Treasury Today Country Profiles in association with Citi

SWIFT gpi hits the mark

Red dart hit the bullseye on dartboard

SWIFT gpi payments account for nearly 10% of SWIFT’s cross-border payments traffic a year after launch.

SWIFT’s global payments initiative (gpi) has made a strong start in life. New data released by SWIFT shows that over US$100bn in gpi messages are being sent every day. This accounts for nearly 10% of SWIFT’s total cross-border payments traffic.

These payments are flowing daily across 220 international payment corridors. This includes the USA-China corridor, where gpi payments already account for more than 25% of the payment traffic.

The speed at which these payments are happening is also notable, with nearly 50% of gpi payments credited to end beneficiaries within 30 minutes. Those payments that take longer typically require more complex foreign exchange conversions, compliance checks or regulatory authorisations and are settled within 24 hours.

“SWIFT gpi continues to gain significant traction, and we are delighted with the total number of banks using the service, the geographical diversity of these institutions and the customers and sectors they serve,” says Harry Newman, Head of Banking at SWIFT.

A payments revolution

Launched in February 2017 to much fanfare, SWIFT gpi is designed to improve the customer experience in correspondent banking by increasing the speed, transparency and predictability of cross-border payments.

Using gpi, corporates can today make payments with same day value, obtain transparency over fees, increase certainty by offering end-to-end payments tracking and ensure that remittance information is transferred unaltered.

To achieve this, SWIFT has enforced a new service agreement for banks. Each bank then has the responsibility to translate the innovation brought by SWIFT gpi into a value proposition for their customers.

Corporate approval

It is not just the data that shows the success of gpi, corporate treasurers have also recently come out in approval of the initiative.

For example, last year a handful of the leading Swiss corporates – including ABB, Nestlé, Swiss Re and Roche – explained the benefits that they thought gpi offered the treasury community. They also urged that the world’s banks get fully behind the initiative.

This sentiment was echoed by The Luxembourg Association of Corporate Treasurers (ATEL). Its Chair and Head of Corporate Finance, Treasury and Enterprise Risk Management at the RTL Group, François Masquelier said: “SWIFT’s gpi is beginning to solve an issue that the corporate treasury community has demanded be changed for years. We, therefore, endorse and encourage SWIFT to bring this to fruition.”

The banking community has certainly listened and today “more than 150 banks are currently using the service in total,” says SWIFT’s Newman. “This includes 48 of the world’s top 50.”

Gpi and blockchain

Given the success of gpi in bringing increased speed, transparency and predictability to cross-border payments, it puts into question where blockchain technology fits into the equation, if at all.

Ripple, for example, has been very outspoken about the need to replace the existing payments infrastructure with a blockchain-based system. Whilst blockchain-based payment methods may have some advantages over gpi, SWIFT has the benefit of incumbency. And it also has the speed now, with 50% of gpi cross-border payments being credited in under 30 minutes. It begs the question of whether the few minutes that blockchain potentially saves is worth the time and effort required to revamp the global payments infrastructure.

The debate will continue.

Future developments

SWIFT is also looking at how blockchain could work within a SWIFT context. But its “immediate goal is adoption and, over time, steady expansion and upgrading of gpi,” says Newman. “A number of planned upgrades are set to be introduced to SWIFT gpi in 2018 and will be announced in due course.”