Everything you need to know about SWIFT gpi

By David Beach | 14 November 2017

With SWIFT announcing its new SWIFT gpi network, extensively covered at Sibos 2017, we’ve pulled together an overview and the best SWIFT gpi articles on bobsguide.

Firstly, define SWIFT.

If you’re a corporate or bank you’ve probably used SWIFT, or to use their far catchier name, the Society for Worldwide Interbank Financial Telecommunications. The SWIFT network is responsible for processing, transmitting and messaging secure information from one financial institution to another.

In many cases, this means that the coffee retailer in London can send money to the coffee vendor in Colombia by providing the right account number and corresponding bank SWIFT code. SWIFT sends a message code to release the funds from the retailer’s account in London and to be received in the vendor’s account. Simple, the postal service for digital payments.

SWIFT took over the mantle of international correspondent banking from Telex. This was largely due to the free format of messaging, where a central switchboard operator interpreted the request and executed the transaction. This was fraught with latency issues as well as human error. SWIFT’s standardised coding eliminates the middleman.

So what is SWIFT gpi?

Gpi, or Global Payments Innovation, looks to improve upon the SWIFT system. Indeed, SWIFT’s website promises it is “the biggest thing to happen to correspondent banking in 30 years” for the 110+ banks who’ve already signed up since January 2017.

The first phase of gpi (currently live) promises to enable:

  1. Faster transactions
  2. More transparent fees
  3. End-to-end payment tracking

In effect, the first phase seeks to provide faster payments by making transferred funds available providing they are transferred before SWIFT’s cut-off point. The cloud correspondent tool also seeks to address the pain point around payment visibility from corporate treasurers. SWIFT gpi uses real-time tracking, end-to-end view of payments thanks to the unique tracking codes which will enable a notification lifecycle of the settlement i.e. you will know when the payment has reached its destination. The ability to settle transactions in the same day optimises liquidity with improved cash forecasts.

The second phase (for 2018-2019) will feature:

The immediate stopping of a payment

The idea is to give banks more control over cases of fraud or duplicate payments by allowing building in the ability of cancelling a payment anywhere in the payment chain. This is made possible by the unique tracking code that also enables the payment tracking provided in the first phase. This greatly aids in fraud prevention, but also in operational cost and wasting time making administrative cancellation requests.

The additional transfer of rich payment data

The complex nature of many transactions requires more information to be sent along with the payments. Previously this was left to email liaising between corporate clients and their banks. Naturally, cutting this out makes the system quicker and more efficient.

The use of an international payment assistant

This essentially acts as an information source to speed up payments by providing the relevant information at the touch of a button, whilst also avoiding incorrect and bounced payments.

Further reading on SWIFT

The emergence of SWIFT gpi and the future of correspondent banking

Editor, Alex Hammond, examines the mood at Sibos 2017 around SWIFT gpi.

How satisfied are corporates with SWIFT gpi?

Editor, Alex Hammond, looks at the key pain points for banks and corporates.

How interlinked technology is underpinning the evolution of payments

Alessandra Riccardi, Business Expert at TAS Group, gives a good evolutionary overview of correspondent banking and why the future is a mixture of SWIFT gpi with emerging technologies.