Transforming cross border payments with SWIFT gpi

The Society for Worldwide Interbank Financial Telecommunication, better known as SWIFT, has been providing a secure network for sending financial messages since the 1970s. SWIFT does not hold funds or manage accounts on behalf of its customers but enables financial institutions, market infrastructures and corporates to communicate reliably and securely via standardised financial messages

The global payments initiative is SWIFT’s new service upgrade, focused on improving efficiency via speed, more transparency and better trackability in the cross-border payments space. According to SWIFT, “more than USD 300bn is now sent daily via gpi, with 50 per cent of SWIFT gpi payments delivered within 30 minutes and 40 per cent credited within five minutes, many in just seconds. To date, SWIFT gpi has been adopted by more than 3,500 banks globally. By 2020, all banks will be able to track and confirm all their payments from end to end.”

Coming to the Nordics

Having made some features of SWIFT gpi already available in Denmark, Nordea is on the way to implementing the payments service for the rest of the Nordics.

Emma Printzél, Global Product Manager at Nordea, says: “We work with SWIFT and we have of course done so for many years. SWIFT gpi is a significant upgrade that introduces several improvements for our customers. We are already a fully compliant gpi bank in Denmark and were a first mover there. Now that the adoption rate of gpi globally has matured to a satisfactory level, we are taking the next steps to expand the offering across the Nordic region.”

“The new features introduced are a big step forward in enabling extra functionality around payments. As well as track and trace, the transparency of payments is key. You are able to gain more information about the payment and what is happening in the payment chain with regards to FX rates, fees and time. You also have the possibility to stop and recall funds in a different way. If you send off a payment by mistake, it’s easier to stop it now within SWIFT gpi.”

“Also, SWIFT gpi will have a big impact on the investigations space as we will be able to speed them up and make them more streamlined. From the banks perspective, this is where we can save time and working hours. In the best of worlds, we would later on like to push this even further out to the customers so that they can initiate investigations themselves either via their ERP systems or through a portal, etc so that they don’t need to contact the bank personally as they are doing today. That would increase customers’ control of the process and on the Nordea side release resources from our operations. That is the ambition in the end,” she adds.

Connected fast

In a fast paced and interconnected world, the demand for infrastructures that can support instant and transparent payments is increasingly being requested by customers.

Peter Damgaard Henriksen, Head of Cross Border Payments at Nordea, notes: “You could say that gpi is actually a vehicle for pushing the players in the industry towards a standard of international transactions that are more transparent and faster. I see this as SWIFT’s response to other solutions in the market offered by fintech companies marketing themselves as potential international payments alternatives and is intended to make SWIFT as equally attractive in the market as one of those new players.”

Improved customer offering

For businesses operating complex global supply chains, SWIFT gpi gives them the chance to gain a fuller and more instant overview of the state of their payments.

Peter Damgaard Henriksen explains: “If you look at it from the corporate side, sometimes they face the situation where the beneficiary from who they are buying goods, perhaps in Asia or somewhere are saying, ‘we haven’t received the funds’. It is a bit cumbersome today to figure out where the money actually is. Is it just awaiting the last push to be booked onto the accounts, or has it actually been booked, and they are overlooking it, etc? In the first phase it will be possible for us at Nordea to respond to those enquiries immediately by looking them up in the SWIFT Tracker. It’s not water proof before everybody is on gpi but the adoption is now starting to be good enough for it to be relevant to provide this service to our customers.”

“Also, when we are a bit further down the road, we will be capable of monitoring our own quality of gpi payments to safeguard that we are an attractive partner to other banks needing us as a gateway to the Nordics. On the other side, when we are selecting corresponding banks, the transparency from SWIFT gpi will be one of the elements that we can use to monitor the quality of them as a corresponding banking partner for that selected currency,” he adds.

Time to implement

As parts of SWIFT gpi will become mandatory from 2020 for all banks, the current implementation process is about selecting which of the available services to choose from first to create a differentiated offering to customers. In the short term, implementation is likely to be very different from bank to bank.

Emma Printzél says: “The first thing we will do is implement the basic functionality required to connect to the service across the Nordics which will enable the bank to communicate with a tracker. The tracker is where information is held in the cloud and were we are feeding and collecting information about the payments. That is key to being able to begin providing end customer solutions. At the same time, we are also evaluating ideas for the final customer solution for a phased roll out later this year.”

Peter Damgaard Henriksen says: “There are different options that are on the table for consideration at this point in time. One thing we are looking into is something called g4c, which is gpi for corporates using SWIFT for communication. We are also looking into file solutions that provide end customers with reports on the status of outgoing and incoming payments as well an API solution that establishes a connector directly from the SWIFT tracker to a customer’s ERP systems. It’s of course also an option to build this in the traditional way i.e. directly into Nordea’s netbank solutions. Our decision will be very much related to how we want to position ourselves going forward and also related to complexity and speed to market.”

Emma Printzél concludes: “We know that customers don’t want to log into something and have to search if they are working with an ERP system. They would like things to be fed to them and matched automatically. That is very much keeping with our focus on Open Banking and we are looking into whether we can develop an API to do something in that space.”

Nordea aims to be able to offer SWIFT gpi services across the Nordics as they are phased in during 2019.

For more information on SWIFT gpi please write to: peter.henriksen [at] nordea.com or emma.printzel [at] nordea.com