fast to legacy systems and rarely collaborated on advancements that would, in effect, change their ways of handling payments.
“You can see that banks are on this now and they have changed,” Raymaekers said. “Maybe payments were boring in the past, but now this is an exciting time and a fast moving, very competitive space.”
Still, Swift feels it was wise to wait before launching GPI as a way to measure what sort of technologies banks were contemplating, and how an overhaul aimed at the best use of the current messaging standards and legacy networks could operate as a launching pad to future improvements.
It’s something Raymaekers keeps in mind when industry colleagues ask him why Swift didn’t initiate something like GPI years ago. “We can’t turn back time, we can only change the future together,” he said. “In hindsight, we had a bit of foresight.”