What do you think will be the biggest disruptive force in the payments industry in the coming years? Most treasurers, when they learn about the SWIFT gpi initiative, are left in little doubt: SWIFT gpi will bring a renewed client experience for users of cross-border payments.

At BNP Paribas’ Cash Management University in May 2016, a poll was conducted of the 200 corporate treasurers in attendance before and after a presentation on SWIFT’s global payments innovation (gpi) initiative. Treasurers were twice asked the question: what do you think will be the biggest disruptive force in the payments landscape in the coming years? Before the presentation, SWIFT gpi polled barely a handful of votes. After the presentation, it was the near unanimous winner.

“At the start, treasurers didn’t know precisely what SWIFT gpi was about so they didn’t vote for it,” says Wim Grosemans, Head of Product Management International Payments, BNP Paribas. “But after we had finished explaining what it means, well, then everyone wanted it.” The story shows just how excited treasurers become once they learn what SWIFT gpi is setting out to achieve. So, for the benefit of any treasurers still in the dark, what exactly is SWIFT gpi?

A game changer for cross-border payments

In simple terms, SWIFT gpi is a SWIFT-led initiative gathering 70+ banks across the globe (which represents the vast majority of worldwide payments volume) intended to improve corporate treasurers’ experience when making cross-border payments by increasing speed, transparency and end-to-end tracking of transactions. A forerunner to the initiative, BNP Paribas is also a very active member of the panel of 20 leading banks who signed up as SWIFT gpi pilots. Treasurers have long suffered from inefficiencies when making cross-border payments. Unlike domestic payments, the processing of cross-border payments is dependent upon not just the debtor and creditor banks, but also different correspondent banks and, potentially, different clearing systems. The lack of synchronisation is a source of errors and delays that creates more work for the corporate treasurer.

Through collaboration with the banks signed up to the initiative, a new set of strict business rules has been developed to make the process much smoother. It will mean that banks will be able to offer a greatly enhanced payments service to their corporate clients, one that boasts same day use of funds, transparency of fees, end-to-end payments tracking and the certainty to have remittance information transferred unaltered. Each bank will have the responsibility to translate the innovation brought by SWIFT gpi into a value proposition for their customers. Given the opportunities these improvements will present to treasurers to more efficiently manage their cash positions and improve working capital management, it is, perhaps, no wonder that the initiative is causing such a stir in the treasury community. “Ultimately, the initiative is designed for the corporate treasurer,” says Wim Raymaekers, Global Head of Banking Market at SWIFT, “and we think it will improve their lives exponentially.”

Building on existing technology

Treasurers will be pleased to hear that they will not have long to wait either. Results from the pilot launched earlier this year are to be presented at Sibos, SWIFT’s annual financial services conference, with the service set to go live in early 2017. Raymaekers says that one of the key reasons SWIFT has been able to make SWIFT gpi a reality in such a short space of time is the decision to not pin everything on still-nascent technologies – like blockchain – that are going to require a lot more time to develop. While Grosemans and Raymaekers are as excited as everyone else in the industry about blockchain, for the time being SWIFT gpi will focus on the technology banks have in place today. Additional innovations will be incorporated into SWIFT gpi as and when new technologies become ready to deploy. Continuous improvement is a key feature of SWIFT gpi.

“We made a conscious decision at the start of this initiative to first gather banks to design solutions on the existing technology,” says Grosemans. “That was the only way we would be able to develop a solution quickly that would have benefits for the corporate treasurer.”

As SWIFT and the banks consider how the solution will develop, Grosemans would like to encourage corporate treasurers to join the discussion. “We are extending an open hand to corporate treasurers. We want them to be included in the conversation so that we make sure we are addressing the pain points that are important to them and bringing relevant added-value. Ultimately, we are doing this for them. But the founding fathers are indeed the banks, and it is for us to work together before taking our innovation to the market.

Corporates to join in the conversation

Referring back to BNP Paribas Cash Management University, Grosemans says the need to involve corporate treasurers in the development of SWIFT gpi is one of the reasons why industry events are so important in terms of raising awareness in the treasury community. “After the presentation, SWIFT gpi was what treasurers thought would have the biggest impact on the industry in the coming years. It shows that education and providing information to treasurers is going to be important as we look to progressively include them on this journey.” SWIFT gpi will be deployed step by step. Current schemes will continue to coexist with the new SWIFT gpi. This is not a revolution, nor a big bang but rather a smooth and steady transformation of the correspondent banking business with a new standard progressively settling in. But then, even Rome was not built in a day.