Interview by Kate Goldfinch
Wim Raymaekers, Head of Banking Market, SWIFT gpi Programme Manager spoke to The Fintech Times reporter Kate Goldfinch on the future of the cross-border payments market…
TFT: Cross-border finance remains concentrated in business-to-business operations according to SWIFT & McKinsey’s latest joint research. However B2C & C2B markets are also fast growing. Which niche of the cross-border market do you see as your core and why?
WR: Change in the cross-border payments industry is being driven by the opportunities presented by technology, the need to reduce costs and improve processes, as well as by evolving consumer expectations born from a hyper-connected, technology-centric world.
With SWIFT gpi, we have dramatically improved the experience in cross-border payments for both banks and their end customers by increasing the speed, transparency and traceability of payments. We continue to evolve gpi to maximise efficiency, improve end-user experience and extend the benefits deeper into the marketplace.
TFT: Do you feel increasing pressure from emerging technologies including distributed ledger technology (DLT), card and network innovations?
WR: It is a fascinating time to be in payments and the industry is rising to the challenge by working together for the benefit of customers. There are many great initiatives and a lot of collaboration between banks, fintechs and SWIFT.
With all technology, we continue to help our customers maximise its potential in a secure and cost-effective way, and will work with whichever technology best serves our community and their needs.
With SWIFT gpi, we have transformed cross-border payments by modernising the existing rails, for instance, by using APIs. SWIFT gpi payments are typically made within minutes and in some cases seconds, and the toolset we are evolving alongside it is rapidly leading to the elimination of many of the issues that have previously led to time-consuming costly enquiries for banks.
TFT: Growth in the cross border market is increasingly driven by lower-value payments. What is the transaction fee and speed of SWIFT gpi at the moment?
WR: As cross-border payment volumes have risen, it is natural that pricing has come under pressure. Cross-border payments tend to involve more banks, more complexity, FX conversions, regulatory checks – all of which incur costs which have to ultimately be passed on. Increased volumes, accompanied by improvements in processes however will help to reduce prices over time – but cross-border, cross currency payments will always involve more costs than domestic, single currency payments.
With SWIFT gpi, we have transformed cross-border payments by modernising the existing rails, rather than reinventing the entire system.
While SWIFT message prices are already negligible, over the past seven years, SWIFT has reduced average message prices by more than 60%, as we’ve been able to pass the benefits of increased volume back to the community. gpi, together with the gpi toolset, should help to reduce errors, exceptions and enquiries, all of which should help to lead to lower costs.
TFT: Do you have plans to lower fees and increase transaction speed?
WR: SWIFT has reduced average message prices by more than 60%, while with gpi we have dramatically improved the speed of payments. On average, 40% of SWIFT gpi payments are credited to end beneficiaries within five minutes. Half are credited within 30 minutes; three quarters within six hours; and almost 100% within 24 hours. Wherever possible we will continue to improve the time it takes for payments to reach end customers, and alongside that we aim to continue extending our toolset to make the process smoother for banks, and the experience better for end customers.
TFT: How many banks use SWIFT gpi at the moment?
WR: More than 3,500 banks have signed up to gpi, and more and more are signing up all the time.
TFT: Who will dominate the cross-border market in the future – DLT based solutions or traditional network innovators?
WR: With SWIFT gpi, we have transformed cross-border payments by modernising the existing rails, rather than reinventing the entire system.
On average, 40% of SWIFT gpi payments are credited to end beneficiaries within five minutes.
We have been monitoring the development of DLT for several years at SWIFT, and have explored the technology through a number of proofs of concept. While significant progress has been made, it is still not clear that it is mature and scalable enough for mission critical applications such as cross-border payments.
As with all technology, we will continue to help our customers maximise DLT’s potential in a secure and cost-effective way, and will work with whichever technology best serves our community and their needs.
TFT: How would you describe your customers’ evolving needs and how do you support those expanding needs within your services and products (in terms of cross-border value propositions)?
WR: Our customers expect a reliable, secure, trusted network with global reach that can deliver solid solutions at pace and at scale. They want reliable, innovative solutions to address real problems – rather than innovation for innovation’s sake. We have delivered on the demands for speed, transparency and traceability with gpi, and we are now building on that to really transform the payments experience – both for banks and their end customers.