Insight & Analysis

SWIFT gpi receives corporate seal of approval

Published: Jul 2017

Corporate treasurers are beginning to endorse SWIFT’s gpi initiative. Treasury Today talks to François Masquelier, Head of Corporate Finance, Treasury and Enterprise Risk Management at the RTL Group to hear why he is supporting gpi.

Corporate treasurers yearning for an improved cross-border payments experience have given the seal of approval to SWIFT’s global payments innovation (gpi) initiative.

In an open letter, 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.

The Luxembourg Association of Corporate Treasurers (ATEL) echo this sentiment. François Masquelier, ATEL Chair, EACT Vice-Chair, and Head of Corporate Finance, Treasury and Enterprise Risk Management at the RTL Group told Treasury Today that: “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.”

Solving issues

The legacy cross-border payments process is fraught with inefficiency and lacks transparency, says Masquelier. More precisely, he points out that corporates can never be certain when its payments will arrive with the beneficiary. “When the payment does arrive, we do not receive confirmation,” he adds. “This can cause delays across the business, especially when these are crucial M&A payments, for example.”

Masquelier also adds that even when the payment does arrive with the beneficiary, it can often be for less than they were expecting, due to the bank’s lifting fees. “Often, we will then have to send a second wire transfer, at great cost, to cover the fees lifted by the banks from the original payment.”

Life becomes more complicated for treasurers when a payment fails to arrive with the beneficiary within the expected timeframe. Masquelier says that there is no way to tell where the payment has been held up. “We, therefore, have to waste considerable time and effort phoning up the correspondent banks to find out exactly what has happened.”

Promising signs

From what he has seen from his position on the SWIFT gpi Corporate Working Group, Masquelier thinks the initiative will go a long way to solving these issues. “We have not had the chance to pilot a transaction yet, but it looks to be highly promising from the demons I have seen.”

Masquelier is keen to note that there is still some significant work that needs to happen. Most notably, he is concerned that the full benefit of gpi will not be realised if the banks do not invest in and enable the track and trace functionality.

“We are not asking the bank to give us all the intricate details of the transaction,” he says. “We just need the basic information around where the payment is and what problems exist, if any. This visibility will allow us to be more proactive when managing the payment flow.”

Masquelier says that there is still debate around how the banks will disseminate this information. He is clear on the direction they should take. “This information should be provided through a single-window,” he says. “Multi-banked corporates want a portal that enables them to see the status of their payments with every bank they work with. We do not want 15 different solutions from 15 different banks.”

Views on the blockchain

Francisco de Barros, EMEA Regional Treasurer at AbbVie is also confident that gpi will significantly improve the cross-border payment process for corporates. He is, however, very interested in the potential of blockchain in this space.

de Barros contrasts gpi and blockchain with the competition between VHS and Betamax in the 1970s. “SWIFT gpi has an advantage because the banks are adopting this earlier,” he says. “But blockchain has the potential to solve all the issues that gpi does, whilst also making cross-border transactions significantly cheaper. We will just have to wait and see which one catches on.”

Widespread adoption

Over 110 banks from around the world are members of gpi today. But Masquelier is keen to see even more join in the coming months. “SWIFT’s gpi will only be a success if all payments are gpi enabled, giving treasurers that consistent experience around the world,” he says.

To drive further participation, he urges the corporate community to put pressure on its banking partners to do so. “Those treasurers that want to see change should come out and endorse gpi, either individually or through their association,” he says. “I also suggest that they talk to their banks directly about gpi.”

Masquelier concludes by noting an interesting development he has seen in recent months. “SWIFT gpi capability is starting to appear in a number of bank RFPs,” he claims. “I will certainly include it in my next RPF. This again shows how serious the treasury community is about seeing improvements in the cross-border payments space.”

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