Insight & Analysis

Swift edges towards G20 payments goals

Published: Sep 2023

As delegates descend on Sibos – the annual conference for Swift’s payments community – corporates have an opportunity to reflect on the progress there has been in their industry. Payments are getting faster, opportunities with digital assets abound, but challenges remain.

Red dart hitting the bullseye on a dart board

If the introduction to this year’s Sibos Opening Plenary is anything to go by, the payments industry is dynamic – and its future bright. This year in Toronto, Swift’s annual gathering opened with ballet dancers and a 3D visual light show that prompted applause and even comments of ‘wow’.

Swift’s CEO Javier Perez-Tasso took the opportunity to show how the company is advancing the G20’s goals to enhance the speed, cost, transparency and choice and access of cross-border payments by 2027. “Over the past few years we’ve been focusing, with the Swift community, on addressing those,” Perez-Tasso said. For example, 89% of all Swift payments get to the recipient bank within an hour. And in terms of cost, “we’re stripping out millions if not billions,” he said.

The theme of Sibos 2023 is ‘Collaborative finance in a fragmented world’. For corporate treasurers, this means the various industry initiatives that are afoot could make their professional lives a lot easier.

As the conference opened on Monday, the announcements of such collaboration came thick and fast. Money transfer service Wise, for example, announced a partnership with Swift.

A spokesperson explained to Treasury Today this partnership is aimed at financial institutions so they can redirect their Swift payment messages to Wise, which translates them into a local payment or on its network. While corporates are unlikely to directly use this service, they can plug into the Wise Platform which offers various solutions for large enterprises and corporates, which points to the plethora of options now available to multinationals.

For now, the corporates that are making announcements are sticking with the transaction banking stalwarts. For example, the Danish shipping company Maersk has been working with Citi to digitise a solution that serves the same purpose as bank guarantees and letters of credit. Marie-Laure Martin, Regional Treasury Manager for the Americas at Maersk, said, “We are pleased to have collaborated with Citi in the successful test pilots for the guarantee solution using digitised tokens and smart contracts. The innovative solution has promising applications for trade finance.” This comment came at the beginning of Sibos as Citi announced its new digital asset capabilities for institutional clients, which will provide cross-border payments, liquidity and automated trade finance solutions on a 24/7 basis.

Digital assets were just one of many topics on the agenda for the conference. And a recent report by Zumo – also announced at the beginning of Sibos – showed there have been a number of industry collaborations in this regard. “At its simplest, a token, through the act of tokenisation, is no more than an empty programmable container recorded on the blockchain. As to what that token represents, that is becoming increasingly diverse in its interpretation,” the report stated. Corporates are already embracing these technologies, and the report gives the Aura blockchain consortium as an example. It was set up by the likes of Prada Group, Cartier and Mercedes-Benz and standardises the tokenisation of non-fungible tokens (NFTs) to trace and authenticate luxury products. This uses pNFTs, whereby digital twins of physical products are tokenised so that the physical object’s provenance can be more easily traced.

While such initiatives are exciting and point to the innovation afoot in corporate treasury, it was not all good news, however. The Capgemini payments report – which is published each year to coincide with Sibos – noted how treasurers are “soldiering through ongoing macroeconomic and geopolitical upheaval”. The report noted a number of firms are operating at a negative cash flow, and they are facing a higher cash conversion cycle. The report noted in 3Q 2022, for example, this deteriorated to 61.6 days, an increase from 55.4 days the year before. The report stated: “Not surprisingly, 79% of the corporate treasurers we polled agreed poor cash management capabilities contribute to more lengthy cash conversion cycles.”

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