Cash & Liquidity ManagementPaymentsSWIFTSibos 2017: How satisfied are corporates with SWIFT gpi?

Sibos 2017: How satisfied are corporates with SWIFT gpi?

Corporates do not want to pay excessively for access to SWIFT gpi was the overall feeling at this year;s SIBOS conference in Toronto.

Key takeaways

  • Corporate priorities remain focused on the predictability and certainty of payments – both in reference to timing and value e.g. costs and deductions
  • New payments solutions need to focus more broadly than cross-border payments, as this is only one element of a treasurers payments obligations that needs to be standardised
  • Corporates require a ‘stop payments’ feature to combat internal errors and amend fraud/breach that is recognised
  • The quality of payments data is more important than speed for reconciliation
  • For banks, SWIFT gpi should be viewed as a driver of efficiency not top line revenue, and also as a functionality that keeps banks relevant as more options are made available to corporates
  • Corporates do not want to pay excessively for access to SWIFT gpi.

One of the most fascinating panel discussions on day three of Sibos 2017 came late in the afternoon, with representatives of banks and corporates taking to the stage to debate the benefit of SWIFT gpi for treasurers, the functionalities still lacking that remain on treasurers’ wish lists, and the practical obstacles preventing those wishes becoming reality.

Corporates were represented on the panel by Brooke Tilton, Vice President, Treasury Operations at Viacom, and Bart Verweij, Deputy Treasurer of Banks were represented by Søren Haugaard, Global Head of Trade & Supply Chain Finance at Danske Bank, and  Hubert J. P. Jolly, Head of Global Financing and Channels, Global Transaction Services at Bank of America Merrill Lynch.

The panel kicked off with the corporates voicing their current pain points, which unsurprisingly centred around continual transparency issues.

Brooke highlighted the amount of time that corporates are still spending attempting to get visibility on the state of payments, including heavy dialogue with banks.

Bart added that treasurers also still lack visibility with regards to FX conversions and additional unexpected fees when making cross-border payments, but did add that the implementation of SWIFT gpi is providing more insight in this area including combatting the effects of double conversions that frequently occur when European companies own dollar-based bank accounts.

J.P Jolly is quick to acknowledge the corporates’ paint points, echoing that the same issues are also pain points for banks. Ultimately excessive conversation between banks and corporates caused by a lack of payment transparency is an inefficiency issue that banks want to avoid, J.P argues that perhaps the greatest benefit of SWIFT gpi is the end-to-end visibility throughout the payment rails that the system is designed to provide.

Søren Haugaard agrees that greater transparency is beneficial for corporate banking, for efficiency purposes, but more importantly because their clients are universally demanding it. All corporates suffer from the same issues, namely cross-border payment visibility to the extent of having ownership of a payment tracking number to know exactly where the payment is on the network rails, or why it isn’t at an expected location at the expected time. Additionally, it isn’t purely global corporations that are demanding greater transparency, in many cases international business is more important for SMEs so implementation of SWIFT gpi is valuable across all customer segments.

He also notes that the SWIFT gpi structure is also an improvement over previous systems in that it can carry a greater amount of information, enhancing the quality of data related to the payment for corporates and also potentially assisting the bank in additional function e.g. AML.

SWIFT gpi adoption: How crucial is it and who is responsible for driving it?

The conversation shifted to focusing on banks adoption of SWIFT gpi, and the utility, or lack of utility, that corporates can gain from the SWIFT gpi network without a substantial take-up globally. The corporates on the panel stressed that without complete end-to-end adoption for cross-border payments the value of SWIFT gpi is greatly diminished. With the current SWIFT cross-border payment rails as they are there are very few disruptions in payments between the UK and the US, it is payments being moved to the outer corners of the globe which create the largest headaches. If banks in these regions do not join the SWIFT gpi network, then these issues will persist.

This inevitably leads to the question of who should take responsibility for putting pressure on more banks to accommodate SWIFT gpi, and this is the first major point upon which the banks and corporates disagree.

Bart reinforces the point that for a company such as that is making cross-border payments throughout the globe it is vital that the banks at the end of the line are part of the network to provide full visibility. His preference would be for SWIFT to enforce a fixed date for banks to sign up to SWIFT gpi by.

Soren doesn’t believe that SWIFT will mandate sign up, but does feel that there is mounting pressure for banks to commit to the scheme in 2018. Corporates are now questioning banks as to whether they have implemented SWIFT gpi and making partnership decisions based on banks’ response, which should be a driver to greater adoption.

Brooke is sceptical of this way of thinking, and questions whether individual corporates have the strength to move the market.

It is proposed to J.P that banks mandating correspondent banks would be a more effective source of pressure for SWIFT gpi adoption than corporates, but this is not a suggestion he concurs with as this would put the bank at a competitive disadvantage. He argues that the primary paint points SWIFT gpi solve are on the corporate side, it is therefore corporates that need to compel the market to adopt.

Gaps in the current roadmap and the future wish list

The panel concluded the discussion with a conversation of how the landscape looks in a SWIFT gpi world, and the issues that will not be solved by adoption.

One additional feature that all panellists were in agreement would be beneficial would be a stop payments option. From both a human error recognition and fraud detection perspective, the ability to recall a payment once it has been made would be of huge benefit to corporates and banks.

The corporates were also keen to stress that speed of payments was not the only measurable that wold determine whether cross-border payments had been improved. The quality of the data associated with the payment is paramount, so much so that Bart stated he would rather receive a payment two days later if it meant receiving full data for reconciliation purposes.

Brooke reminded the audience as one final point that the majority of payments will not be processed using SWIFT gpi, and that she hopes the same process will be rolled out throughout other clearing networks in due time.

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