Digitization is gathering pace, and innovative payment providers are using new technologies to change the landscape of the financial services sector. Corporate banking customers are demanding more and more efficiency and transparency in their cross-border payments. And the global correspondent banking network—the crucial facilitator of international trade—is under increasing pressure to adapt.
Banks have long been reliant on the payments infrastructure provided by the Society for Worldwide Interbank Financial Telecommunication, known more commonly as SWIFT, the global network that enables communication of financial information between banks. But the status quo is no longer acceptable. Financial institutions that want to remain competitive in the market for cross-border trade must embrace innovation.
This is where SWIFT’s global payments innovation (GPI) initiative comes in. The initiative commits banks to a higher standard when facilitating cross-border payments, which helps corporate banking customers grow their international business. The initiative’s pilot program, which launched last April, marks a vital step forward.
In the past, a multinational company may have accepted waiting a day or two for a cross-border payment to clear. But in today’s business environment, with its high-speed communications and digitization of information, treasurers expect payments to process quickly. Speed is of the essence.
At the same time, companies are expecting to receive greater clarity and more comprehensive information from their banking partners. The complexities of trade, particularly as companies go global, mean that treasurers need to be able to easily track the status of all their transactions.
Transparency supports a company’s working capital efficiency, obviously, but that’s not the only benefit. Payments transparency also helps companies nurture better relationships with their trading partners. For instance, if a buyer gets confirmation that payments to a supplier have been both made and received successfully, it knows how to proceed in building and sustaining a healthy trading relationship for the future.
“SWIFT’s GPI initiative marks an important milestone for corporate treasury. It goes a long way toward removing the bottlenecks that slow down cross-border payments.”And the last—but by no means least—area in which corporate treasurers are expecting more from their banks: Companies are demanding that their banks provide comprehensive, reliable, and visible information on banking fees.
In light of these growing customer demands, most banks are working hard to provide corporate customers with a modern, rapid, and user-friendly payments experience. They cannot run the risk of falling behind in the payments race. This is all the more crucial, given the pressure that the global correspondent banking network is already under from increasing compliance costs, regulatory intensity, consolidation of correspondent networks, and disintermediation.
Of course, within the SWIFT system, the process of actually sending a payment already happens relatively quickly. Standardized financial messages identify more than 11,000 banks and speedily facilitate the movement of funds between some 200 countries worldwide.