RTGS Global has collaborated with Microsoft to develop a transformative new system which enables banks to gain complete visibility of liquidity between their counterparties, for the first time.
Built on Microsoft Azure, RTGS.global promises to completely overhaul the machinery of correspondent banking. The network safeguards existing commercial banking relationships, but will change the way they work – in many cases moving from what today still involves manual processing – to one that materially improves efficiency, reduces costs and enables a new level of customer service to be delivered.
The announcement comes in parallel to a move by the G20, under the 2020 Saudi Arabian Presidency, to make cross-border payments a priority in recognition of the widespread benefits for global citizens and economies, that will result from ‘faster, cheaper, more transparent and more inclusive cross border payments’. In July, following the G20’s instruction, the Committee on Payments and Market Infrastructures (CPMI), Financial Stability Board (FSB) and other stakeholders produced a report outlining the building blocks for a solution to this challenge. RTGS Global has subsequently produced a response which it has shared with various regulators describing how the RTGS.global network already dovetails into the identified building blocks.
RTGS Global is the brainchild of Nick Ogden, fintech entrepreneur and founder of WorldPay and ClearBank, it brings the benefits and transparency of real-time domestic gross settlement to a global level, delivering instant transactional integrity, security, risk reduction and settlement finality.
RTGS Global enables atomic settlement across both commercial and central banks, authenticating the exchange of funds between banks based on the real-time availability of liquidity. Through its patent-pending Liquidity Lock, Lock and Block system, RTGS Global locks available liquidity at two counterparty banks, before sending a Liquidity Block message to complete the transaction. This whole process can take just 50 milliseconds to complete, enabling real-time, bilateral settlement of funds.
The result is RTGS.global, an international system that transforms the challenges of legacy correspondent banking and international banking. Settlement and counterparty credit risk become non-existent; there’s no need to pre-fund a nostro account; and 24/7/365 availability drastically improves the end customer experience dramatically improving commercial cashflows.
RTGS Global founder, Nick Ogden, said: “The current interbank infrastructure that supports cross-border payments is much like other corners of the payments industry – legacy technology combined with historic practices. As we become increasingly used to interacting on a real-time or instant basis, it’s obvious that the international payments system is nowhere near fit for purpose in today’s global digital economy. In times of economic instability, inefficient processes and slow transaction speeds become even more problematic. Invisibility of liquidity undoubtedly contributed to the last global financial crisis. We believe that we have made significant progress by ensuring that every international transaction is matched to corresponding real-time institutional liquidity.
“Throughout many decades spent working on new technologies to revolutionise the global payments industry, I’ve worked closely with regulators, central banks and commercial institutions. RTGS.global is the culmination of that experience delivering a new network to 43,300 banks around the planet that all now have a unique RTGS.global capability.”
Bill Borden, Corporate Vice President, Worldwide Financial Services at Microsoft, said: “Today’s advanced technologies are enabling new opportunities to modernize outdated aspects of the financial services industry for big gains. Using Azure’s AI and data analytics capabilities, RTGS Global’s new system provides a powerful way for banks to transform their international payments process, delivering enhanced value to their customers while reducing costs, improving efficiencies, and staying secure and compliant. We’re pleased to make RTGS.global available in Microsoft Azure Marketplace and extend its benefits to our banking customers.”
Delivery of stage one is the first step in making the RTGS Global network available to 43,300 banks globally. Stage two, the technical integration involving Azure, will commence in autumn this year.