Banking
THE Society for Worldwide Interbank Financial Telecommunications (SWIFT) announced at the end of December 2015 a global payments innovation initiative to enhance cross border payments.
So far, more than 73 leading banks, including some of South Africa’s biggest banks, Standard Bank, FirstRand and Investec, have signed up to the initiative.
The participating firms include major transaction banks from South Africa, as well as the rest of Africa, Europe, Asia Pacific, and the Americas. More banks are expected to join this initiative in the coming months.
Harry Newman, Head of Banking at SWIFT, says: “Together, the banks that have already signed up account for 71 per cent of all cross-border payments on the SWIFT network.
More are joining every day. Such strong participation from major global banks illustrates the importance of this initiative and the industry’s commitment to offering greater speed, transparency and traceability in cross-border payments.”
The aim of the SWIFT global payments innovation (gpi) initiative is to enhance cross-border transactions by leveraging SWIFT’s proven messaging platform and global reach.
In collaboration with the banking community, SWIFT has cre- ated a new service level agreement (SLA) rulebook, providing an opportunity for smart collaboration between banks.
Newman says that in its first phase, the new service will focus on business to business payments.
Designed to help corporates grow their international business, improve supplier relationships, and achieve greater treasury efficiencies, the initiative will enable corporates to receive an enhanced payments service directly from their banks, with the following key features: same day use of funds; transparency of fees; end to end payments tracking; and unaltered transfer of remittance information.
To enable the end to end tracking, SWIFT is developing a database ‘in the cloud’ hosted at SWIFT, to give end to end visibility on the status of a payment transaction, from the moment it is sent until it is confirmed – similar to tracking services provided by international shipping companies.
Newman says the system has been designed for the corporate treasurer, thereby enabling banks to dramatically improve their customers’ cross-border payments experience.
Leveraging SWIFT’s global community and the innovative application of its proven technology, the new service should find rapid adoption by African banks and make a hugely positive impact on the global payments landscape.
Beyond the corporate cross-border payments space, SWIFT aims to incorporate additional innovations and deploy new technologies to its global payments innovation initiative, says Newman.
“SWIFT will work together with the industry to define additional service level agreements that will cater for other client groups, further reducing the costs and frictions arising from compliance, liquidity and processing efficiency considerations involved in cross-border payments.”
SWIFT was formed in 1973 as a bank-owned cooperative. It has developed a highly secure messaging platform with strict message content standards that has enabled users to automate the handling of transactions between them.
The network is deployed in the vast majority of countries and institutions. The SWIFT network and services will become an integral component of the financial fabric throughout Africa well into the future.
Since 2001 SWIFT began permitting corporate clients of banks to connect to their banks using the SWIFT network. The SWIFT connectivity option is used primarily by organisations that are multibanked. This enables them to save on the cost of maintaining multiple interfaces.
Most of these organisations have sophisticated enterprise resource planning (ERP) and treasury systems that generate SWIFT-formatted messages and they therefore wish to capitalise on their investments.
Besides multinational corporations, a number of large Africa based companies have expanded throughout Africa and beyond. Banking for such organisations is very complex in that each country in which they operate is likely to have their own banking regulations, domestic processing standards and practices.
This is where communicating via SWIFT can assist considerably as virtually all countries in the world deploy SWIFT and most banks around the world are connected to the network.
They benefit from the extended reach and efficiencies inherent in the standardised messages transmitted over this network.