GPI, The Global Payment Innovation – An initiative launched by SWIFT

Behind this mysterious acronym a very interesting innovation initiative has been hidden. What do they mean by this “GPI”? What is SWIFT preparing to make Corporate Treasurers happier? The treasury associations have welcomed this new solution SWIFT is developing but also the idea of involving their members into working groups to further understand their needs and expectations in terms of payment in the years to come. Would it be the next era for correspondent banking, as announced by SWIFT? We will see.

Corporate Treasurers around the world are getting a better cross-border payments experience according to SWIFT. They have recently announced that “Major global transaction banks were live with SWIFT GPI”. SWIFT, the La Hulpe based company, held by banks has released the names of the transaction banks actively using its new global payment innovation (i.e. GPI) service. Among them, we can list ABN.AMRO, Bank of China, CITI, ING, San Paolo, Standard Chartered or Unicredit.

The classic correspondent banking model is under pressure. Customers and regulators have pushed for better payment services. The banks have rationalized their banking correspondent banking networks and eventually, digital innovators offer new disruptive solutions these days. The domestic payments are going real-time or are even instant-payments in some countries, end-users are increasingly demanding more services, regulatory costs are increasing and require intense efforts from banks, networks have to be rationalized, bank disintermediation is a reality and all corporates are expecting enhanced value proposition from their banks. That’s the context in which SWIFT decided to innovate and to be proactive in a moving landscape with new block chain technology emerging.

The corporates are facing issues with uncertainties after payment initiation, unpredictable settlement time and bank deducts, inconsistencies between amounts sent and received, cumbersome handling of exceptions and investigations and eventually incomplete or even missing remittance information, although it is key to a smooth reconciliation.

This SWIFT product suite will cover different parts. It will consists of (1) a directory (to provide operational information on BIC, currencies, cut-off times and essential reference data); (2) a tracker (to monitor progress of a gpi payment and to track a payment’s path in real time as a parcel bought on AMAZON, to obtain transparency on deducts always sources of problems and confirmation that payments have been credited on counterparty’s account) and (3) an observer (a sort of BI dashboard showing bank compliance with gpi SLA, to ensure control, monitoring and enforcement of SLA and therefore a good service quality). This tracker will be the “revolution” in payments. It will be an “in the cloud” solution. The concept is to enable a treasurer to follow at any moment in time his/her payment status (e.g. from the origination through MT1001, MT 103 and MT 910. This MT 199/API will give us an overview “one-glance” status, in real-time, with details of banks along the chain, transparency on fees and unique end-end tracking number. We can all easily see the benefits for treasurers: same day use of funds will be possible, a real transparency of fees, end-to-end payment tracking to inform stakeholders, unaltered remittance information, which is crucial for smooth and automated reconciliations. It will have positive impacts on treasury (cash management, higher visibility with “Unique transaction Reference UETR, guaranteed “our”, reduced FX risks, etc…), on accounting (better cash flow management, speed increased on critical payments, certainty for buyers and sellers, transparent bank charges, reduced exceptions and investigations with back-offices of banks,…) and eventually on budget & forecasting (with increased predictability of flows, beneficiary payment confirmation, better planning and therefore decision making and reporting).

As we can notice, SWIFT is generating a new customer credit transfer (with lots of required attributes), a digital transformation for the cross-border payments by including rich(er) payment data (including attachments potentially) and technological innovations. Today, it seems that roughly ten banks are “live” and more to come. The idea will be to soon have a global coverage. SWIFT wanted to get customer’s feedback on their plans and deliverables in order to structure its future strategy of roll-out of the gpi. They also confirmed the successful completion of initial pilots. By engaging in dialogue and collecting feed-back on gpi, SWIFT shown the will to share experience with their non-bank customers and to better fit with clients’

expectations. SWIFT intends to more appropriately answer to payment transformation and future digitization, while maintaining quality and security (the 2 keys of its success until now). Corporates also would like to get additional services (e.g. mobile access to payment status, access into the ERP’s or TMS’s). The treasurers expect an increased comfort on these types of payments, which sometime are low amounts and cause disproportionate levels of resource to deal with queries or investigations. They also would love to have more standardization of formats and especially with the XML ISO 20022 because they have in general invested heavily in this international standard format.

The corporate have expressed their wish of a continuous dialogue with SWIFT to help shaping the future services of SWIFT, including gpi.

We believe that the payment landscape is moving fast(er) especially with FinTech’s and market disruptors. Therefore, we are pleased to see that market infrastructure players are undertaking their essential role in this payment revolution.

François Masquelier, Honorary Chairman of EACT