At Sibos 2019, Swift’s Fabien Depasse, Wim Raymaekers, Anne-Sophie Walravens and Lior Cohen, explored how Swift gpi is seeing unparalleled growth in adoption, traffic and corridors. Today, more than 3,500 financial institutions (FIs) are signed up to gpi and allow their customers to make payments in nearly 150 currencies.
Nearly 60% of all international transfers on Swift are now sent via gpi and the industry is quickly moving towards universal global adoption. At the same time, Swift is also working on complementing the core gpi service with additional services to further reduce friction and facilitate innovation in international payments.
Ahead of the session on the first day of the conference, Finextra spoke to Fabien Depasse about what gpi is, how it has transformed the customer experience and the importance of transparency, visibility and universal confirmations.
Swift gpi as a concept
Swift gpi was launched to make payments faster, traceable and more transparent. Depasse explains, “When you consider cross-border payments, the payment goes through a chain of institutions, from the bank that sends the payment to the bank that receives the payment. The previous model of correspondent banking operated under less certain timeframes as payments moved across those institutions.”
“The idea behind gpi is to go from the old model to a fully transparent, faster system. A system not only allowing customers to know when the end beneficiary is credited, but also allowing payments to be traced and with data unaltered.”
Success in adoption
After launching gpi, Depasse notes that the community response was astounding. The first live message was sent in January 2017. With over $300 billion of value moving today through the service on a daily basis, Swift continues to see adoption rapidly increasing.
And it’s not just the quantity; Depasse adds that almost 100% of the payments on gpi travel end-to-end, from originator to end beneficiary, within 24 hours.
“What’s even more impressive is when you consider how fast these payments are actually being sent, 40% are reaching the end beneficiary in under five minutes and 50% under 30 minutes. With increased transparency, gpi has also allowed banks to identify and remedy many of the traditional bottlenecks.”
Removing friction
The vast majority of cross-border transactions on gpi are ready to be processed straight through for financial institutions. But the few that aren’t can cause headaches. Delays can happen for a number of reasons, explains Depasse, but Swift and its community are working on ways to tackle those frictions.
“A small number of payments remain unsettled because of friction in the market, for example payments may be sent to accounts that are closed or an account that cannot accept a particular currency.”
Additionally, compliance teams often must carry out additional checks on some payments because they might not have all the information they need. In this case, the bank must go back to the originator to ask for that missing data, Depasse explains.
“We are working with our community on a number of solutions to remove these bottlenecks, and find ways to take the small minority of payments that are not settled within 24 hours and reduce that number even further.”
Universal payment confirmations
While tracking payments from originator to the beneficiary bank is valuable, the importance of knowing when funds are available for the recipient is key. “It is not only about whether payments have reached the bank, you also need to have knowledge of whether your business partner has access to the funds, because that is when the transaction is complete from an end customer point of view,” says Depasse.
“Providing transparency on the last mile of the journey is what brings the whole corporate ecosystem value.” To illustrate this concept further, Depasse points to a messaging service like WhatsApp as an example. “When sending a message, the two blue ticks let you know that your message has been sent and read. This is a lot more valuable than only knowing that your message has been sent.”
“It is the same with payment confirmations. That is what matters in a business relationship and these confirmations allow you to leverage this information in the supply chain and automate processes. All of these things were not possible before, because you were never made aware when the payment was final.”
Depasse concludes, “Swift gpi is reducing friction and increasing speed, but also opening up new possibilities for financial institutions to build new services and use cases. It’s very exciting to see the community innovate together in this way.”