a bank teller helping a customer make payments

SWIFT gpi enables a faster, more transparent process for global cross border payments. Source: Shutterstock

Connecting Asia with SWIFT-er payments

BANKS and financial institutions across Asia are adopting SWIFT’s global payments innovation (gpi), a new standard for cross-border payments that promises faster transactions and better transparency.

SWIFT helps facilitate large payments transactions, but up until now, required up to five days to complete. With gpi in the picture, processing should take no more than 24 hours, with a majority of settlements being completed within half an hour.

The speed of settling transactions is something SWIFT had been struggling with for so long. In a digital world, it seemed as the company operated an analog business.

“The payments have been happening a lot faster than we expected. There’s also an opportunity to further speed up GPI payment to offer real-time settements,”  Micheal Moon, Head of Payments in APAC for SWIFT told Tech Wire Asia.

Moon explained that this is the first time SWIFT has been able to track and record exactly how long a payment takes. gpi made it a requirement that banks provide the status of the transaction to universal tracking database, where each payment has a unique tracking identifier.

“Financial institutions in their back office and processing are not operating on a real-time basis, and payments have suffered from a lot of business process frictions,” he commented. The 2-5 days processing time previously recorded wasn’t due to the technology but rather inefficient back-office processes, according to Moon.

On the traditional SWIFT networks, the payments are not tracked end to end. Banks that need to perform additional processes to the transactions, will have to spend time manually tracking each leg of the transaction.

gpi’s tracking feature allows banks to focus on other processes like managing compliance, detecting potential fraud in payments, and optimize liquidity management, among others.

Today, over 11,000 institutions are connected to the SWIFT network. Of that, over 200 banks that account for more than 80 percent of global cross-border payments are using gpi – more than 60 of which are in Asia.

Banks that have adopted gpi reported reducing costs of servicing transactions.

Dao Minh Tuan, Deputy CEO, Vietcombank expressed that gpi “offers timely and end-to-end information” of international transfers, “including those made between banks with no account relationship with each other”.

To realize the potential of real-time payments, SWIFT is planning to incorporate business intelligence to identify payments that don’t fit normal patterns.

Through the gpi platform, SWIFT hopes to remove the inefficiencies in business processes, to makes cross-border payments more reliable.