SWIFT gpi: Life in the Fast Lane
By Eleanor Hill, Editor
By now, most treasurers will have heard of SWIFT gpi – the solution that is speeding up cross-border payments and delivering track and trace capabilities. But not all treasurers have grasped the game-changing potential of gpi, or that it isn’t just for treasury functions that are SWIFT-enabled. Christof Hofmann, Global Head of Payments and Collection Products, Global Transaction Banking, Deutsche Bank, explains to TMI how, following the successful gpi for Corporates pilot, the solution is becoming more widely accessible.
Eleanor Hill, Editor, TMI (EH): Could you provide a brief update on the current development status of SWIFT gpi?
Christof Hofmann, Deutsche Bank (CH): SWIFT gpi is becoming the standard for all cross-border payments. The general evolution of gpi is following three stages (see fig. 1). The initial stage involved banking participants deploying the concept as the ‘new normal’ in cross-border payments. This created numerous live payments corridors, but largely excluded end-user access to the transferred data – the Tracker was visible only to the banks.
The second stage opened up gpi status data to the electronic banking channels used by corporates, offering users greater transparency and precision on payment location. Not all banks are delivering this service yet, but I believe corporates will expect this as a minimum going forward.
Deutsche Bank entered the third stage (more are planned) in October 2018, giving corporates access to all available information about a payment, across multiple banks, which they can incorporate directly into their ERP or TMS. This information includes payment routing, foreign exchange rates, and bank deducts. It also enables corporates to establish their own payment-monitoring capabilities, potentially delivering alerts via the ERP or TMS if a transaction fails to progress as expected. Furthermore, some corporates are now using statistical analysis tools within their ERP or TMS, leveraging the gpi data to help them engage more in a strategic dialogue – across their banks – around payments workflow efficiencies.
Fig 1 - Deutsche Bank’s SWIFT gpi journey
EH: Tell us a little bit more about the process and outcomes of the SWIFT gpi for Corporates pilot. What was involved and what has been achieved?
CH: The pilot kicked off with a discovery session at the end of 2017 with the aim of bringing together SWIFT, banks and corporates to design, build and test a new standard that would deliver transparent, real-time, trackable multi-bank information for corporate treasurers.
After the design and development phase, testing began in July 2018, with 12 banks and 10 corporates taking part. The ultimate goal was to deliver a multi-bank gpi solution that was integrated into the corporates’ ERPs and/or TMSs. Just prior to Sibos in October 2018, many of the participants, including Deutsche Bank, brought the service into production. It has continued to be live within this closed user group.
Some of the milestones achieved through the pilot include: enabling corporates to access payment status information across SWIFT and bank proprietary channels and the ability for the corporate to generate its own Unique End-to-End Transaction Reference (UETR) – which is the SWIFT gpi tracking code. The pilot has also ensured that the originating bank provides status feedback retrieved from the central SWIFT cloud tracker in a standardised manner to the corporate payer.
EH: How have corporates on the pilot reacted? What has been the feedback - and the key learnings?
CH: The reaction from those corporates taking part in the pilot has been excellent. One of Deutsche Bank’s clients, Martin Schlageter, Head of Treasury Operations at Roche, commented that, “It’s like day after a long night to, at last, have nearly full transparency of your cross-border flows through gpi.” He has found that having access to tracking information has significantly improved the treasury team’s efficiency when dealing with payment enquiries. His team is also now able to analyse the performance of different correspondent bank payment channels, comparing the fees and time taken to deliver a payment, and can use this data to improve the service that banks deliver to Roche.
One of the key learnings from the pilot – for everyone involved – has been that there need to be pioneers who are prepared to take bold steps. We cannot wait around for the entire industry to be ready before investing in gpi, we must blaze a trail.
EH: What next? How will SWIFT gpi for Corporates be made more accessible for corporates of all sizes?
CH: SWIFT will open up the service beyond the closed user group of early adopters in June 2019, at which point banks can provide the gpi for Corporates service to all their corporate clients. At Deutsche Bank, we currently have the service live in Germany and are about to expand it to the UK, France and the Netherlands, ahead of a global roll-out.
Until now, gpi has been for SWIFT-connected corporates only, using the MT format. Before mid-year 2019, we plan to go live with ISO20022 XML-formatted payments, throwing open the doors to many more corporates. We are also adding channels, so that transactions sent host-to-host or via FileAct, for example, will be trackable in the same way.
This is game-changing: gpi for Corporates is now independent of SWIFT membership. It is not SWIFT providing the data, it is the corporate’s bank. Corporates can simply provide a payment file to their bank in a standard format, using any of the established channels. The bank then executes that instruction as a gpi payment. If the corporate has provided a UETR in the file then the corporate will get all the feedback on that payment’s progress, including information on deducts and intermediaries, in near real time, automatically, via the same channel they used to originate the payment.
EH: So, how can corporates – especially those that are not SWIFT-enabled – generate a UETR and take advantage of gpi functionalities?
CH: To leverage gpi, all the corporate has to do is create the UETR, either using its own integrated industry-standard algorithm, or applying such functionality from its ERP or TMS technology vendor. Many of the vendors are implementing this as standard functionality in their systems. Then, whenever the corporate generates a payments file, it includes a new UETR for each transaction to alert the banks that it requires feedback. The only other step for the corporate is to ensure that its relevant core systems – ERP or TMS – are prepared for receiving status feedback in MT or ISO20022 XML format via the established channels. Again, many vendor packages already include or will include this as standard functionality.
Box 1 - Switching things up the gpi way
SWIFT gpi has already had a significant impact on the cross-border payments landscape:
Source: SWIFT, April 2019